Yahoo Finance How to save money abroad by avoiding sneaky fees and pointless charges
As a lifelong traveler, I’ve made my share of money mistakes abroad - like tipping when it wasn’t expected (offending the tippee) or overpaying for sluggish WiFi for a patchy call back home. And I’ll never forget the one time I spent a fortune on gratuities while stuck at the Dar es Salaam International Airport in Tanzania because I had only large bills, not small coins, as I waited out a days-long delay.
But with experience comes wisdom - and here’s some advice I gathered over the years that can help you avoid wasting money when you should be using it for a well-deserved vacation.
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Beware of credit cards with no foreign transaction fees
Some credit cards boast they don’t have transaction fees - only to sneak in steep exchange rates that they hope will go unnoticed. Check your card to make sure you know what the full transaction costs are.
That said, finding out what the exchange rate is can also be challenging. When I tried to unearth the rate for my no-fee Visa card, it took a long slog to get a half-answer. First, I requested a copy of my card agreement, which landed in my online account three days later. In fine print, it unhelpfully stated that it used “a rate selected by Visa from the range of rates available in wholesale currency markets.” I then called my bank’s toll-free number and asked the representative where I would be able to find an exact answer.
After two minutes of silence, he said he found the Visa exchange rate by using its online calculator and suggested I do the same. He couldn’t guarantee I would get the exact rate he did, but he said it would give me a close estimate. (This bore out with a recent purchase I made abroad.) Mastercard has a similar online calculator.
Not heeding the fine print turned out badly for one group of Capital One credit card users. Several of them recently tried to bring a class-action lawsuit against the company, alleging it used “fictional” exchange rates. The presiding judge dismissed the case in March on the grounds that they couldn’t prove that the card agreement was sufficiently ambiguous.
You can also look at other options, such as digital-based financial institutions that may have more favorable exchange rates and typically come without high fees. These include Revolut and Wise, which cater to travelers who need access to multiple currencies. They also offer a physical card, so if you’re somewhere that no longer takes cash (which is increasingly common in many countries), you can still take advantage of a better exchange rate.
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Pay in local currency, not in dollars
They look so innocent, those few words blinking up at you from the card reader as the server patiently waits for you to choose: “Local currency or home currency, madam?”
Referred to as dynamic currency conversion, this relatively new feature is making its way across digital payment services around the globe. In theory, it can make your life easier, because you will know how many dollars you’re spending on the spot. But in practice, choosing your home currency can be one of the most expensive ways to pay overseas.
“The fees can be the highest of everything,” said Chuck Bell, programs director of advocacy for Consumer Reports, noting they can hit 6 to 7 percent compared to the typical 3 percent. To make it even sneakier, you won’t be able to find out what the fees are until after you have paid.
In my experience, all you get is a simple handheld card reader - without any way to find out more information.
“It's a value-added service that merchant is adding, just to give you the peace of mind that you know what you paid,” Bell explained. “But they're really socking it to you in terms of fees.”
Bell encourages users to read the fine print to ensure the local currency option doesn’t waive earning rewards points or any buyer protections the card provides - a less common practice, but it’s still a risk.
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Avoid paying for calls back home
When you need to stay connected to home or work, a popular solution for travelers is a decent WiFi connection or a reasonably priced overseas data plan from your carrier. WhatsApp, with over 2 billion monthly users worldwide, is a common platform for sending text messages or making free voice or video calls if the receiving end also has the app installed.
One drawback, though, is that WhatsApp doesn’t work well with landline numbers. In that case, you can look to Skype, Google Voice and RingCentral as options if you need to dial a landline. Prices vary from free to $20 per month.
If you need to view the screens on Zoom or Microsoft Teams calls, you can download their free apps on your phone or tablet. In some cases, it’s possible to join via the web browser on a mobile device without the app. Just remember some mobile browsers can be clunky to use for video calls, so practice a few different methods before your trip. The apps may also be a better option since it can be easier to mute yourself and avoid any potentially embarrassing moments from background noise.
If you won’t have your own internet connection, most major cities have internet cafes - some with private phone booths - or co-working spaces where you can rent time to use their WiFi and on-site computers. Just don’t make the same mistake I did at an overpriced London internet cafe, when I rushed and logged off as quickly as possible to keep my cost low - only to look up and spot a discreet sign: “Half-hour minimum charge.” So I got docked a high fee for time I didn’t even use.
If you need a co-working space more suited for business travelers, Regus is one of the largest international companies with locations in most destination cities.
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Save on short-term luggage storage
It’s a common hassle: Your next flight or train leaves in the evening but you have to check out of your hotel by midmorning - and it’s too inconvenient for your itinerary to leave your bags at the hotel after you pay the bill. Instead of dragging your suitcases around while you take in one more day of sightseeing, you can book short-term luggage storage using an app that has partnered with small stores and businesses to provide secure storage.
A few of the many options include Usebounce.com, Nannybag.com, Radicalstorage.com and Stasher.com. Prices tend to start around $5-7 dollars per day per item.
That option is often cheaper than using the short-term storage offered at large train stations and some airports - which are often located far from sites you want to visit.
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