How to Use Money Abroad Without Losing It to Fees and Exchange Rates

The practical ways to carry and spend money when you travel

You have several ways to access your money abroad, and each one costs you differently. A debit card at an ATM usually costs less than exchanging cash at an airport. A credit card with no foreign transaction fee costs less than one that charges 3 percent on every purchase. Knowing which method works for your trip — and which combinations save the most — means the difference between spending an extra $50 and an extra $500.

The core trade-off is always the same: convenience versus cost. ATMs are everywhere and give you local currency at a real exchange rate, but your bank charges a fee per withdrawal. Credit cards are accepted almost everywhere in developed countries, but many charge a percentage on top of the exchange rate. Cash is accepted everywhere but loses value the moment you exchange it, and you cannot get it back if you lose it.

Key Takeaways

• ATM withdrawals usually offer the best exchange rate but come with a per-transaction fee from your bank, so one large withdrawal often costs less than several small ones.
• Credit cards with no foreign transaction fee are cheaper than those that charge 1 to 3 percent, but only if the merchant accepts cards and you can pay the full balance when you return.
• Airport currency exchanges and hotel desk exchanges charge the worst rates — sometimes 5 to 10 percent worse than an ATM — and should be your last resort.
• Prepaid travel cards and currency exchange services like Wise can work well for long trips or frequent travel, but require planning before you leave.
• Carrying some local cash is practical for taxis, tips, and small vendors, but exchanging large amounts before you travel wastes money on poor rates.

ATM withdrawals: the most reliable option for most travelers

Using an ATM abroad gives you the real exchange rate — the one banks actually use with each other — plus your bank's ATM fee. That fee is usually $2 to $5 per transaction, regardless of how much you withdraw. This makes one large withdrawal much cheaper than several small ones.

Before you travel, call your bank and tell them you will be using your debit card abroad. Many banks flag foreign transactions as fraud and freeze your card. Ask whether your bank has a network of partner banks in your destination country that waive the ATM fee — some do, and it saves money if you are staying in one place.

When you arrive, find an ATM at the airport or in a bank lobby rather than a convenience store or casino. Standalone ATMs in tourist areas often charge their own fee on top of your bank's fee, sometimes $3 to $5 more. A bank ATM charges only your bank's fee.

Credit cards: free if they have no foreign transaction fee, expensive if they do

A credit card with no foreign transaction fee is cheaper than paying cash or using an ATM if you can pay the full balance when you return home. The card charges you the real exchange rate with no markup. A card that charges 1, 2, or 3 percent on foreign purchases adds that percentage to every single transaction.

Check your card's terms before you travel. Many cards marketed to travelers explicitly state "no foreign transaction fees." Cards from banks like Schwab, Charles Schwab Bank, and some credit unions often have no fee. If your card charges a fee and you have time before your trip, opening a second card with no fee takes a few days and costs nothing.

Credit cards are accepted almost everywhere in cities and tourist areas in developed countries, but less reliably in rural areas, small towns, and developing countries. Restaurants and shops in Europe, Australia, and Japan accept cards almost universally. Markets, taxis, and small vendors in Southeast Asia, Central America, and Africa often do not. Plan to use both cards and cash depending on where you are.

Cash exchange: when to do it and where not to

Exchanging cash before you travel is convenient but expensive. Airport currency exchanges and hotel desks charge rates that are 5 to 10 percent worse than what an ATM gives you. If you exchange $1,000 at an airport desk instead of at an ATM, you might lose $50 to $100 just on the rate.

If you must exchange cash before you travel, do it at your bank a few days ahead. Banks usually offer better rates than airports and tourist areas, though still not as good as an ATM. Never exchange money at a hotel desk or a currency exchange kiosk in a tourist area unless you have no other option.

Carry only the cash you need for the first day or two — taxis from the airport, tips, and meals until you can reach an ATM. This limits your loss if your wallet is stolen and keeps you from exchanging more money than you will actually spend.

Prepaid travel cards and currency services for longer trips

Prepaid travel cards let you load money before you leave and use the card like a debit card abroad. They work well if you want to lock in an exchange rate before you travel or if you are nervous about carrying a debit card. The downside is that most charge a fee to load money and another fee per ATM withdrawal, which adds up if you withdraw many times.

Currency exchange services like Wise (formerly TransferWise) let you transfer money to a local bank account in your destination country before you arrive. You get a real exchange rate and can withdraw cash from a local ATM with no additional fee. This works well for trips longer than two weeks or if you are relocating temporarily, but requires planning a few days ahead.

Compare the total cost: a prepaid card with a $5 load fee and $2 per withdrawal costs $9 for one withdrawal. An ATM with a $3 bank fee costs $3. For a two-week trip where you withdraw twice, the prepaid card costs $9 and the ATM costs $6. The math changes if you are staying three months and withdrawing many times.

Protecting yourself from theft and fraud while traveling

Carry your debit card and credit card separately. If one is stolen or lost, you still have the other. Keep one in your main wallet and one in a money belt or hotel safe.

Use ATMs inside banks or in busy, well-lit areas. ATMs in dark alleys or convenience stores in tourist areas are targets for skimming devices that steal card information. If an ATM looks damaged or loose, do not use it.

Check your bank and credit card statements online while you are traveling, not just when you return. Many banks let you set up alerts for transactions over a certain amount. If you see a charge you did not make, call your bank immediately — you have more protection if you report fraud quickly.

Tell your bank and credit card company your travel dates and destinations before you leave. This prevents them from freezing your card when they see a charge from another country. If you forget and your card is frozen, you can usually unfreeze it by calling the number on the back of the card.

Comparing costs for a typical week-long trip

Assume you need $1,500 in local currency for a week in a country where the ATM fee is $3 and your credit card has no foreign transaction fee.

Option 1: One ATM withdrawal plus credit card for most purchases. You withdraw $1,500 at an ATM ($3 fee). You spend $1,200 on a credit card (no fee). Total cost: $3.

Option 2: Exchange $1,500 cash at the airport. You exchange $1,500 at a rate 7 percent worse than the real rate. You lose $105. Total cost: $105.

Option 3: Three ATM withdrawals of $500 each. You withdraw $500 three times ($3 per withdrawal). Total cost: $9.

Option 1 is cheapest. Option 2 costs 35 times more. Option 3 costs three times more than Option 1, which is why one large withdrawal beats several small ones.

Frequently Asked Questions

What should I do if my card is declined abroad?

Call your bank immediately using the number on the back of your card. Many declines happen because the bank flagged the transaction as fraud, even though you told them you were traveling. The bank can unfreeze your card over the phone in a few minutes. If you cannot reach your bank, ask a merchant if they can try the transaction again — sometimes a second attempt goes through.

Is it safe to use ATMs in developing countries?

ATMs in banks and busy areas are generally safe. Avoid ATMs in dark or isolated locations, and do not use one if it looks damaged or has loose parts. Skimming devices are rare but possible. Check your statements online while traveling and report any unauthorized charges immediately.

Should I exchange money before I travel or after I arrive?

Exchange only a small amount of cash before you travel — enough for a taxi and a meal. Wait until you arrive to use an ATM, which gives you a much better rate. If you exchange large amounts at an airport before you leave, you lose money on the exchange rate and carry unnecessary cash.

Can I use my credit card everywhere abroad?

Credit cards work in most cities, restaurants, and shops in developed countries and tourist areas. They are less reliable in rural areas, small towns, and developing countries. Markets, taxis, and street vendors often accept only cash. Carry both a credit card and some local cash.

What is the difference between a debit card and a credit card abroad?

A debit card pulls money directly from your bank account and gives you the real exchange rate plus your bank's ATM fee. A credit card charges you the exchange rate plus any foreign transaction fee your card charges, and you pay the bill later. If your credit card has no foreign transaction fee, it is usually cheaper than a debit card for purchases, but a debit card is better for ATM withdrawals.