Traveling can be pricey and expensive but memories, experience and personal rewards can pay you dividends for a lifetime.
The high cost of travel is one of the major reasons why there is such intense competition for major tourism events such as the Olympics, World Cup Soccer, the Super Bowl and more. (Do you remember the Utah bribing scandal of Olympic host city judges of 2002?).
Although there is tremendous initial expenditure, the financial rewards for cities are years to come due to the increased local business in restaurants, hotels, tourism sights, airports, increased jobs in other local industries, and not to mention the status a city gains by being a tourism destination.
It’s been shown through travel research studies that the vast majority of expenditures while taking a trip are not airfare, but rather lodging, food, and other local businesses combined. Yet while being abroad, there often is a financing fee for making purchases in a different currency, yet the smart traveler does not want to miss losing out on all those credit card reward points or risk carrying a lot of cash in case of a mugging or pickpockets.
So what is the best way to pay for things while on vacation? Cash? Credit cards? Travelers checks?
Credit cards have many advantages for travelers
While traveling, a travel friendly credit card can be your biggest advantage. It is important to always have some cash on hand, but by predominantly using a credit card (and carrying a backup, or two, in a safe place) you can drastically simplify your travels as well as continue to take advantage of the reward perks your card offers.
If using a card that does not charge any fees for currency change you can always have the right amount of money for your purchases. It also takes away the concern with pickpockets. Credit cards are far easier to conceal than cash, and even if your card is stolen, you can often have a new one in less than 24 hours, delivered to your hotel at no cost to you. Best of all, you will not lose any money! Just report the card missing, and you are protected for any unauthorized purchases!
There are a few things we recommend when going on a trip.
1. Before you leave
Apply in time to receive a no foreign transaction fee credit card. This will save you a lot of money, as whatever the currency rate is, you are charged the same amount in your home currency. It ends up even being less expensive than cash, as you have a money-changing fee for cash. Yes, credit cards are typically only a 2% or 3% fee for currency changes, but why pay it when you can get a card that is your own personal money changer at no cost to you!
It also helps to look into the fees you may be charged if you make an ATM withdrawal. If they do have a fee, also apply for a debit card that does not charge a currency exchange fee [link]. Capitol One is one of the top tourism credit card companies if you want to avoid fees.
2. Let your credit card company know you’re leaving (and tell them when, where and how long)
To avoid any unwanted fraud alerts, call your credit card company, and let them know the approximate dates you will be in which cities. Also, store the international number of your credit card on your phone or written down somewhere safe. Most of the time, this is a free call for you.
By calling in advance, this greatly reduces the chance that your credit card is not suspended for suspicious activity, when it is in fact you in that European gift store or beach bar in Fiji!
Also make sure to give the credit card companies ways of contacting you while abroad. Cell phones, email, etc. Just in case they need to contact you, and traditional means of communication are not available.
3. Bring a small calculator, smart phone app, or avoid on-the-fly currency changes with vendors
Often tourists have difficulties making conversions in their head. Either take a small calculator with you on your trip, or avoid making such rough math exchanges. Many foreign merchants take advantage of these exchanges, and have been doing it for years with unsuspecting tourists by offering very uncompetitive exchange rates. There are plenty of iPhone and Android apps out there as well.
4. Always keep ID
Since Europe, Japan, and Canada have surpassed U.S.A. Credit cards a long time ago, many merchants require ID when using the less-sophisticated magnetic swipe system. Most people have PIN chips in their actual credit card. As a result, often merchants require proper ID. Perhaps do not carry your passport on you, but keep some form of reliable ID, such as your driver’s license.
5. Have fun!
While being overseas can be expensive, it also is an incredibly rewarding time to travel, try new foods, experience new cultures.
Sometimes it is more expensive to not do something than it is to do. Provided you have received a credit card with no foreign transaction fees, you let your lender company know the dates you will be traveling and where, you should be able to laugh and avoid any post-trip surprises with your credit card statement. Have a great trip free of worries and plenty of rest, relaxation, and culture!
For more tips and suggestions on how to save money while traveling, check out our guide to traveling on a budget!