This is a guest article written by Odysseas Papadimitriou, the founder and CEO of Card Hub, an online marketplace for discounted gift cards and the best credit card deals.
For many people, especially recent college grads, backpacking through Europe is a rite of passage. It’s a time to see the world, to enjoy a life devoid of obligation and to come of age. However, despite all the freedom and growth such a trip can inspire, one of the lasting takeaways is often the impact it has on one’s finances. In fact, this is true whether you’re backpacking or staying in five star hotels, whether your degree is hot off the presses or you have an established career. Foreign travel is unfortunately quite expensive, and if you don’t take a few simple precautions before embarking, it will be even more costly than it truly has to be.
The first thing anyone traveling abroad needs to do is make sure they have debit cards and credit cards with no foreign fees. While such spending vehicles will certainly prove beneficial abroad given that they largely mitigate the hassle of exchanging currency and the threat of pickpockets, you must make sure to get them before even booking a plane ticket, making hostel or hotel accommodations or arranging day trips. According to the Pew Charitable Trusts, 91% of bank cards have fees around 3% for any purchase processed overseas. Thus, these fees could very well be applied to purchases made through foreign companies, even if you are in the U.S. when you make them.
Next, and still prior to departure, make sure to notify your card issuer of your travel plans. This both decreases the likelihood that your card will be suspended due to suspicious activity and gives you a chance to ask for a number you can call for free from abroad should you experience any difficulties. After all, the last thing you want is to be stranded in a foreign city, much less a hostel, with a suspended credit card.
This is also one of the primary reasons to bring a debit card that allows you to get cash from an ATM at no extra charge. Besides, cash always comes in handy given that not every store accepts credit cards, particularly in less-developed countries. Even within the European Union, recent regulations have paved the way for restrictions on magnetic stripe credit cards, like the ones used in America, due to security concerns. While having your passport on you should alleviate any fraud concerns foreign merchants have as a result of your mag stripe card, it’s still a good idea to carry some cash.
So, once you have the proper debit card and credit card and you have crossed the “t’s” and dotted the “i’s” with your bank, all that’s left is to throw that pack on your back and hit the tarmac. However, the money-saving tips don’t stop here.
One very important thing to watch out for while abroad is dynamic currency conversion. This is when foreign merchants offer to convert the price of your purchase from the local currency to American dollars. While this might seem like a good idea, always decline this supposed service. Merchants typically use high conversion rates in converting purchase totals in order to make a profit off tourists who are understandably more comfortable with the dollar than they are with native currency. Therefore, all things considered, I think we’d all agree that brushing up on conversion rates or using your phone’s calculator is preferable to getting swindled.
Besides, you decided to travel abroad in order to learn about other cultures, so consider shopping to be part of this learning experience. As long as you use a credit card without foreign transaction fees, make sure to have a debit card that allows for ATM withdrawals abroad, and decline offers for dynamic currency conversion, your lasting memories of your trip can be about the sights you saw and the good times you had, not the toll it took on your bank account.