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foreign-currencyEvery 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?

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.