How do I avoid fees when using money abroad?

Spending abroad has several avoidable costs stacked on top of each other: foreign transaction fees, ATM charges, poor exchange rates, and a specific trap at the payment terminal called dynamic currency conversion.

What you'll need

• A card that suits travel (optional)
• Your bank's fee schedule (optional)

Step by step

1. Always pay in the local currency.When a terminal asks whether to charge in your home currency, decline. That is dynamic currency conversion and the rate is consistently poor — typically several per cent worse.
2. Check your card's foreign transaction fee before travelling.Some cards charge nothing; others add around 3% to every purchase. It is worth knowing before you rely on a card for two weeks.
3. Consider a dedicated travel card.Several providers offer cards with no foreign transaction fee and near-market exchange rates. For a longer trip the saving is substantial.
4. Use ATMs sparingly and withdraw larger amounts.Withdrawal fees are often fixed, so several small withdrawals cost far more than one larger one. Watch for the machine's own charge, which is separate.
5. Avoid airport exchange bureaux.They have the worst rates of any option, by a wide margin. If you need cash on arrival, an ATM is almost always better.
6. Tell your bank you are travelling if required.Many banks no longer need this, but a card blocked for suspected fraud in another country is a serious inconvenience.
7. Carry two cards from different providers.Kept separately. If one is lost, blocked or not accepted, you are not stranded. This is the single most useful travel money precaution.
8. Check whether credit card purchases still carry protection abroad.In many countries statutory purchase protection applies to overseas purchases too, which matters for expensive bookings.

Tips

• Take a small amount of local cash for arrival — transport and small purchases sometimes need it — but do not exchange large sums in advance.
• Some countries are effectively cashless and others are heavily cash-based. Check before assuming your card will work everywhere.
• Note the emergency number for your card provider separately from your phone, in case the phone is what goes missing.

Common mistakes

• Accepting payment in your home currency at the terminal — That is dynamic currency conversion, and the exchange rate applied is consistently several per cent worse than your bank's.
• Making many small ATM withdrawals — Fixed withdrawal fees mean several small withdrawals cost far more than one larger one.
• Carrying only one card — A blocked, lost or unaccepted card leaves you with no way to pay. Two cards from different providers, kept separately, solves it.

Questions people ask