When booking a holiday, most of us will invest a huge amount of time and energy in making sure that we get a great deal on every aspect of our trip, from the flights to our hotel room.
After putting such thought into budgeting your holiday, the last thing you need is to return home to find you’ve incurred unexpected credit card charges, especially as, if you know how, credit cards can provide you with an easy and affordable way to spend money overseas. Follow these tips to ensure you make the most of your cash during your trip.
Get Yourself a Card Intended for Use Abroad
Most cards will charge you a transaction fee of around 3% for using your card while in a foreign country. However, you can avoid such charges by applying for a card that has no foreign exchange rate fees. If you prefer to work with cash (which, let’s face it, is very useful for keeping track of just how much you’re spending) you can also find cards that won’t charge you for withdrawing from an ATM while on vacation, otherwise, doing so could be very costly (as we’ll see down the article.)
If you are heading off with the specific intention of going on something of a shopping bonanza, then you should seek out a card that, for an introductory period, will offer you 0% interest on purchases made over seas.
Avoid Cash Withdrawals
Unless, as discussed above, you manage to get your hands on a card that doesn’t charge you to use an ATM while in another country, taking out cash can be an expensive businesses. For starters, you’ll probably be hit with an exchange rate fee, then, to add insult to injury, you’ll start incurring interest on the money as soon as the notes are issued from the machine and, unlike other transactions, you can’t avoid paying this interest, even if you clear your balance at the end of the month.
Use Local Currency
When paying for products on your card, you might be given the option of paying in your own currency, rather than that of the nation you are visiting. You may even find that the proprietors of certain businesses seem overly keen for you to opt to pay in your own currency when using your card.
This is because, if you do so, they’ll be able to charge their own exchange rate. This will almost certainly be higher than your bank’s rate and provides many retailers with some handsome additional profits. You should always be given the option to pay using their currency when using a credit card, and you should take it.
Susan Blake is a writer who with a passion for helping her readers make informed decision when it comes to their personal finance choices.
Hi, I’m Cathy! I’m a former career-driven professional turned stay-at-home mom. Living on one salary has its challenges, but it is possible to live the good life while spending less. Cool to be Frugal is all about how we’re thriving, not just surviving, on a single income.
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Although I use a credit card almost exclusively overseas, I use my ATM to change currency. I make sure the bank is a correspondent bank of my bank and I do not pay fees. It is the least expensive way to get local currency at a good rate of exchange.
I’ve been looking at the Charles Schwab card that has no foreign transaction fee on the recommendation of my brother. Thanks for the advice.