The Ins and Outs of Keeping Foreign Travel Costs Low
Posted by Guest Author on March 14, 2012 in Business Travel [ 0 Comments ]
We all know Europe is the epicenter of financial turmoil these days, but if you’re heading overseas for business anytime soon, you should concern yourself with a couple of decidedly more microeconomic issues: getting a favorable exchange rate and avoiding unnecessary fees. After all, foreign travel can be extremely costly, and there’s no reason to spend a cent more than necessary, regardless of whether you’re a small business owner traveling on your own dime or are simply interested in seeing the sights in your free time and bringing home gifts for loved ones.
Choosing How to Exchange Currency
You will want to focus on the two types of ways to spend money:
- Cash – You first need to figure out the least costly way to turn U.S. dollars into the type of currency used in your destination. According to Card Hub’s Currency Conversion Study, card networks like Visa and MasterCard automatically offer the best conversion rates. In fact, the rates they offer will save you around 15% relative to exchanging cash at those kiosks at the airport and roughly 8% as compared to cash exchanged at local banks. Getting a credit card to use for the majority of your purchases while abroad is therefore highly advised, and since Visa and MasterCard are by far the most widely accepted networks, this card should be on one of them.
- Card – You should also get a debit card with low fees for using overseas ATMs. As is the case in the U.S., you won’t be able to use plastic for everything while abroad. A debit card allows you to get cash with the same low card network exchange rate as your credit card.
The benefits of using plastic while traveling out of the country aren’t just monetary either. Not only are credit cards and debit cards easier to carry around than a bunch of cash, but they’re also more secure. If you lose your card, you won’t be liable for any unauthorized charges and will be able to get an emergency replacement card shipped to you. If you lose cash, it’s just gone. What’s more, card networks as well as issuers often give some form of travel insurance and baggage protection to their cardholders, which would obviously prove quite helpful if you run into any speed bumps along your way.
Saying No to Foreign Transaction Fees
Unfortunately, around 90% of all credit cards charge foreign transaction fees. Depending on the card, these fees can inflate every purchase you make either abroad or through foreign-based merchants by 2% -3%. This might not seem like that big of a deal, but it’s the little costs that can really add up. That’s why the card you get should not only be on the Visa or MasterCard network, but also be classified as a no foreign transaction fee credit card. Remember to use this card on flights, hotels, day trips – basically anything booked through foreign companies because foreign fees aren’t only assessed when your feet are on foreign soil.
This isn’t necessarily a money-saving tip, but you must not forget to inform your card issuer(s) about your travel plans. If you don’t, transactions won’t be approved.
Avoiding Merchant Tricks While Abroad
It is important to be careful about the way in which foreign merchants ring you up at the register as they have been known to convert purchase totals into U.S. dollars, supposedly to help out their customers, but really to help out their wallets by charging high exchange rates. Sometimes, they offer this “service” – called dynamic currency conversion – under the guise of convenience; other times, they do it on their own accord. Either way, avoiding dynamic currency conversion is simple: Just make sure that any receipt you sign is expressed in the local currency, and not in U.S. dollars.
Most of us don’t travel abroad for business too often, so the time we spend in our destinations should be spent tackling the tasks at hand as well as enjoying the scenery and culture, not worrying about money. A bit of planning can save a lot of hassle and confusion, not to mention sticker shock when you receive your post-trip bill or take that first look at your bank account balance. So plan ahead, have the time of your life, and know that you aren’t breaking the bank when doing so. Happy travels!
Photo Credit: countryvacationsandresorts.com