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The quickest way to lose money on a trip is a card machine asking if you’d like to pay in U.S. dollars. The right answer is almost always no.
Paying abroad has three common cost traps: foreign transaction fees, dynamic currency conversion and ATM fees. All three are avoidable with a little preparation.
Foreign transaction fees
Many U.S. credit and debit cards add a foreign transaction fee, often around 3%, to purchases made abroad or with foreign merchants, including some online purchases. Plenty of cards charge nothing. Check your card’s terms before the trip, and pack the card with no fee as your main card.
“Would you like to pay in dollars?”
That’s dynamic currency conversion (DCC). The merchant or ATM converts the price into dollars on the spot, using its own exchange rate, which usually includes a markup. Your card still processes the payment, and if your card charges foreign transaction fees, you may pay those too.
Travel tip
Always choose the local currency, whether you’re paying at a restaurant, a hotel or an ATM. If the receipt shows dollars when you didn’t agree to it, ask the merchant to rerun the charge in local currency.
ATMs abroad
| Cost | Who charges it | How to reduce it |
|---|---|---|
| Out-of-network fee | Your bank | Use a bank or account that waives or refunds ATM fees |
| Foreign transaction fee | Your bank | Use a debit card without one |
| Operator fee | The ATM’s owner | Use machines run by banks rather than standalone ATMs in tourist areas |
| Conversion markup | The ATM, if you accept DCC | Decline the conversion and choose local currency |
Withdrawing larger amounts less often cuts per-withdrawal fees, but balance that against the risk of carrying cash.
Card protections
Credit cards let you dispute billing errors, including charges for things you didn’t receive, under the Fair Credit Billing Act. Debit cards have protections under the Electronic Fund Transfer Act, but losses from unauthorized use depend on how quickly you report them, and the money is gone from your account while you wait. For hotels, car rentals and other big holds, a credit card is usually the safer choice; see hotel card holds and deposits.
Before you go
- Bring two cards from different networks, kept in different places.
- Save your banks’ international phone numbers, not their toll-free numbers, which may not work abroad.
- Check that your PIN works abroad; some countries expect four digits.
If an airline owes you money after a canceled flight, a credit card can help there too; see airline refund rights.
Before you go
- Many U.S. cards charge foreign transaction fees, often around 3% of each purchase; others charge none.
- When a card terminal or ATM offers to charge you in dollars, decline and pay in the local currency.
- ATM withdrawals abroad can carry fees from both your bank and the local machine’s owner.
- Credit cards generally give stronger dispute rights than debit cards, which matters for big travel purchases.
Travelers also ask
Q: Do I still need to tell my bank I’m traveling?
A: Many banks no longer require travel notices, but some still use them to reduce fraud blocks. Check your bank’s app, and make sure your phone can receive security alerts abroad.
Q: Should I exchange cash before I leave?
A: Usually only a small amount, if any. Airport exchange counters and home-country exchanges often have poor rates. Withdrawing from a bank-owned ATM at your destination is often cheaper.
Q: What is the ‘conversion rate’ the machine shows me?
A: When a terminal offers to charge you in dollars, it uses its own exchange rate, which typically includes a markup. Your card network’s rate is usually better.
Fees, processing times and agency rules change, and airline and hotel policies vary. This guide is general information for travelers in the U.S.; confirm the current rules with the agency, airline or hotel before you travel.
