Dealing with a different currency can make every transaction—from buying a souvenir to settling your hotel bill—more challenging. Here's what you need to know about foreign transaction fees, exchange rates and cash vs. credit while you're in another country.
It's helpful to arrive at your destination with some local currency already in your wallet, and one of the best ways to get a good deal is to purchase it through your bank before you leave. As part of this process, make sure you're aware of the exchange rate of the local currency where you're traveling. This will help you make smart shopping choices. Many local merchants will accept U.S. dollars, but these merchants often apply a specific exchange rate that could cost you more. When in doubt, trade your dollars ahead of time and pay with the local currency. You may also get a better exchange rate if you make purchases with your credit card, though you'll have to be mindful of foreign transaction fees.
Order foreign currency with Bank of America before you travel.
How often you use your credit card may depend largely on whether you'll be charged a foreign transaction fee and how high that fee is. Many credit cards charge a foreign transaction fee every time you make a purchase abroad. Considering that, you may want to use local currency for smaller purchases, such as coffees and snacks, and a credit card for more expensive purchases, such as pricey souvenirs and restaurants.
Tip: Don't forget to set a travel alert on your card so your bank doesn't suspect fraud when they see foreign charges. Also keep in mind that some foreign terminals may ask for a PIN when you use a credit card. For more information, check out our travel checklist.
Before using an international ATM, it pays to do some research, as you could be charged fees. These include non-bank ATM usage fees, ATM operator access fees and international transaction fees for currency conversion. These fees can be charged by both the foreign bank as well as your bank, but you may be able to avoid or limit some of them by using ATMs of banks that partner with your bank. You can usually find these by doing some research ahead of time.
You may be able to minimize some charges. For example, if you're a Bank of America customer, Bank of America may assess an international transaction fee of 3 percent of the converted U.S. dollar amount.1 Foreign ATM operators may offer to do the currency conversion for you, but they may charge a higher conversion fee. You can refuse the foreign ATM conversion and be assessed the 3 percent Bank of America international transaction fee instead. Conversion fee policies vary by bank, and don't forget to consider the ATM usage and access fees mentioned above in your decision. Wherever you bank, doing some research on these issues will ensure you aren't surprised.
Tip: Before you leave, check your Personal Identification Number (PIN). Some international ATMs only support four-digit PINs. Be sure your PIN doesn't start with a zero, and know your PIN by its numbers, since some international ATMs do not have letters on the keypad.
It's hard to predict the exact amount of foreign money you'll need, so you may end up with excess cash at the end of your trip. There are a number of ways to keep it from going to waste. You may be able to apply it toward your hotel bill or your final meal, then pay the remaining amount by credit card. If you'd rather give the money to charity, there are often donation bins at airports. You can exchange foreign cash back into U.S. dollars (though the exchange rate will likely be different and you may pay a fee), or consider giving it as a gift to friends who plan to travel.