How to get money on vacation without getting ripped off

Check the exchange rate.
Check the exchange rate.
Image: AP/Sakchai Lalit
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Planning a trip takes quite a lot of administrative grunt work. Once you’ve jumped through the hurdles of booking flights, getting a visa, choosing accommodation, and getting yourself to the airport on time with the correct amount of luggage, it’s easy to forget: You also are going to need some money when you get there.

The truth is this that the way you spend money when you’re traveling abroad matters. Mindlessly using your ATM card or withdrawing cash as-needed as you do at home will not only cost you a fortune, but also prevent you from earning rewards and cash back on money you’re already spending. Nobody wants that, so what follows are Quartzy’s five cardinal rules of spending money while traveling overseas.

Getting money at the airport is (almost always) a terrible idea

Nothing is more mystifying to the experienced traveler than the queue of people at the airport exchanging currencies. As a rule, exchange bureaus at airports almost always end up costing you more money than you should spend. Even if they say they charge no commission or fees, they always charge you an exchange rate that is far less favorable than one you’d get at a plain old bank.

Exchange bureaus also tend to rip you off near major tourist attractions—as one YouTuber in Prague pointed out in this video:

You should avoid airport ATMs as much as you can, too, such as those commonly provided by the company Travelex, which almost always provide an inferior exchange rate than one you can get elsewhere.

Having said all that, if you’re about to take off for a foreign airport where you don’t have much local knowledge and you’re nervous about not having cash upon arrival, your best course of action is to take a small chunk of cash in your own currency (enough to pay for a cab to where you’re staying, with a little to spare). That way, if all else fails, your last resort can be to exchange that wad in the airport.

ATMs > currency exchange counters

Generally speaking, withdrawing cash from the right ATM at your destination will land you with a better deal than using an exchange bureau or purchasing travelers checks or currency from your bank before you leave. But you need to be mindful of two things: your bank’s policy and the ATM you’re using.

Some banks offer foreign transaction fee free debit cards—lucky you, if so!—but these tend to be a little rarer than credit cards with no fees. Most likely, your bank will charge you a conversion fee of around 3%, a flat fee for using a foreign ATM, and then a flat fee will sometimes be levied by the foreign bank too. (Check whether your bank is part of the Global ATM Alliance, which can put a cap on these fees if you use ATMs in the partner network).

Those flat fees mean it makes sense to withdraw one or two large sums over the course of your trip, instead of taking out cash on an as-needed basis. If you follow that rule, ATMs are probably a better bet overall than a currency exchange with a poor exchange rate. (Also, to avoid triggering a fraud alert, don’t forget to notify your bank that you’ll be using your ATM and credit card abroad before you go, via phone call or your online banking.)

But which ATM to use? As mentioned earlier, avoid the machines in airport arrival areas if you can; they will likely offer worse exchange rates. Ditto convenience stores and hotel lobbies. Google the major banks in the country where you’ve arrived—or just notice which ones are the most prevalent on the street—and seek out those ATMs to withdraw your cash. Those are the most likely to offer you an exchange rate closer to what’s known as the “inter-bank rate” or “mid market rate”—what banks charge each other to convert money. Most ATMs will preview the amount you’re going to get from your foreign bank account; if in doubt, Google the exchange rate (or use an app like XE) to make sure the ATM you’re using is not ripping you off.

Take a credit card with no foreign transaction fees

The most powerful weapon in any traveler’s arsenal are credit cards with no foreign transaction fees. There are various travel-specific rewards cards which offer this, some with annual fees—check Quartz’s guide to the world of credit card points—but most competitive card providers will offer some option that doesn’t charge foreign fees, and it’s not a bad idea to apply for a couple if you travel a lot.

Remember, you more or less need a credit card or two if you’re planning to travel widely. Many hotels and rental car companies will require a card on file—and a debit card won’t always do.

Because credit cards offer the best exchange rate available to travelers, you should use these as much as possible for major spending abroad—hotel bills, restaurant meals, shopping, and last-minute itinerary changes. And keep in mind that Visa and Mastercard are a better bet globally than Discover and American Express. (Though American Express has great perks, particularly when it comes to airport lounges.)

Important side note: Often, when paying with a foreign card, machines will ask you if you’d like to pay in local currency or your home currency. This practice, known as “dynamic currency conversion,” is one to watch out for. Though it may seem counter intuitive, you always want to pay in the local currency. That’s because the machine will often charge you for converting your currency, or give you an awful exchange rate.

Research the country’s spending habits in advance

There are different schools of thought on whether to mostly spend cash or mostly use cards when traveling. It’s true that in situations of desperation, cash talks a lot louder than plastic. But the more cash you withdraw, the more you spend on fees, and of course you also put yourself at risk of theft.

In general, a good rule of thumb is to have some cash on you at all times—enough, say, for an emergency taxi fare to the airport plus a hefty tip—and then to put everything you can on a fee-free credit card. You’ll earn rewards that way, and you’ll have more recourse if, say, a hotel charges you for damages that you didn’t cause or a rental company adds on exorbitant fees you never agreed to.

That said, each country is different, so it’s always worth doing a little research ahead of time. If you arrive in Germany assuming you can pay by card for everything, you’ll find yourself annoying nearly every merchant you interact with—or worse finding establishments that only take cash. Meanwhile, if you pay with cash in a card-centric society like Denmark, you may find many bars don’t even have cash tills, and some might even assume you are involved in some illicit activity. In developing countries, it’s best to have cash for smaller day-to-day transactions—street vendors in Vietnam are not taking American Express or Visa, obviously—but you can still generally rely on using credit cards at hotels and larger merchants.

Don’t keep all your money in one place

Having one credit card, one debit card, and wad of cash may prepare you for all eventualities, but if you’ve stashed all those things in one wallet, and it gets pinched, you’ll be in a pickle. The smart traveler always avoids carrying all their methods of payment with them in one place.

Take multiple methods of payment and split them up; when you’re out and about, carry one or more of your payment methods, and leave one in a secure place where you’re staying (your hotel room safe is a good bet, but don’t forget to retrieve your belongings before you leave). When you must carry everything at once, scatter them on your person (one in your pocket, and a few in your bags). This is especially important advice to follow if you’re traveling alone.