By Odysseas Papadimitriou
Let's play a little game. Imagine you're leaving for a trip overseas, and you have to convert US dollars into the currency used in your destination. Do you: a) Head down to a local bank, cash in hand; b) Hit an airport kiosk on the way out of town; or c) Simply bring your credit card?
The answer: C, without a doubt. While this might surprise you, Visa and MasterCard offer exchange rates that are 16.2 percent lower than those available through Travelex—the world's largest in-airport currency conversion company—and 8.1 percent lower than you'll find at the average bank. In other words, by crossing an item off your pre-trip to-do list, you'll actually save yourself a considerable amount of money and avoid having to walk around a foreign country with a lot of cash.
That's sure to put a smile on any traveler's face, and the best part is that it's not the only insider tip that can save you big before departure. If you're into saving money, you should also:
Leverage Rewards: Ever since the Great Recession, credit card companies have taken to using initial rewards bonuses to essentially bribe people with excellent credit to open credit cards. The issuers get a customer base better suited to pay their bills on time even during a downturn, and you have the opportunity to score hundreds of dollars with which to subsidize your travels. The best deal on the market right now is Chase's Sapphire Preferred Card, which gives you $500 in travel accommodations or a $400 statement credit for charging $3,000 within the initial three months that you're an accountholder.
Avoid foreign transaction fees: Roughly 90% of credit cards apply surcharges to transactions that are processed outside of the United States. As these fees will inflate the cost of purchases you make with foreign-based companies by an average of 2.22%, it's in your bank account's best interest to make sure that your credit card is one without foreign transaction fees. In case you're wondering, the aforementioned Chase Sapphire Preferred Card would qualify.
Think plastic when it comes to cash: You're obviously going to need a way to access cash while on your trip, and the most cost-effective way to do so is to bring along a debit card that has low international ATM withdrawal fees. This will enable you to leverage an advantageous exchange rate as well as take out cash as needed—both a convenience, and a way to mitigate the threat of theft.
Book wisely: Everyone knows that you can get a great deal on hotels and airfare by using a travel comparison website, but not everybody is aware of how to extend the savings even more. The best way to do so, at least as far as hotel rates are concerned, is to find the best possible deal online and then call the respective hotel and say that you will make a reservation on the spot if they give you a 10% discount. It won't always work, but it's worth a shot.
When you consider all this together, it's clear that you could easily save hundreds of dollars on a trip abroad before you even leave the country. That's sure to make for a more enjoyable experience, but during all those good times, it's very important that you maintain a modicum of vigilance and avoid falling for cost-boosting merchant tricks. More specifically, merchants are known to offer to convert purchase totals into US dollars in order to assess unfavorable exchange rates and thereby profit under the guise of kindness. The best way to avoid falling for this trap is to just say no whenever a merchant extends such a seemingly innocuous offer and, if need be, use a small calculator or cell phone to get a better sense of how much things are going to cost you.
With that being said, all that's left to say is have a great time and you will have an unusually robust bank account balance remaining on your return.
Photo credit: Global currencies via Shutterstock