Traveling abroad to new countries is rewarding and one of our favorite ways to continue to grow and try new things. The unique cultures and varied landscapes add a great appreciation for the vastness of the world as well as adding a new perspective on where you already live. One of the big considerations when traveling is to make sure you are prepared to make purchases while abroad. Just as at home there are multiple approaches to spending, we wanted to share what we have found that works well for us and some of the tips we have picked up along the way.
The first and generally easiest form of payment abroad is cash. We recommend carrying at least a small amount of local currency while traveling. It can be great for small purchases or roadside stands in less developed countries where cards may not be accepted. It also can give greater bargaining leverage when making purchases as it saves the seller the bank fees on cards. There are however a couple of considerations to how much cash to convert and carry when abroad. Cash in foreign currency can regularly be bulky.
On our last trip to Sri Lanka $400 USD converted to just shy of 130,000.00 rupees. The most common bills for transacting was 500’s, 1000’s, and 5,000’s . the small stack of bills exchanged ended up an envelope of bills to carry around. If trying to do all cash for hotels, purchases, and meals while there we would have needed a lot more and would have ended up with a mountain of bills to keep track of and carry with us.
There are many places where USD cash is accepted in country as well as the local currency but do keep in mind that a lot of times you may find the business’s will value it a bit less knowing they will have to pay to convert it upon deposit and your money may loose a little value if wanting them to do the conversion in store and be responsible for converting themselves.
Keep in mind that when converting currency there is also a fee for this. Generally, it is worked conversion rate when done at the airport or in country. For example in Sri Lanka the market rate was 328 rupees per 1 USD while the cash exchange rate was about 2% less as 323 rupees per $1. This is not a huge cost but does add up when exchanging large amounts of money. Also keep in mind that any unused cash will have to be exchanged back to USD and this is generally done at an even lower rate, I believe it was 320 rupees buy back to USD.
The other option for cash conversion is to buy through your bank at home prior to leaving. For most currencies it must be ordered through the bank and can take a week or two to be ready for pick up so plan ahead. Most major banks will base exchange off market rate and will then either add a fixed fee for the transaction, often $15 or $20 for the exchange or will base it as a percentage of the amount exchanged, 2-3%. Check with your bank before placing order to make sure you know the transaction cost before exchanging.
Credit and debit cards can also be used when traveling abroad to make purchases. We find that most of the world has mobile or wireless payment terminals and even at local markets and smaller shops cards are welcome. They can be a great way to pay when traveling as they are easy to carry. I recommend leaving your debit cards at home when traveling and sticking to credit cards due to the fraud protection they offer that debit cards do not. I do recommend making sure that the vendor will take cards when at local markets before making all your selections and being ready to check out if you only using cards. However, we have found that the majority of the time they are able to process cards but not all roadside stops are set up to do non cash transactions.
When paying with cards abroad there are just a couple of things to keep in mind. If you are someone who likes to haggle and try to get the price we have found cash is still king. In many countries all banking is done through one central country bank unlike the United States and as a result is a bit less competitive to customers. We have seen that transaction rates of 5%+ for card transactions on vendors is not uncommon and sellers are more willing to work deals if cash is being paid. Check your cards that are planning to be used abroad for foreign transaction fees. Most travel and business cards do not have any fees but some cards will have fees that is generally done as a fixed percentage or flat fee of a couple dollars per transaction. Again, this can quickly add up over the whole trip.
If you don’t have a card that waves transaction fees we recommend adding one to your wallet before you head off on your adventure. Most major banks offer many options. Most travel, airline and hotel cards will offer this feature. If your card does not charge foreign transaction fees we generally find this to be your best exchange value as major banks (Chase, Wells Fargo, Citi) base exchange off prime market rates and will be higher than the cash exchange rates. We have found that for us we like to do a combination of the above to give us the greatest flexibility and make our funds go the furthest so that we can do more with the money budgeted towards the trip.
Here is an example of what our general trip looks like and some tips we have found that keep money in your pocket. We convert a few hundred dollars into the local currency to carry when abroad. Think about the cost of food, how many souvenirs you plan to buy, etc. to determine how much you may need. Also, account for transportation costs, if renting a car (gas is expensive oversees) or taxis, etc. We aim to carry enough to not have to try and convert more cash during the trip while also not having leftover at the end of trip to exchange back. I will normally carry a couple hundred dollars in USD as well as a safety just to have in case of emergency. ATMs and getting access to bank accounts abroad is not always to easy depending on your destination and if you need more cash its much easier to have some on hand to convert. We use cash for the smaller purchases, local restaurants, and rides, while using a travel card for hotels and larger purchases.
One tip we have found is that when able, have places run the transaction in the local currency. Many large hotels and chains will offer the bill in USD and the local currency, and at both of our longer hotel stays, when checking the rate on the bill, we found that their USD charge was 5% higher than what we ended up paying in Rupees and letting our credit card provider convert at the prime rate. Again, this can add up over a couple weeks. As a whole, when abroad paying in the local currency, whether card or cash, will always be to your advantage. We have also found that at the end of our trip we will use up any remaining cash at our final hotel by applying it to the bill at check out. This keeps us from having to exchange back to USD and paying a second conversion fee on the same money.
However you choose to handle money when abroad we always recommend a little research prior to your trip, you can quickly find out if cards are widely accepted or if more cash may be needed for certain regions over others. There are many ways to handle spending while you embark on your adventures, hopefully these tips help you keep more of it in your pocket and allow your money to go further and fund more new experiences.
MC Exploring 