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The Basics of Money Overseas

It’s easy to forget that after you’ve picked your flights and chosen your hotels, you still need a way to pay for things overseas. This post covers the basics of money overseas, including getting cash and what credit cards to use.

Cash Is (Sort of) King

When I first wrote this post almost a decade ago, I strongly felt cash was King. Well, things have changed a bit and while I think cash is still important to have, there are some caveats.

There have been trips that go by where I use almost no cash. Certainly I’ve finished trips with way more cash left in my pockets than I expected, having used it only for a few small tips. Credit cards are nearly ubiquitous these days. Indeed, since COVID there are many restaurants and attractions that are actually card only, where you won’t be able to use cash.

All that said, you should have a plan for acquiring at least a small amount of cash during any trip abroad. I’d say probably $50 worth is the minimum I plan for (my plan is usually just to use a Schwab debit card, more on that below).

The reason is that while you might never need cash if everything goes smoothly, you will be desperate for it if things don’t go smoothly. Even in the most tech-forward locations, credit cards can get declined for no good reason.

A few weeks ago we were in Philadelphia (not even abroad!) and it took three credit cards before a transit booth gave us a train ticket. This was a one-off, we had no problems at other stations or anywhere else on the trip, but this was also the only ticket machine at a station basically in the middle of a highway. Had the third card failed, we luckily had cash (a byproduct of moving to New York City, where “Cash Only” is more common than one might expect).

Relatedly, the places that only take cash in the world are often the places you’re most desperate for some essential, like food or water. In the middle of a big city you can probably just go next door for a bite if a restaurant doesn’t take card. But in the middle of a long hike, the stand that takes cash only because there’s no reception might be the only place to get water for miles.

Finally, you’ll often want cash for tips. Even in cultures where tipping in restaurants is uncommon, it might still be appropriate to tip hotel staff, for example.

Here are four ways to make sure you have cash abroad.

Option 1: Contact Your Bank or a Currency Exchange Ahead of Time

You might be most comfortable resolving your cash issues from the comfort of your own country. While you’re in the United States, you’ll have access to a variety of services that can turn USD into other currencies.

Your bank will usually be one of them, and local currency exchanges are another. We recommend contacting different options and comparing the rates they’re offering. Make sure you ask about any fees that are included. This is the best way to make sure you have cash in your pocket before you leave. Just don’t take more than $10,000, or you’ll have to declare it and get asked a few questions at Customs.

Option 2: Change Cash Abroad

Rates for changing USD into local currency will usually be better abroad than in the US with one BIG exception: airports. Airports will always have crazy rates because they’re catching desperate travelers who need local currency. This is a problem if you arrive without cash and need it to catch a cab, for example. This is typically our backup plan, and in 20+ countries we’ve only had to use it once so far, at Pudong International Airport in Shanghai.

Option 3: Plan to Use Your ATM Card Overseas

Most bank ATM cards can be used overseas. Our Chase ATM card, for example, is part of worldwide ATM networks, and we could use it in most any country we visit. The problem? HUGE fees. Many people don’t realize you are usually subject to three fees for using your bank ATM card at a foreign ATM:

  1. A fee from your bank for using an outside ATM
  2. A fee from the ATM, for their services
  3. A foreign exchange fee from your bank for converting USD to another currency

These fees really add up, which is why we don’t recommend this option unless your ATM card happens to be what we mention in Option 4…

Option 4: The Schwab Debit Card

Our top choice for getting cash overseas is our Schwab debit card associated with our Schwab Bank High Yield Investor Checking account. Schwab is a bank with very few physical locations and even fewer ATMs. To make up for this lack of ATMs, they do not charge you a fee for using outside ATMs, AND they refund all the fees that other ATMs charge you for using them! Finally, they don’t charge foreign transaction fees!

We’ve used this card in over 20 countries and only had problems in one country, China. After some hiccups, we were able to find a bank that worked consistently for us in China (ICBC). Other than that, we haven’t had any issues with this option, and Schwab always refunds our ATM fees at the end of the month.

Use Credit Cards Without Foreign Transaction Fees

Visa and MasterCard are the most globally accepted credit cards. It’s not enough just to have a Visa card, though. You’ll want to make sure it’s a card without foreign transaction fees. Some locations will ask you whether you want to pay in USD or local currency (discussed below). Most will simply charge your card in the local currency. If your card charges a foreign transaction fee, you’ll have to pay usually about 3%. Cards without foreign transaction fees are widely available. We suggest the Chase Sapphire Preferred card, but NerdWallet has a list that includes cards without annual fees.

No Foreign Transaction Fees
Three of our favorite credit cards with no foreign transaction fees are Citi Prestige, Ritz Visa and Chase Sapphire Reserve

Charge In Local Currency, When It’s An Option

It is usually going to make sense to charge in the foreign currency if your card has no foreign transaction fees. If you’re unsure or want to confirm:

  1. Note the amount they would have charged in USD
  2. After the transaction, check your pending charge (your credit card website will display USD)
  3. Compare the amounts

If their USD amount is lower than what you paid, then that establishment has better exchange rates than your bank. This is rare, because establishments typically pay a fee to their bank for the privilege of taking USD, and they push that onto the consumer. In many cases, the bank doesn’t even offer the option, and a company that wants to take USD has to go to a third party which, of course, charges a fee.

Making sure you have access to money abroad is critical to any trip. With a little bit of advanced preparation, you can make this process cheap (possibly “free”) and easy. What other tips do you have when it comes to accessing your money abroad? Feel free to share in the comments below.