How to plan finances for overseas travel, from setting a budget to exchanging currency.
James Wolanski,| managing director of Global Foreign Exchange at TD Bank
There is something extra thrilling about planning a trip abroad this year. Many people are finally comfortable enough to globetrot after a few less than desirable travel seasons. But getting back into an international traveling routine — or embarking on that first overseas adventure — can be overwhelming.
Top that with the current economic uncertainty, it can be difficult for aspiring travelers to determine what budget might be the best fit for their dream vacation. Consider this, however: While the euro and Great British pound recently hit record lows, the U.S. dollar (USD) remains strong, providing an added advantage for those traveling abroad.
With a little planning, the experience of foreign travel can be exhilarating. And while creating a budget can often be a less inspiring aspect of travel planning, establishing a financial gameplan for any trip is an important step and unique to each traveler’s personal financial situation.
James Wolanski, managing director of Global Foreign Exchange at TD Bank, is an avid world traveler and passionate for making the most of time spent abroad. He is also an advocate for understanding the financial landscape of both the destination and one’s personal budget. Recently returned from traveling abroad himself, Wolanski is sharing a few essential tips to keep in mind before traveling abroad this year.
Reduce worry by planning ahead
While everyone wants to enjoy traveling, overspending can be a concern. Therefore, it’s important that travelers take the time to research their destination and day-to-day costs, as well as the cost of activities they plan to prioritize while traveling.
Setting a reasonable budget by doing research should be a significant part of an individual’s early plan. While some activities, such as shopping or tours, seem like an obvious place to budget, also consider splurge purchases or unexpected costs. (Perhaps a local provides an insider tip on the best local specialty cuisine or offers an unexpected, can’t-miss afternoonboat ride.) Start by creating a simple spreadsheet of expected expenses and add in a “buffer” for any last-minute situations or emergencies that may arise while traveling.
When it comes to travel, explore all options
It’s important to remember that not all payment methods are created equal. While many travel rewards and cashback credit cards come with no foreign transaction fees, this isn’t always the case. Card comparison sites, like Bankrate and NerdWallet, can be helpful in seeing the key differences across cards — also consider reading insights from experts.
Think about booking (and paying) in advance as conversion rates still favor the USD for many destinations. Because rates fluctuate, travelers shouldn’t wait until they arrive to pay for their accommodations or activities. With today’s rates, the conversion might be too good to pass up.
Know how much cash to take
Of course, a mix of cash and cards is ideal when traveling abroad. Soon-to-be travelers can visit their local bank in advance of their trip to exchange currency. And at some banks, like TD Bank, anyone can order foreign currency online or in-person — even without an account.
Depending on an individual’s destination, calculating how much cash to take prior can vary. The general rule of thumb is to take the equivalent of $50-$100 per day. Some travelers should consider taking more cash with them — especially if planning to shop in local boutiques and at street stands. And when dining out, it’s best to tip restaurant staff in the local currency.
Many locations have varying degrees of access to ATMs and local preferences for paying in cash versus card. Remember that some countries are more limited in their acceptance of cash, for instance, some shops and restaurants still require card payments due to COVID-19, so think about bringing a mix of cash and credit cards. It’s important to be prepared for either situation as cash or card needs can always change, depending on planned activities, so do research ahead of time.
Mixing cash and credit cards is an approach to paying for day-to-day needs while traveling abroad, but travelers should keep in mind that setting aside a specific budget and allotting certain amounts for activities can help foster a better understanding of how much is spent before heading home.
Understand local money habits
Each destination is unique when it comes to money habits. Some vendors, including taxi services, may only take cash. While many international vendors may accept US dollars, without local currency, it’s easy to miss out on certain items and experiences on that to-do list or receive an unfavorable exchange rate.
Before booking a flight, remember to check for specific foreign transaction fees and account terms applicable to credit and debit card purchases. This will help determine whether it makes sense to use cash or cards. Using ATMs or exchange centers when abroad can typically result in high transaction fees and some foreign ATMs may not accept U.S. cards.
Ultimately, planning a budget around local money habits has its limitations. When traveling and in need of extra cash, remember to take it slow when reading through the prompts as some ATMs have specific surge pricing depending on locations and times used.
For many ATMs this could include dynamic currency conversion, or DCC, which converts user transactions into their home currency. This could lead to bigger surcharges depending on the ATM network. Be sure to read all the fine print and understand the terms before opting for this service. Travelers should determine whether the rates and service works in their favor — or not. After all, conversions are often cheaper when billed in the destination’s local currency.
Before spending money abroad, it helps to learn approximate exchange rates before leaving and to check rates periodically throughout a trip to ensure all decisions are well-informed.
Benefit from thoughtful travel budgeting
When traveling, individuals often account for how long is needed to make that connecting flight — creating a budget is no different. Understanding how to pay for trip priorities — from sky diving to nights out on the town to shopping excursions — can make for a less stressful experience when going abroad.
For even more help and a more tailored experience, travelers do not have to go far — the neighborhood bank is always a good resource for international travel financial planning and tips.
And for those looking to exchange money, TD Bank offers travelers more than 55 currencies at competitive exchange rates. Many TD Bank Stores carry common currencies on-site; if a traveler needs a currency that’s not available on-site at a TD Bank Store, they can order it online and pick it up typically within two to three business days.
Bon voyage!
Get more tips on budgeting for an upcoming trip by visiting TD Bank at td.com.
Members of the editorial and news staff of USA TODAY Network were not involved in the creation of this content.
