Do you ever come home from a nice vacation only to look at your credit card bill or your bank account and wonder where all your money went? Well I have news for you, your pocket may be getting picked leached by a little thing called “Foreign Transaction Fees”. I’m going to share the top 4 ways to avoid getting fleeced for these pesky little fees.
Fees on every purchase means that effectively you are paying an extra 3% on your whole trip and I don’t know about you but when’s the last time you spent under $1000 bucks on a vacation? If you are a frequent traveler then this starts to add up quickly.
Use these techniques often and you could find yourself saving as much as a one way ticket to another country…
Method 1: Travel Rewards Cards.
Not all rewards cards are created equal. Some offer no fees, some charge fees, but the real kicker is weather or not they offer no foreign transaction fees.
You can always call the card company and negotiate lower, or even no fees, or simply build your credit until you get 0% credit cards. Ultimately as long as you pay off your balance each month by the billing period you won’t incur any debt.
Really, the best way to save on foreign transaction fees is to find a card that doesn’t have them, or offers to waive them. Now some people would be tempted to spend more, and science actually proves that you do spend more on plastic than paper ( source); however, for sake of convenience (and assuming you have a well defined budget) then cards are the preferred method to finance travel.
I won’t dive deep into why cards are better than cash for travel in this article, but I will say that cards with no foreign transaction fees are just that much better.
Method 2: Debit Cards with No Foreign Fees
Most debit cards will not offer this; however, the one I use (and I’m not affiliated with) will. Opening a Schwab Brokerage account will get you… I deposit money in the account and then when I withdraw it I’m not charged any transaction fees.
In fact, all my ATM fees are actually refunded to me at the end of the month. So technically I am charged that, but with the added benefit that I can withdraw at any atm in the world.
Method 3: Just Bring cash
The simplest and easiest way of avoiding these pesky fees is to just withdraw a daily cash budget while traveling for short periods of time and to avoid using cards.
The only challenge behind this is that you will have to consider the exchange rates when you travel. The plus side is that some local restaurants and hostels may give you a cash rate instead of having to pay the card transaction fee.
Method 4: Open up a foreign bank account
This strategy works better when you are living somewhere for a longer period of time. A few days or weeks won’t work.
When I lived in Hong Kong we simply opened up a bank account with HSBC and since I had opened a HSBC bank account in the States before leaving the money easily transferred over to the HSBC account in Hong Kong. Check with your Local big brand bank and find out if they have a location in the country you choose to move to.
If you have any other thoughts on the subject or would like to offer advice on how else to avoid paying fees while traveling or to save more money on your trips please feel free to leave a comment or drop me a line in the “contact us” section.