Budgeting for Travel Overseas? Don’t Forget to Factor in the Exchange Rate

United States By Christy Lowry Oct 26, 2022

As you plan your incredible vacation overseas, don’t forget to factor exchange rates into your travel budget. Before you set your out-of-office email and enter full-on vacation mode, you’ll need to consider foreign transaction fees, exchange rates, and spending in the local currency. Even though budgeting ahead of time can be stressful, we’ve collected a few different tips and tricks to take the headache out of exchange rates.

5 Budget-Friendly Ways to Manage Currency Conversions

Choose a travel spot with an exchange rate in your favor 

One of the easiest ways to save money on currency conversions is choosing a destination with a similar or higher value to the dollar. Every time you make a purchase abroad, depending on the value of the local currency, you could either lose or save a ton of money. Those extra few cents may not seem like a lot, but they’ll add up faster than you think. In some countries, you could lose as much as .50 cents on the dollar! So, help your money go further on vacation by traveling to a country with a favorable exchange rate.

Send money ahead of time in the local currency 

Western Union’s money transfer process allows you to send money to a foreign country easily and conveniently. Through Western Union’s easy-to-use app, you can send money ahead of time and have it waiting for you at your travel destination. You can send the money from anywhere at any time, like in the taxi or sitting at the airport, and then retrieve it at an in-person location. We have store locations in over 200 countries/territories worldwide and you can easily pick up your transfer in the local currency. Also, if you ever find yourself in a bind, friends and family can use the app or website to send you extra cash to your bank account or a WU location.

Use a credit card with no foreign transaction fees

Using a credit card with zero foreign transaction fees will save you a lot of money in the long run. Foreign transaction fees from credit and debit cards can add up very quickly and suck a lot of money out of your travel budget. Travel credit cards are very popular not only because they offer great rewards and perks, but because they charge zero fees on purchases made abroad. Even though cash is accepted at many small businesses, you’ll find that credit cards are considered the norm at many destinations across the world. You’ll save plenty of money if you invest in a credit card with no foreign transaction fees.

Use your own bank’s international branch or affiliate

Before traveling abroad, contact your bank and notify them of your travel plans. You’ll get the most current exchange rate by speaking to your bank ahead of time. Your bank may even have an affiliate bank or international branch at your travel destination. Using a local bank in a foreign country will make it easier to take out money in the local currency.

Avoid exchanging currencies at airports or hotels

Airports and hotels notoriously upcharge tourists with additional fees and pricey exchange rates. Don’t fall victim to extra fees just because it’s convenient to exchange money at the airport. When planning your trip, take the time to order foreign currency from your local bank. Not all banks keep foreign cash on hand, so budget a couple extra weeks for the money to arrive at your bank. This may not be the most time-efficient tip, but you’ll get the latest exchange rate and avoid high fees from airports or hotels.

Bonus Tip: Don’t exchange more money than you need

If you do your due diligence, you may find you don’t need a ton of cash for your vacation. Even though it can be tempting to go overboard and exchange all your vacation money into the local currency, you may find it unnecessary. Do a little research beforehand about the local culture and see what types of places only accept cash. For example, street vendors and small merchants may prefer payment in pesos in many areas across Mexico. However, in many European countries, many businesses only accept credit cards. So, make a plan to see how much cash you’ll need, and be sure to use up all your extra foreign bills and coins before traveling back to the U.S.

If you’ve never traveled out of the country, navigating exchange rates, transaction fees, and handling the local currency can be tricky. However, just these few, simple tips can really help.

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