Hidden fees, poor exchange rates and ATM charges can quietly eat into your holiday budget. Many travellers lose more than they realise by exchanging money at airports or paying in the wrong currency. With the right approach to travel money, you can keep more of your cash for experiences. This guide explains the best ways to pay abroad and the costly mistakes to avoid.

This article is general information, not financial advice. Card features and fees vary by provider and country, so check the terms of your own accounts.

Understand the Costs

When spending abroad, you may face:

  • exchange rate markup – the difference between the real mid-market rate and the rate you're given,
  • foreign transaction fees – a percentage charged by some cards on overseas spending,
  • ATM fees – charged by your bank, the local ATM operator or both,
  • cash advance fees – when withdrawing cash with a credit card,
  • dynamic currency conversion (DCC) markups – when you choose to pay in your home currency abroad.

Knowing these helps you choose the cheapest options.

Best Ways to Pay Abroad

1. Travel-Friendly Debit or Credit Cards

Many banks and fintech companies offer cards with no foreign transaction fees and good exchange rates. These are often the cheapest way to pay abroad. Check your current card's fees before you travel.

2. Multi-Currency Accounts and Cards

Services like Wise, Revolut and similar providers let you hold multiple currencies, convert at competitive rates and spend with a linked card. They're popular with frequent travellers.

3. Prepaid Travel Cards

Prepaid cards let you load currency before you travel, which can help with budgeting. Check fees for loading, spending and withdrawals.

4. Cash

Cash is still essential in many places for markets, street food, small shops and tips. Carry a moderate amount and top up as needed.

Travel Money Tips to Save on Fees

Always Pay in the Local Currency

When a card machine or ATM asks "Pay in your home currency or local currency?", choose local currency. Choosing your home currency triggers dynamic currency conversion, which often uses a poor exchange rate.

Avoid Airport Currency Exchanges

Airport and tourist-area exchange counters often offer poor rates and high fees. If you need cash on arrival, withdraw a small amount from an ATM instead, or exchange only a little at the airport.

Withdraw Larger Amounts Less Often

If your bank or the ATM charges a fixed fee per withdrawal, fewer, larger withdrawals cost less. Balance this with safety; don't carry too much cash.

Use Bank ATMs

ATMs attached to banks are often safer and may charge lower fees than standalone machines in tourist areas.

Avoid Credit Card Cash Withdrawals

Using a credit card at an ATM usually triggers cash advance fees and immediate interest. Use a debit card or travel card for cash instead.

Notify Your Bank

Some banks may block cards if they detect unusual foreign activity. Check whether you need to notify your bank, and make sure your app and contact details are up to date.

Bring a Backup Card

Carry at least two cards from different providers, stored separately, in case one is lost, stolen or blocked.

Check Exchange Rates

Use a currency app to check the real mid-market rate so you can spot poor deals.

Keeping Your Money Safe

  • Keep cards and cash in different places.
  • Use the hotel safe for spare cards and extra cash.
  • Use a money belt or anti-theft bag in crowded areas.
  • Cover your PIN at ATMs and check for skimming devices.
  • Enable instant notifications and card controls in your banking app.
  • Freeze your card in the app immediately if it's lost.

Read our travel safety tips for more.

Budgeting Your Travel Money

Set a daily budget and track spending with an app or notes. Multi-currency apps often categorise spending automatically. Our guide on how to travel on a budget includes planning tips, and our budgeting guide explains how to save for trips.

Tipping Customs

Tipping norms vary widely. In some countries, service charges are included; in others, tips are expected. Research tipping customs before you travel so you can budget and avoid awkward moments.

Travel Money Checklist

  • Checked card fees for foreign transactions and ATMs
  • Opened a travel-friendly or multi-currency card if needed
  • Brought at least two cards, stored separately
  • Updated banking app and contact details
  • Small amount of local currency for arrival (optional)
  • Currency app installed
  • Emergency cash hidden separately
  • Researched tipping customs

Common Travel Money Mistakes

  • Paying in home currency when abroad.
  • Exchanging large amounts at airports.
  • Using credit cards for cash withdrawals.
  • Carrying all cards and cash in one wallet.
  • Not checking fees before travelling.
  • Ignoring small daily fees that add up over a long trip.

Example: How Much Fees Can Cost

Imagine a two-week trip where you spend the equivalent of $2,000 by card and withdraw $600 in cash. A card with a 3% foreign transaction fee would cost around $60 on purchases alone. Add $5 ATM fees on six withdrawals and poor exchange rates from choosing your home currency a few times, and you could lose well over $100. A fee-free travel card and paying in local currency could save most of that, enough for a nice dinner or an extra excursion.

Final Thoughts

Smart travel money choices can save a surprising amount. Use a card with low or no foreign fees, always pay in local currency, avoid airport exchanges and credit card cash withdrawals, and keep your money secure. Spend less on fees and more on memories. Explore more planning tips in our travel tips section.