When traveling to well-developed destinations—think Portugal, France, Japan, or Australia—you’ll find that technology and infrastructure make paying for goods and services remarkably easy. In many cases, you can enjoy your entire trip without ever exchanging large amounts of cash.
I was reminded of this recently while planning my own trip to Portugal. As part of my preparation, I researched the most efficient, secure, and cost-effective ways to pay for expenses abroad. These strategies worked well for me, and I’m passing them along to help make your next international trip smoother and more cost-effective.
The way you pay can make a big difference in exchange rates, fees, and fraud protection. Here’s a practical guide to help you maximize value and minimize costs when spending abroad.
Credit Card – Your Primary Payment Method
Best for: Hotels, restaurants, major attractions, and most retail purchases.
Advantages:
- Competitive exchange rates—often better than ATMs or exchanging cash.
- Fraud protection and the ability to dispute charges.
- No foreign transaction fees if you use the right card
- Contactless and Apple Pay support for added convenience.
Considerations:
- May not be accepted at small markets, street vendors, or in rural areas.
- Beware of Dynamic Currency Conversion (DCC)*—always choose to pay in local currency (euros, yen, etc.), not USD. Selecting to pay in your home currency (USD) can add an additional 3-7% mark up.
Tip: Travel with a card that has no foreign transaction fees, chip technology, and contactless capability.
ATM Withdrawals – Best for Cash Needs
Best for: Small purchases, tips, transportation, and rural areas where cards are less common.
Advantages:
- Often provides a better exchange rate than purchasing foreign currency at home.
- Allows you to withdraw only what you need, limiting the risk of carrying large sums.
Considerations:
- Possible ATM fees from both the foreign bank and your U.S. bank.
- Daily withdrawal limits may apply.
Tip: Choose a bank that refunds ATM fees or has global partners
Ordering Currency from Your U.S. Bank – Useful for Day One
Best for: Having a small amount of local currency upon arrival for taxis, snacks, and immediate expenses.
Advantages:
- Provides peace of mind and immediate spending power upon landing.
- Avoids the need to find an ATM while managing luggage and jet lag.
Considerations:
- Generally the least favorable exchange rates.
- Additional service fees may apply.
Tip: Keep this amount small—use local ATMs for additional cash needs.
Debit Card for Purchases – A Good Back Up
Best for: Emergencies or situations where credit cards are not accepted.
Drawbacks:
- Lower fraud protection than credit cards.
- Direct withdrawal from your checking account.
- Possible foreign transaction fees.
In countries with modern payment systems, a strategically chosen credit card—supplemented with a small amount of cash—will provide the best combination of convenience, security, and value. You can avoid unnecessary fees and ensure your money is working for you, even while you’re on vacation. Bon Voyage!