Key takeaways
- Using credit cards for purchases and using ATMs to get local currency are the best options when abroad.
- Avoiding cash as much as possible won’t saddle you with extra unspent currency when you leave a country.
- If you don’t travel often, notify your card issuers before a trip abroad so that the unusual transactions don’t trigger a fraud alert that might freeze your account.
International networking of ATMs through MasterCard and Visa and the advent of smartphones have made paying for things abroad easier than ever. Smartphone apps, for instance, can do currency conversions for you and locate the nearest ATM that takes your card.
Using credit cards for purchases when possible and using ATMs to get local currency for when you need to pay cash are by far the best ways to pay for things when abroad because you will get the wholesale exchange rate rather than the less favorable retail rate posted in currency exchange facilities or at bank teller windows.
“I pay as much as I can with credit cards,” says Nicholas Kralev, founder of Kralev International, a travel advisory firm. “There are countries where I never use cash money.”
Kralev finds the extra fees entailed in ATM use—you pay fees to your bank and to the bank where you draw the money, as well as a separate fee for using your card abroad—add up to more than the percentage commission charged on credit card purchases in a foreign currency. In addition, he says, the exchange rate used in the credit card purchases is somehow “more wholesale” than that used for ATM withdrawals.
So this expert recommends using credit cards where possible, even for smaller transactions. That said, ATMs are the best way to get the cash you need.
Analysis
Purchasing while abroad is a subject that always seems to be more complicated than it needs to be. The advice that this article gives is to stick with credit cards as much as possible, and use local ATMs to obtain foreign currency so you’re not stuck with unusable cash once you make it back to the US. It’s pretty much the same advice I was given when I studied abroad this summer, except I ran into the issue of my credit card not being accepted in every location, and I was out of euros before I knew it. ATM exchange rates are supposedly better abroad, so this article advises travelers to wait to exchange any money until they’ve reached their destination, even if it is a bit stressful to go in without any safety cash. My biggest takeaway from this article is that the process to obtain foreign currency has lots of speed bumps, obstacles that make the overall travel experience more complicated than it should be. There are tons of ways to obtain foreign currency, but it’s on the customers to determine which is the best and most economical one for them. The system isn’t set up to be quick and easy – not yet.
Source
NEA Member Benefits. (2020, August 31). The best ways to pay when you’re abroad. NEA Member Benefits. https://www.neamb.com/travel-and-vacations/the-best-ways-to-pay-when-youre-abroad#:~:text=Using%20credit%20cards%20for%20purchases,when%20you%20leave%20a%20country.
