Fresh off the Thanksgiving getaway to Mexico, there’s no better time to reflect quickly on how to keep expenses reasonable and avoiding unnecessary fees. Travel is expensive, but why throw money away? Here are the top hits:
- Use a no foreign transaction fee card
- Always select local currency (never convert to USD)
- Getting local currency from ATMs is good
- Getting small bills at US Banks is easy
No Forex Fee Cards
The most important first step is this. Rewards are great, but if you’re paying a fee, it defeats the point. Using cards with no fee can mean big savings. MANY issuers and otherwise good rewards cards (ex. BofA Custom Cash) have large foreign exchange fees (3% of US Dollar amount). While the terms when originally opening card have these details, often you can find out online easily. There are also many, many cards that do not have fees (often billed “travel cards”) which include the following (note: not comprehensive):
- Bank of America Premium Rewards
- All Capital One & Discover cards
- Chase Sapphire Preferred
- AMEX Platinum & Gold
ALWAYS skip currency conversion
It’s nice to know how much something costs in your own currency, but you should do the math for yourself. When checking out, the highly convenient currency conversion is universally a terrible deal for the consumer. Typically they disclose a transparent x% markup, and while that conversion could result in avoiding foreign transaction fees, the card you use should already do that. Just don’t do it. If you’re buying something in Mexico, pay in pesos. If you’re in Europe, use euros. When paying in local currency, the conversion to USD will typically occur very close to spot exchange rate (read: the best deal.)
Need local currency? Use the ATM
While there are typically international ATM fees, using the ATM is often worthwhile as the exchange rate at currency changers is MUCH worse than the official rates you get in ATMs. For example, our resort front desk was offering $1 = 17 pesos, while the ATM on my BofA debit card gave me a rate of 18.28 + 2.5% forex fee (my BofA ATM fee was waived due to relationship.) That’s about a 5% difference in cost just from conversion.
Just like in the US, I like to avoid using any sketchy machine. Sticking with major banks or hotel ATMs is typically pretty easy, and won’t make a big difference on any sort of fees paid.
Need petty cash? Ask your local banker
For tipping cleaners and bellhops and such, it is nice to have $1s and $5s. ATMs often do not have options smaller than 10s and 20s (although sometimes $5s). All it takes is a quick stop inside your bank branch and you’ve got all the small currency you could want in crisp clean bills. As long as you actually bank with the institution, there shouldn’t be any fee for the service.
Hopefully these are some helpful reflections. And now as a perk, you can see some of my favorite highlights from Mexico. Cancun is a delightful getaway.
