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Every sovereign nation has a different name for the bills they print and coins they mint. Pesos. Dollars. Yuan. Yen. Euros. Baht. Shekels. Rubles. Rupees. There are numerous denominations, different faces and images, and various sizes and colors. Outside of their esthetic differences, they are all the same, just a means to trade for things that we need.
As travelers, we work in multiple currencies every day. All of our assets are based in US Dollars. We spend in the local currency. We still have a small collection of bills and coins left over from previous countries. How do we best manage this mix?
Even over the past 10 years the best tools for international money management have changed. Ordering traveler’s checks and getting foreign currency from your local bank are no longer good advice. With fees and worse exchange rates, both will cost you more than the alternatives
What are the most efficient and convenient tools for juggling these various currencies? How do we minimize fees and maximize value?
The ATM
Automated Teller Machines are the king of cash and they are everywhere. They are superior in every way to the currency exchange office, with lower or zero fees, better exchange rates, and are open 24/7.
When was the last time you had a good meal in an airport? The airport currency exchange office is the overpriced greasy airport sandwich of the finance world. You may eat one, but you will wish you didn’t later. Use the ATM.
Some banks charge additional fees for withdrawals on foreign ATMs, or they charge a fee for transactions on ATMs outside of their network. These are horrible practices, and banks that charge them should be mercilessly left on the side of the road. Change banks.
We do all of our primary banking through Fidelity, and not only do they not charge any of these fees, they reimburse ATM fees from other banks, foreign or domestic. Several other banks have similar practices, make an inquiry at yours.
We carry an ATM card for a second bank in case of emergencies.
Credit Cards
The Credit Card is the best friend of a traveler, and should be used for absolutely every possible transaction. Unlike cash, if it is lost or stolen it costs you nothing. Cash is always Plan B.
The credit card companies move a massive amount of money across international borders on a daily basis, and are therefore the most efficient at doing so. This gives you a better exchange rate, saving you money.
Some credit cards charge Foreign Transaction Fees of as much as 3% and/or have annual fees. These are also horrible insults, and these cards should be tossed in the trash.
There are many cards targeted at travelers, such as airlines’ Frequent Flyer cards, hotel rewards program cards, and travel point system cards. Many of them offer juicy sign-up deals and have annual fees waived for the first year. These may be good options if you want miles, hotel points, or travel points, and are willing to pay annual fees or switch to a new card every year. Many successfully juggle various credit cards in order to get all of these promotions, ourselves included.
We use multiple cards that generate hotel and airline points and/or provide cash back. This provides us with thousands of dollars of free travel.
We also carry a 2nd credit card for the times when the card companies, in their infinite wisdom, decides to deny a transaction because it doesn’t match our spending pattern. Fraud Alert! I’m sorry, your credit card has been declined.
My personal favorite example of this was on a business trip to Korea a few years ago. I had purchased a business class flight a few days earlier, and upon arriving at the hotel the same credit card was declined on check-in. This was taken care of quickly by calling the credit card company, where they explained it was declined because I was making an unusual transaction in a foreign country. This is interesting because my credit card statement showed the flight itinerary and traveler name in big bold letters. Apparently computers can’t understand that if somebody is buying a plane ticket that they may actually use it, but I digress.
Other Tools
- PayPal: PayPal is fantastic tool for getting money to anybody, fast. We have used it to send money to family in Taiwan, and to friends and family across the United States. There are fees related to currency conversion, but the ease of use of the tool and the infrequency of sending money abroad make it worth it. No other fees are involved, transfers in the US are free if for non-business purposes.
- Online bill-pay: We don’t have regular bills “back home”, but occasionally something comes up where we need to pay for something or send a check in the US. Our bank does this for free, even if it has to put something in the mail.
- Photo deposit: On occasion, a check shows up for us in the US. Many banks now allow remote deposit just by taking a picture of the check on a smartphone. Technology is great.
- Mail: we use Traveling Mailbox to process all of our mail. Junk mail is sorted out and everything else is scanned and can be read online. See our review.
In summary:
While on the road use a good credit card for all possible transactions, and cash from an ATM for all else. If only all things in life could be so simple.
Thanks to the spread of the ATM and modern credit cards, we can just focus on what’s important: Living The Good LifeTM, now with with zero fees, cash back, and free travel.
Editorial Note – Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
Recently took out the same card it is great, and when I hit the $1000 amount the $100 reward showed right in The rewards.
Hi Mark
You have to love free money. Capital One recently sent a notice changing their rewards policy, instead of 1.5% monthly and another 0.5% bonus annually, they just change it to a straight up 1.5% every month. That is way better in my view, I’d rather have the cash now
Except for a few strategic uses of other credit cards, notably cards that give you a lot of free frequent flier miles on various airlines, we use the Capital One card as our primary card
Cheers
Jeremy
Have you considered the Fidelity Amex with 2% cash rewards?
Hi Kuma. 2% is great. We used to have a Fidelity Visa card, back before the Amex option existed. It seems a lot of places outside the US don’t take Amex so currently we don’t carry one. The Starwood Preferred Guest Amex is also a great card. We were able to accumulate a ton of hotel points that we will use in Europe
Cheers
Jeremy
I travel a lot and have family around the globe and prefer transferwise over paypal. Much cheaper and very easy after the original set up.
I am not associated with this company just thought I share
Prost
Looks like a good service. I’ll have to give them a try if they start supporting Taiwan Dollars
Great information, I’ve had a substantial paradigm shift after reading through your story, particularly the tax portions.
Awesome! Thanks for sharing
It is pretty cool when it all starts to click
Hi! Thank you for providing all your great blogs as its been super helpful for restructuring our financial plan. My wife and I have been traveling for a year and we’ve been very happy with Schwab’s atm card. However, since I am always looking to refine my financial tools, I looked into Fidelity’s atm card last week and found that there are 1% in fees when used abroad. I don’t remember if its for the foreign currency conversion fee or for the foreign transaction fee or if its the same, but in any case Schwab might be worth looking into. Thanks for blog!
Hi Jonnie
There are 1% fees on the Fidelity card, charged by Visa as part of the currency conversion. It would make sense that the Schwab card is the same
Thanks
Jeremy
I’m not sure that’s the case — it seems like *only* charge the equivalent dollar amount. Take a look at http://www.schwab.com/public/file?cmsid=P-6425867&cv32 . It is available from http://www.schwab.com/public/schwab/banking_lending/checking_account , a main page on the site.
Yes, same as Fidelity
If they use Visa as a network for foreign exchange, which they probably do, then there is a 1% fee in the conversion
It doesn’t seem to be the same. Fidelity says : “Please note, there is a foreign transaction fee of one percent that is not waived, which will be included in the amount charged to your account.”
Schwab specifically says there is no foreign currency transaction fee: “If you use your debit card to withdraw foreign currency from an ATM or to pay for a purchase with foreign currency, we charge your account only for
the U.S. dollar equivalent of the transaction. There is no additional percentage added for the foreign currency transaction.”
Unless I’m not understanding verbiage, Schwab does not charge a foreign transaction currency fee; Fidelity does.
I’m on the same page as you from the text
But Fidelity doesn’t charge the fee, Visa does. You won’t find a fee anywhere on a Fidelity statement from a foreign ATM withdrawal. This was confirmed by the Mad Fientist via a phone call to Fidelity
Schwab may not be as forthcoming in their disclosure, but unless they have their own international currency system or they are absorbing the costs, there is a 1% load.
To close this out, a friend and I conducted an experiment.
In Dublin, we found a bank with 2 ATM machines adjacent to each other. He inserted a Schwab card into ATM1 at the same time I inserted my Fidelity card into ATM2.
We both withdrew 100 Euros at the same time.
In USD, the two transactions were equivalent.
Conclusion: Use either Fidelity or Schwab, whichever is better for you. Neither has an advantage over the other.
Transferwise is indeed a great way to send money. I hope they will offer more currencies soon. You could also have a look at Xoom or Paysera. They might be a good solution. I know that their processing fees are very low.
I agree with all the tips above. However have run into 2 situations where those tips dont always work.
I travel frequently to Japan (my wife is Japanese), and previously I used to casually go to the ATM and withdraw cash without fuss. In the last year or 2 the ATM’s no longer accept my cards. Same ATM machines as always but when i try and withdraw the computer does not allow it to happen. I have actually 3 different bank cards in my wallet and none of them work. I ended up having to borrow local Yen from relatives for the remainder of the trip as there was literally no way to get some spending cash? Almost all restaurants and shops etc accepted my American express and Visa, but having no cash for the train or taxi was challenging.
The other problem i had was a trip to Singapore. We rushed off the plane straight into a taxi with no cash as we saw the taxi accepted credit card. When we arrived at our destination the local credit card system was overloaded at 12 midnight, and we couldnt make payment for the taxi. We literally had to drive around for 20 minutes looking for an ATM that would accept our cards (at extra taxi expense of course). Really frustrating when you are tired after a long flight.
So to avoid the many opportunities to be stranded these days I simply get some money at the airport before i depart. and to not run out I usually get up to $500 even for just a week away. If i have any left over on the last day it is surprising and it can easily be spent on the last couple of meals or gifts on the way home.
When we were in Singapore, we mostly used Uber. It is great for getting from point A to B without needing cash. But if you are going to take a taxi from the airport, it is definitely a must to get cash before getting in the taxi.
When we were in Japan we didn’t have any problems with ATMs. Maybe we got lucky.
Hi Nathan,
That’s a really common problem in Japan – that often you can’t use foreign ATM cards.
The common work-around is use ATM’s at the 7-11s – they will accept almost all cards.
Hope this helps.
Japan: using the 7-11 ATMs is the most important thing to know about travelling in Japan. Without that, your list. I met an American who was on the verge of flying home early because he couldn’t get money. I may have saved his trip for him. The Post Office ATMs also accept foreign cards, but forget about the banks.
We travel to Mexico a fair amount and are thinking soon of looking for rentals there longer term (multiple months). Some of the rentals want cash. Seriously? They want us to go to an ATM multiple trips every month to sit there and pay ATM fees every day to get sufficient cash to pay the month’s rent? any tips here?
I just use the ATM, nbd. See other comments on this post re: Fidelity and Schwab ATM cards (no fees, fee reimbursement)
If you were born and raised in Mexico and had a rental property, what would you do differently?
When you did the scan of the check into your checking account, did you scan it from the PDF on the computer screen or did you scan it from a printed copy of the PDF? Thanks
computer screen
Wish I had noticed this yesterday. I just picked up a UPS box for 15 months. Many thanks.
Have you used their service for the entire duration since this posted in 2013? Has your opinion of the company changed at all over the years. Thanks.
Traveling Mailbox? Yeah, great service, still use it. If we do end up back in the US, I’ll continue to use it just for the zero junk mail benefit.
If one moves outside the U.S, how do you navigate the bank’s (i.e. Fidelity or other) regulations and restrictions that are in place for outside residents?
Also why don’t you have a local account in your foreign location and just wire money from fidelity to your local bank or do you just do the ATM withdrawals?
Which regulations and restrictions are you referring to?
We just do ATM withdrawals – cheaper than wire transfers. Details: The International ATM Bonanza
How do you manage your household budget now that you are back in the states?
basically the same