Cash may not always be the best bet for much of your spending when traveling internationally. Carrying a wallet full of cash can be risky—if your wallet is stolen or lost, the chances of getting your money back are slim.
Using your debit or credit cards can be the safest and most cost-effective way to pay worldwide. It may take some planning ahead, though, to avoid fees. Whether you pay with a debit card or use a credit card, plan ahead so you don't end up paying more than necessary.
Before you travel, be sure to call the toll-free number on the back of your card and let the card issuer know where you’re traveling and the dates for each stop. Doing so will reduce the chance of your transactions being flagged as unusual and possibly declined.
Paying with local currency
Taking money out of an ATM in a foreign country typically incurs a fee from both the local bank that owns the ATM and your bank at home. So, researching when and how you will be charged fees can pay off. That's because some debit card providers don't charge fees for using foreign ATMs—and a few may even reimburse fees charged by the foreign bank. Planning withdrawals in advance can help you minimize any fees that could be charged.
"Try to plan your total local currency needs and withdraw the funds from an ATM in as few transactions as possible, so you reduce the foreign bank servicing fees," says Stefan Ross,VP, Credit Card Products at Fidelity.
Explore card benefits
Review the benefits on your current cards or any new ones you apply for, to see if they include:
- Extended warranty services for the first 90 days from the date of purchase
- Travel and emergency assistance
- Worldwide travel accident insurance
- Auto rental collision damage waiver
Credit card advantages
Credit cards come with some advantages when traveling—you're protected against unauthorized charges by federal law in case your card is lost or stolen. The law limits your liability to $50 but many credit card issuers offer zero-liability protection. Plus, purchases made with a credit card typically get a much better exchange rate than you can get from a currency exchange vendor or ATM. Depending on the policies and features of your credit card, you may also pay a fee for the currency conversion. Credit card networks charge the fee to your bank and the cost is generally added to your purchase. Some credit card issuers will pay the currency conversion fee for you, so you may want to shop around for a new credit card before your trip.
There's another fee to look out for as well: the foreign transaction fee on purchases. The fee can be up to 3% of each purchase.* That can add up. If you could shop around ahead of time for a new card that offers a low foreign transaction fee (1%, for example) plus cash back rewards, you could potentially come out ahead.
Chip-and-PIN cards have been used in Europe and many Asian countries for years, but they have just started to be widely used in the US. When you use your chip-embedded card, the chip generates a one-time code that is virtually impossible to counterfeit, so it helps to reduce fraud—and it's pretty much required if you plan to use your card while traveling.
"In Europe, bus or train ticket machines, gas pumps, and vending machines only accept chip cards because it's so much better at preventing fraud," Ross notes. "If your card doesn't have a chip, call the number on the back of your card to request a card with chip technology."
Next steps to consider
Spending on your card can put money in your Fidelity account.
This account helps you save money in ways that a traditional bank can't.
Learn how to use credit cards safely and maximize their benefits.