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Jenny and Charlie's International Travel Tips

Cash or Credit? Using money around the world

Cash or Credit?

There are as many ways of taking money to a foreign country as there are people who have opinions. Let me try to summarize...

• Convert money to the foreign currency before departure. This is inconvenient, and generally gives a terrible exchange rate, since few local banks make a business of dealing in international currency.
• Travelers checks. This technology is obsolete - I have seen signs in tourist areas like "We will no longer accept travelers checks after October 2003" (a long time ago), or 10% service fee for payment made by travelers checks.
• Convert US currency to local currency at a money exchanger in the destination country. The cambio (or whatever they are called in that country) exists either by charging a transaction fee or by giving a poor exchange rate. (You can quickly see how bad the exchange rate is by looking at the difference between the buy and sell prices.) Further, the one time I was a pick pocket victim was shortly after leaving a cambio. They knew I had significant local cash, and I had not gotten undressed to bury it in a hidden money pouch.
• Some travel consultants recommend primarily using cash for local purchases. They recommend withdrawing relatively large amounts of local currency from bank-based ATMs (large amounts to minimize transaction fees that are often $2 to $5, but may be absorbed by your home bank). Independent ATMs with names like Travelex, Cardpoint, Moneybox, Cashzone, etc. have higher fees or worse exchange rates than most bank machines, but are often located near bank ATMs to attract the tourists.
• In many countries you can use Master Card or Visa credit cards much like in the United States. In most countries the signs at the entrance are far smaller than in the United States. Another indicator: look for a keypad next to the cashier (user-entered PIN numbers are almost universal outside of the United States). American Express cards are less widely accepted, and Diner's Club and Discover cards are practically unknown. However, since I use credit cards for most purchases at home, I like to use them abroad as well, and have reported (in the city/country section) on my success in various countries. The bank exchange rate is competitive (excellent), but the foreign transaction fee is typically 1-5%. Two of my credit cards were chosen in part because their foreign transaction fee is zero.
• Some foreign countries use American dollars routinely - even optionally dispensing dollars in their ATMx. I have spent multiple days in several countries without getting any local currency, using US Dollars and credit cards.
• Even if you plan to use credit cards, you will probably need some cash. In general I recommend picking up the equivalent of about US$100 from a bank ATM in the airport. (If you forgot to figure how much you will need in local currency, pick the middle amount that the ATM suggests.) That will cover most circumstances where a credit card doesn't work. When checking out of the hotel, normally I can pay the hotel bill with whatever cash I have left, with the balance on my credit card.
• Debit cards can be used similar to credit cards, but I do not recommend it for use other than at bank ATMs. The debit card is a direct access to your bank account. If there is a problem with card abuse, it is less risky and far easier to resolve in your favor with a credit card than with a debit card.

Getting Cash: Obtain your local currency from a bank-based ATM upon arrival. Every airport we have been at for decades (except Milan Italy) has had numerous international bank-based ATMs, often with no extra fee (like the ATM Charges in the United States when you use another bank's machine). Beware of commercial (rather than bank based ATMs) such as Western Union and Travelex. They sometimes offer you an exchange rate, and warn you about what the evil banks may charge - in every case I have encountered the evil banks were far better. Milan apparently contracted with one of the commercial exchanges - ALL the ATMs in that airport were Euronet and gave a terrible exchange rate (12% surcharge) in addition to a high (€3.95) service charge.

Every ATM we have used accepts magnetic stripe cards, even in countries where chips are required in credit cards. These machines dispense local currency, and occasionally also dispense a second currency such as US dollars, Euros, or the currency of another nearby country. ATMs often dispense large denomination notes - you want 10,000 of whatever they use, and are likely to receive five 2,000 whatever notes. If you ask for 9,800 rather than 10,000 you may get some smaller notes (or your request may be rejected - try again).

Do not routinely carry extra dollars (other than a few $1.00 bills to use as tips if you are out of local money) - your bank cards are better.

The amount of cash you will need depends on the country. In Europe there are bank ATMs on practically every block with good exchange rates and minimal or no transaction fees, but in some countries you have to look farther. (In Japan most business is cash rather than with credit cards, and common ATMs are domestic rather than international machines; go to a 7-Eleven for an international ATM.) In China the many ATMs in Hotels are domestic only, but most of the ATMs on the street are international.

Let your bank know

Be sure to let your bank know your travel plans... dates and countries. If a number of foreign transactions come through, on either your debit (ATM) or credit cards, your account may be frozen because of fear of fraud. Of course, the banking hours at the other side of the world and not convenient from where you are, and it may take a lot of time and effort to get things unlocked, if they are inadvertently frozen!

If you travel a lot, consider getting separate debit and credit cards from two completely different banks or credit unions, so if one bank cuts you off (perhaps by accident), you are not left "empty."

Credit Cards

ALWAYS have the credit cards charge in the local currency, NEVER allow them to convert the charge to dollars "for your convenience." Some hotel clerks are taught that changing to dollars is to the customer's advantage so push that option - it is not. Your bank offers the best exchange rate, and has the same international transaction fee whether the transaction originated in dollars or local currency. On a recent trip they confessed that they added 4% to convert to dollars, in addition to using their private (non-competitive) exchange rate. An exception from Chile - The 19% hotel tax is not charged if you pay your hotel bill in Dollars, even on your credit card.

If you are looking for a new credit card, I suggest you review the site by Ben "Lucky" Schlappig, a professional traveler (focused on the travel, rather than the destination.) He has a section that he keeps up to date with the current 10 Best Card offers. Before you look, decide if you will be paying off the card each month (interest rates don't matter), if you are willing to limit how you "spend" your rewards (travel usually pays better than cash, but sometimes you have to "buy" your travel in an inconvenient way), and the foreign transaction fee (0-5% added by the bank on foreign transactions). Many people change cards regularly just to collect the sign-up bonus.

What's with the Chip and Pin? In most countries you insert the credit card in their machine, chip end first (and leave it there). This is the same chip that is just emerging in the United States. In most restaurants a wireless hand held machine is brought to you, with keyboard, display, and printer, so the waiter never disappears with your card. In some restaurants you have the option to key in a tip if you wish (sometimes a choice of amount or percent), in some countries you just enter the total amount with tip. You then enter your pin number. When the machine is done with your card it will display a message to remove it; sometimes the machine is even smart enough to recognize that you want instructions in English, but if not, the cashier or waiter will help you.

Proximity cards (hold it near the machine instead of inserting the chip or swiping the magnetic strip) are becoming more common. In one country the waitress did not know you had to insert the chip, not just hold it near her machine. Your smart phone can be set up to function as a proximity card.

The waiter in the United States will likely disappear with your credit card in a restaurant. This is routinely accepted in the United States; not nearly as safe or smart as the portable machines that allow you to control your card in most parts of the world.

For unknown reasons, most US banks are issuing chip and signature cards, many without a PIN number (unless you specifically ask for a PIN) - the machine prints out a receipt for you to sign, but many European waiters or businesses don't know how to handle that signed piece of paper. If you are at an unattended gas pump, parking lot, or ticket vending machine, it may ask you for your PIN, even though you cannot use it for routine transactions - so if you don't have a PIN to go with your chip and signature card, good luck. Be sure to arrange a PIN with your bank before you leave home.

We encountered an another issue in Poland in late 2015 - McDonald's has a large computer touch screen with pictures and multiple languages where you enter your order and pay by credit card. As soon as the system recognizes that your card expects a signature rather than a PIN (even if you have a PIN for that card), it cancels your order and sends you to a "regular" cashier line where the employees are not motivated to be skilled in English, and no longer have the picture-only menus for foreigners. In 2016 in Amsterdam we tried again, and McDonald's machine accepted the PIN we have for our Chip and Signature card, as they have in many other countries since. Bravo!

Visa and Master Card require merchants to support both chip and magnetic stripe, but it amazing how often the magnetic stripe reader is mysteriously out of order.

If you take a taxi to your hotel, pay the taxi directly if you can, even if they offer to have it put on your hotel bill (you don't want to add the local hotel tax to the taxi fare).

Before Chip and Pin cards became common in the United States, I opened an account with Andrews Federal Credit Union. They provided a chip, signature, and pin, debit and credit cards before it was common in the United States, and do not have a foreign transaction fee. They do not credit the foreign ATM fees (but few banks do any more). I no longer think this is necessary, but if you are having trouble getting a chip card, they can help. I also deposited far more than the minimum amount to have an account there, so I would be considered a premium customer.

Working Abroad

My advice is oriented to the tourist, but I was approached by "Bankrate" to link to their page "Working Abroad: How to prepare your finances." Their page looks like good advice (except they recommend traveler's checks, which I consider a dead technology). I have not dealt with them, so this is not a comment (pro or con) on their services. I would add that you should consider getting a local credit card if you will be in country long... some things, often telephone related, cannot be charged to a "foreign" card (your home credit card).

City by City

Our experiences using credit cards in each country/city are in the city guides.

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