Skip to main content
TRAVEL

Spending while you’re abroad: What you need to know

What we'll cover

  • Foreign transaction fees and exchange rates

  • ATM withdrawal fees in other countries

  • Considering your financial options before you leave for your trip

When it comes to spending money abroad, how much will your trip actually cost you? Foreign transaction fees and exchange rates can eat up your costs and cause you to spend more money than you planned.

As you budget your overseas vacation, it's important to keep a few factors in mind, such as exchange rate, transaction fees, currency at which you're billed and the costs of ATM withdrawals (yes, it might cost you more to take money out of your account!). You may also wonder about the best way to tackle overseas spending. Let's jump in so you end up smooth sailing on your vacation.

Look up the exchange rate

You know other countries have their own currencies, but will you remember to factor them in when you budget your vacation ? Look up the exchange rate before you leave, which will help you determine how much you'll spend on everyday items and activities like restaurants, museums, hotels, public transportation and more.

Start by going to an online currency converter and get the exchange rate between the U.S. dollar and the currency of the country you plan to visit. You can practice "translating" the cost of items while you're still at home. For example, you may say to yourself, "This pizza will cost me $X when I'm on my trip."

Know if your credit card has foreign transaction fees 

Many credit cards will add a transaction fee, also called a foreign transaction fee, for every transaction that occurs outside the U.S. Fees vary depending on your credit card company or bank. 

You will typically pay between 1% and 5% of the purchase price of items, though some cards do not charge a fee. If you're on the hunt for a new credit card, read the fine print and find out which cards charge international fees.

Currency at which you are billed 

When paying by credit, always ask merchants to bill you at the local currency. If the merchant chooses to bill you in dollars instead, he could conceivably choose any exchange rate he wants. Your credit card issuer, on the other hand, will stick with the official exchange rate.

When charged in U.S. currency, an intermediary charges an exchange rate that’s not as good as what your card issuer might give you. 

Local currency charges can save you a lot of money, particularly if you make a big purchase like a hotel room or rental car.

ATM withdrawal fees 

It’s smart to have local currency on hand when visiting other countries, since not all merchants accept credit cards or American dollars. 

However, when you withdraw cash from ATMs overseas, you’ll most likely have to pay withdrawal fees. Many ATMs charge foreign transaction fees, dynamic currency conversions, exchange rate margins, bank charges and/or ATM network fees, which typically cost between 1% to 3% of the purchase amount.

Keep in mind that Ally Bank only charges a fee of up to 1% of the transaction amount for the currency conversion and/or cross border transactions.

When traveling overseas, it's smart to have several payment methods available to you when spending abroad.

Consider overseas debit and credit cards

Before you travel, you can get foreign currency from your bank or currency exchange, particularly in the airports of the locations where you visit. Keep in mind that you will usually pay transaction fees, delivery fees and an exchange rate margin to a bank. Here’s a breakdown of what each means: 

  • Transaction fees come from currency conversions.

  • Delivery fees are delivery surcharges the bank charges to have the foreign cash you ordered delivered to your home. 

  • Exchange rate margin is the difference between the bid price of the foreign currency and the ask price you pay. 

You may consider waiting until you get to the country you plan to visit to get cash, but avoid the airport kiosk and head for an ATM instead. Airport kiosks typically won't give you as favorable an exchange rate compared to your local bank.  

Credit cards

Some credit cards may charge a fee on every purchase you make outside the U.S., but you can also find credit cards that have no foreign transaction fees. Some $0 annual fee cards also charge no foreign transaction fees.

Foreign transaction fees typically show up on your billing statement as separate charges. Read the fine print before you choose a card.

Debit cards

You may have heard different opinions on whether you should take a debit card with you overseas (for safety reasons in particular) but it may make the most sense for your situation, especially when you need to access cash. 

Call your bank or credit union to make sure they know you will go overseas with your debit card and make sure your PIN will work overseas. (Five-digit PINs might not work!)

Try not to take out cash at night and keep your PIN memorized, never written down. Also make sure you have enough money in your bank account to carry you overseas. You don't want to run out of money during your trip! 

Consider all options before you depart

When traveling overseas, it's smart to have several payment methods available to you when spending abroad. Consider blending several payment options, such as carrying cash with you and having prepaid and credit cards along with you as well.

Plan for the unthinkable by taking photos of your debit or credit cards. If you lose your debit or credit card, call your financial institution right away. Losing one card or another doesn't have to mean that you lose all access to your cash. 

Explore more

Save Spend Security

Read next

Money solutions and strategies sent straight to your inbox.

Tips and tools to help you build your best financial future.

Let's Connect