Using Money Wisely in Foreign Countries

When in a foreign country you will need substantial amounts of the local currency. Unlike the United States, plastic is not widely accepted. Of course, personal cheques made on US banks aren't exactly popular either. There are a number of ways you can change US$ into local currency. Not all of the methods will exchange at exactly the current exchange rate because of exchange fees and because dealers offer poorer rates. In the following sections, I will list the different ways to change your money with the pros and cons of each.

Traveler's Checks
Cash to Cash: Changing from cash to cash gives you the best exchange rate, however, usually at a high transaction fee. It is unclear to me why the transaction fee should be high at all for cash, but this seems to be the trend. The transaction fee may be a fixed amount or varying amount depending on the size of the transaction. Always ask about the fee before you change your money and then decide how much you want to change. In a cash to cash exchange, you may change any currency to the local currency (or even the currency of some third country). The risk is that you will be carrying lots of cash around, and cash in different currencies is just as palatable to a pickpocket as cash in the local currency.
It is wise not to carry large amounts of cash. You should take most of your money in traveler's checks and remember to record the serial number, denomination and the date and location of the issuing bank or agency. Keep this information in a safe and separate place so, if you lose your traveler's checks, you can quickly get replacements.

Exchanging traveler’s checks at your hotel will cost you. Do this only as a last resort as the exchange rate will be the worst in the country. It is better to walk to a nearby bank or currency exchange to cash your traveler’s checks.

If your financial institution charges a fee for traveler’s checks, tell them “No thanks”. It is easier to use a debit card at an ATM machine. Use traveler’s checks as a back up currency.

Credit & Debit Cards

Most credit cards can be used worldwide, even for cash advances. Keep track of your credit card purchases so that you do not exceed your limit. Travelers have been arrested overseas for mistakenly exceeding their credit limit! Leave all unnecessary credit cards at home. Record the numbers of the credit cards that you do bring, and keep the list separately from the cards.

You should immediately report the loss or theft of your credit cards or traveler's checks to the credit card companies and to the local police. If you plan to stay in one place for some time, you might consider opening an account for check cashing and other transactions at a U.S. bank that has an overseas affiliate. U.S. embassies and consulates cannot cash checks for you.

Before leaving on your trip, you may wish to check with your bank to see if the country or countries that you plan to visit have Automated Teller Machine (ATM) service. The bank should be able to tell you if you can use your ATM card during your trip abroad.

Using an ATM with a DEBIT card is a smarter alternative to using a CREDIT card. Credit cards can be skimmed at the most expensive hotels, restaurants and stores.

Ensure that you secure your credit and debit cards in your hotel safe if you are going out and will not be using them. Only carry an amount of cash that you can afford to lose. And don’t forget to inform your bank that you will be using your plastic in a foreign country.

Prepare for Emergency Funds

It is a good idea to keep the telephone number for your bank in the United States with you, in case you run out of cash and need to transfer money. In some countries, major banks and certain travel agencies can help arrange a transfer of funds from your account to a foreign bank. If you do not have a bank account from which you can obtain emergency funds, you should make arrangements in advance with a relative or friend to send you emergency funds should it become necessary. If you find yourself destitute, contact the nearest U.S. embassy or consulate for assistance in arranging a money wire transfer from a relative or friend in the United States.

Foreign Currency

Before departing, you may wish to purchase small amounts of foreign currency to use for buses, taxis, phones, or tips when you first arrive. Foreign exchange facilities at airports may be closed when your flight arrives. You can purchase foreign currency at some U.S. banks, at foreign exchange firms, at foreign exchange windows, or even at vending machines in many international airports in the United States. Don’t exchange much currency as it is fairly easy to exchange currency at the arriving airport or accessing an ATM at the airport.

Some countries regulate the amount of local currency that you can bring into or take out of the country; others require that you exchange a minimum amount of currency. For currency regulations, check with a bank, a foreign exchange firm, your travel agent, or the embassy or consulate of the countries that you plan to visit.

If you leave or enter the United States with more than $10,000 in monetary instruments of any kind, you must file a report, Customs Form 4790, with U.S. Customs at the time. Failure to comply can result in civil and criminal proceedings.

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