A weekend city break in a big city? Maybe a longer holiday on another continent? Regardless of the destination you choose, a trip abroad always involves preparations. Between packing the essentials and planning your stay, it is worth thinking about financial matters. How to pay abroad without overpaying? What traps related to money can wait for the unaware tourist?
Matters that are better to avoid…
Plane tickets bought, hotel booked, suitcase packed. However, the tourists travelling abroad often forget one thing during their preparations - their finances. The result? They buy currency at a currency exchange office at the airport or just decide to pay with their debit card in their account currency.
"These are the least cost-effective ways to pay abroad. Land-based exchange offices very often offer unfavourable exchange rates. The more popular the location, the higher the spread, i.e. the difference between the purchase and sale price of the currency. Anyone who has tried to exchange currency at least once for example in Prague's Old Town has learned this," notes Bartosz Sawicki, Market Analyst at Conotoxia.
Also, the idea of paying abroad with a debit card settled in the currency of the account is rather dubious. This is, of course, possible, but the currency conversion will also be unattractive here. The exchange rate offered by the bank may be much higher in such cases.
Exchange your currency in advance
So what can you do to pay less abroad? One way to seek additional savings is to exchange your currency using an online service, such as an online exchange office or fintech. The example above clearly illustrates how much you can gain from this.
This saves not only money but also time. Online transactions can be made at any time, and thanks to mobile apps, currency can even be exchanged while waiting to check in at the airport.
"If you still have a long time to travel, it is a good idea to keep track of the exchange rates and consider buying the currency in several instalments. Such practice will allow you to average the purchase rate and limit the impact of sudden currency quotation changes, " says Bartosz Sawicki from Conotoxia.
Bet on a multi-currency card
Exchanging currency through an online service may involve having a bank account in the currency in question and a card assigned to it. However, once again, you can take a shortcut and use a multi-currency card from a fintech.
This is currently one of the most advantageous ways to pay abroad. Using a multi-currency card, users avoid currency conversion fees and gain free access to dozens of currency accounts between which they can exchange currency and pay with funds worldwide at any time.
How do I pay abroad - by card or in cash?
Cashless payments are extremely popular, and fewer and fewer people are using cash. However, the habits of foreign payers may be quite different. Although card transactions are common almost everywhere, you may come across places where you pay cash during your travels abroad.
What should a multi-currency cardholder do in this case? Take advantage of free ATM withdrawals. However, relying on card payments wherever possible is a good idea. They are safer because, among other things, there is no risk of losing or stealing cash.
Keep an eye out for extra fees at ATMs
Multi-currency cardholders withdraw cash abroad without additional fees. However, ATM operators may charge their own commissions or even offer to process transactions at their rate.
What does this look like in reality? When withdrawing euros in a country with a common currency, the ATM may offer to settle the transaction in the currency of the tourist's home country, using its own exchange rate. Such a rate is almost always significantly less favourable than that offered by multi-currency platforms.
Therefore, when withdrawing funds abroad, pay close attention to the messages displayed on the screen and do not agree to the DCC service, i.e. dynamic currency conversion.