1. Currency exchange
Remember to budget for the cost of getting cash to spend at your destination. Consider ordering foreign currency ahead of time and withdrawing cash at ATMs at your destination. ATMs typically offer better exchange rates than you'll get by exchanging cash. (Bank of America assesses a 3% transaction fee at international ATMs.) You can avoid a $5 ATM usage fee by using international partner ATMs.
If you need to exchange cash at your destination, you'll typically get better exchange rates if you exchange funds at banks or post offices rather than at airports, hotels or currency exchange bureaus.
2. Credit card transactions
It's convenient to pay with a credit card while traveling abroad, but be sure you understand the fees involved. Your bank may charge fees for foreign transactions, which generally cost 1–3% of the amount being converted. Understand the nuances of foreign transaction fees before you go abroad.
To minimize travel costs, consider using your card for large purchases while using local currency for smaller transactions. That way you don't pay foreign transaction fees every time you order a latte or pick up a postcard.
You should also consider using a credit card like the BankAmericard Travel Rewards® credit card, which doesn't charge foreign transaction fees. Using your Travel Rewards card to pay for portions of your trip means you'll have started to earn points toward your next adventure.
Be aware of dynamic currency conversion, which allows merchants to convert your transaction to dollars. The conversion rate you pay for this convenience is typically much higher than the going exchange rate and can be as high as 3% of the total cost.footnote1 To avoid this situation, ask to have your transactions processed in the local currency, and check your receipt before you sign.
It's also a good idea to exercise some caution when traveling abroad in order to protect yourself from identity theft. Choose cash over credit if you're shopping in an open-air market or taking a taxi ride. Research your destination beforehand, or check with your hotel for reputable places to shop and safe ways to get around. Another way to protect yourself: Limit your online transactions to times when you have access to a secure wireless network.
Tipping etiquette varies from country to country. If tipping is customary at your destination, plan to tip 5–15% of the base price for meals, cab rides, hotel staff, tour guides and other services. Give tips in cash and in the local currency rather than in U.S. dollars. In some countries (such as Greece, Italy and Guatemala), you should plan to tip in restaurants even if a service charge is included in your bill.
4. Baggage and airline fees
Many airlines charge checked baggage fees that can add up quickly—especially if you're packing for an extended trip. Take the various airlines' baggage fee policies into account when you're booking your flights. (Be sure you're looking at the international travel rates, since fees can differ for domestic and international travel.) Bear in mind that a cheap airfare with high baggage fees could cost more than a higher airfare with better baggage rates.
Plan ahead for other airline fees, too, such as those for seat selection, extra leg room, onboard Wi-Fi, and food and drink purchases.
5. Incidentals and miscellaneous extras
Think of these as costs that have the potential to surprise you during your trip and when you get home and check your bills. One way to account for these items is to factor them into your budget as a miscellaneous expense category. These costs may include:
- Airport parking
- Internet café and Wi-Fi charges (some hotels charge as much as $5 per hour)
- Travel insurance
- Cell phone roaming and data charges
- Voltage converters or adaptable electronics
- Laundry services
- Luggage storage at transportation terminals or hotels before check-in or after check-out
- Beach chair, cabana and towel fees
- Country exit and tourist fees
Traveling abroad can be an adventure of a lifetime, but you don't want to have to be paying it off for years to come. By planning ahead, asking questions, sticking to a budget and making some smart choices about when to use cash or credit, you can rest assured that you'll be minimizing any surprise expenses.