Paying for things overseas, while seemingly simple can often become expensive and frustrating when you return home and realize the price you paid was not actually the price you paid. Banks are in the business of making money. Some make more than others but all banks charge fees for their services and these fees can add up fast. Here are a few money-saving tips that can save you a mountain of headaches and a sea of frustration. Take it from me, I know.
1.) Always pay in the local currency.
If you are using an credit card or debit card (not recommended) pay in the local currency. If you are in Japan, pay in Yen. If in Poland, pay in Zloty. If you are in most of Europe, choose Euro. Most merchant payment systems will give you the option to pay in either “your currency” or the “local currency”. ALWAYS PAY IN THE LOCAL CURRENCY! Merchant systems will give you the option to pay in either one but it’s only an estimate. If you pay in “your currency”, your bank will not only charge you for the conversion but they will also charge a “foreign transaction fee” in addition to the original price. It may only be 3-5% but on a large purchase or as purchases accumulate, the cost becomes significant. Please heed this warning.
2.) If at all possible, do not use debit cards.
Different banks charge different fees for using debit cards. It is entirely possible that the bank overseas will charge you a fee for using their system as will your domestic bank. In addition, you will incur “foreign transaction fees” and possibly a very poor exchange rate. Furthermore, your ability to dispute the charge or try to get a credit is significantly reduced when using a debit card as the funds are immediately transferred from your account and the laws for debit cards and different than the laws protecting consumers using credit cards. Also, if you happen to get you debit card “skimmed” (it’s a big problem in Eastern Europe especially), you are seriously out of luck. They chances of you gettting your money back is essentially zero while you will be 100% liability free should it happen on your credit card.
3.) It’s much better to get cash at an ATM than to use your debit card.
In this day and age many large National and International banks are part of groups and have international partners and affiliates. For instance, I use Citibank in the USA and they are affiliated with Deutsche Bank in Germany so I can get cash in Germany without charges and without limit from my American account. No transaction fees. Again, these fees can vary significantly as can the exchange rate your withdrawal is based on. I always call my bank prior to leaving the US and ask them to temporarily remove the “daily limit” on cash withdrawals or at least significantly increase it so I can withdraw what I need without problem.
Photograph: Dan Chung Dan Chung /Guardian