What we’ll cover:
A record 93 million Americans traveled outside the US in 2018 – and packed into those trips were expenses. Sure, they expected to pay for things like tickets, food, gifts and hotels (it is a vacation after all). But no one wants to take on added travel costs that can easily be avoided in the first place.
We’ve got four costs you may be able to reduce and even avoid the next time you travel.
If you’ve got a credit card that includes travel rewards, you may be able jump right past this section since a number of them don’t charge foreign transaction fees, which you could pay if you’re making a purchase with a card in a different currency (think using a US card to purchase something in Euros). But not all credit cards (or debit cards) give you a free ride and you could get stuck with foreign-transaction fees between 2% and 3% of the purchase price. While those fees might seem like a minor expense per transaction, the extra charges can really add up.
Tip: See what fees your banks and credit card companies charge when traveling abroad. A good place to start is by reading your card’s terms and conditions.
If you want cash on hand, you may want to avoid getting money from the currency kiosks you find at the airport or in town because they tend to charge high exchange rates. You could probably get a better exchange rate if you pay with your credit or debit card.
But if you really need cash, you may pay less to take out the same amount of foreign currency that you would at a kiosk by using a local ATM. Reason being is your bank may charge a comparatively lower flat fee per withdrawal. Or your bank may even waive or refund fees from third-party ATMs.
Dynamic currency conversion may sound like it could make expenses simple because it means paying in your home currency instead of the local one.
This seems logical since you’re only going to pay the bill when you get home, but it’s not the same thing because you can get stuck with an unfavorable exchange rate, a transaction fee or both. The general recommendation we’ve seen is to pay in the local currency.
A few texts, a bit of mapping, some email checks and social media updates. How much could that cost per day? Why wait to find out?
You can take several steps to avoid or lower international charges. One option is to purchase an international roaming plan from your current provider or buying a cheap pay-as-you-go phone when you arrive. Or, to borrow a spy thriller phrase, you could “go dark” and turn off roaming, avoid texting or streaming and shut down unnecessary apps. But it’s kind of extreme.
If you know what fees you could run into and how to avoid them, you could have more money to spend on the trip you’re planning to go on.
This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.
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