The Best Way to Spend Money Internationally

Exploring a new country can be an exciting endeavor.  A new country means new cultures, foods, landscapes and of course, money. Almost every country’s currency will differ so it’s important to research the currency information before you travel.

How is Currency Exchange Calculated?

The majority of the world’s currency is based and traded off the U.S. dollar. Therefore, almost every form of currency is matched to that of the United States. Since the USD will typically be the higher amount, most other currencies are calculated as a percent of 1 USD.

For example: The New Zealand Dollar exchange rate is currently at 62%, which means that 1 NZD is worth 62 US cents.  

This means when exchanging your USD for another currency it is not going to equal the exact same amount. 100 USD will not buy you 100 NZD, it will buy you 160.30 NZD.

It is important to be aware of the exchange rates before exchanging your money so that you can steer clear of overpriced exchange fees.

How Should You Exchange Your Money?

Stay far away from advertised foreign exchange markets. Places in airports and main destination cities tend to charge obnoxious exchange fees. If you can, exchange your money with your local bank before you leave the country for the least offensive price.

Wells Fargo is an example of an American bank that will do free exchange for its patrons. You can order a different currency and have it delivered to the nearest branch in usually less than a week for no additional fee. Just don’t get the exchange rate confused with a fee!

How Much Cash Should You Bring?

It is typically a good idea to have some cash on hand for emergencies. Cash can also come in handy for tipping, to pay in places that don’t accept card transactions, or to avoid surcharges sometimes imposed on card transactions.

Depending on where you travel different countries require different amounts of cash. Some more modern countries like New Zealand will almost always offer card payments. Whereas less developed countries like Peru will require you to use cash more often.

Always keep an on-hand amount of cash in a place other than your wallet. This should be an amount of money that you do not touch unless in an emergency or if your wallet is lost or stolen.

Unless cash is going to be your main form of payment an additional 100-300 USD for every week of travel is recommended. If you are traveling for an extended period look into your bank to see if there are any foreign transaction fees, cash advance fees, or egregious bank or ATM fees.  

How to Spend Your Money While Overseas

Use up all your coins! Unlike the U.S. other countries ditch the one- and two-dollar bills and opt for coins instead. This means the excess coins we usually take for granted and throw at the bottom of our purse can add up to tens of dollars. If you end up with some leftover cash, it can usually be re-exchanged once you arrive back home. Just be cautious: only bills can be exchanged NOT coins.

Certain venues will simply not take credit cards. If you want to purchase from a vendor in the winding streets of Rome, be prepared to have a few euros on you. Sitting down for an exceptional service and feel like leaving a small tip in gratitude? Make sure you have some coins to spare as there’ll be no place to add it to the credit card bill.

Cash or Card: Which to Use?

There are pros and cons to each card and cash payment methods. Credit cards can be replaced, turned off, and reported if lost or stolen. They are easier to keep track of, and less of a hassle to carry around.  

Sometimes credit cards can come with hefty foreign transaction fees. Look for travel specific cards to avoid fees and earn points towards travel. We especially like the Chase Sapphire card with zero foreign transaction fees and tons of great perks like points you can put towards even more travel and discounts on activities, flights, and hotels.

Cash can come in handy when it comes to avoided surcharge fees. Some countries, like New Zealand, have a 2.5% surcharge on all card transactions. It’s not that different than added tax in the U.S., but with cash you can avoid it completely.

A negative of cash can be the simple fact that you must carry it with you. It’s flashier than a card and can attract unwanted attention. If it’s lost or stolen getting it back is harder than disputing a charge on a credit card. If large sums of cash are lost it can be detrimental to your vacation fund.

Research is key to your country of choice’s currency. Though quickly going out of fashion, cash is still important and relevant. Making wise decisions on how you trade, exchange, and spend your money can save you tons on your next get away.

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