Avoid These Costly Money Mistakes When Traveling Abroad

International travel can bring a host of logistical challenges to navigate. In the process of enjoying a trip abroad, tourists tend to make a few mistakes, especially when it comes to money.

From ATM transactions to currency misunderstandings, the opportunities for financial missteps are numerous. With that in mind, we asked personal finance experts to share the money mistakes people commonly make while traveling abroad ― and their advice for avoiding these errors.

“One mistake is paying foreign transaction fees when using a credit card, which is around 3% of each transaction, and that can add up,” said consumer finance and budgeting expert Andrea Woroch. “If you travel abroad often, it’s a good idea to get a credit card that has no foreign transaction fees.”

If you’re unsure about your card, check with your bank ahead of your trip to avoid paying transaction fees. Compare alternative options as well.

“It’s much better to research ahead of time and use credit cards that have no foreign transaction fees,” said Bola Sokunbi, author of “Clever Girl Finance, Expanded & Updated: Ditch Debt, Save Money and Build Real Wealth.”

“The top mistake many travelers make is not arriving with cash on hand,” said NerdWallet travel expert Sally French. “Waiting to get cash from an ATM upon arrival can certainly make sense, but there might be multiple situations where you need cash before you’ve had a chance to get to an ATM. That might include paying cab fare or tipping the hotel employee who carried your bags to your room.”

Although you can find an ATM at the airport when you land, you’ll likely have to pay hefty withdrawal fees. Instead, consider ordering foreign currency from your bank before departing.

The exact amount you’ll need depends on your personal spending habits, group size and comfort carrying cash, but French suggested $100 to $300 to cover cab fare, meals and emergencies before you’ve had a chance to replenish your bills at a local ATM.

“If you absolutely forgot to order cash upon arrival and you only have American bills, you might at least try to offer those bills as payment,” she added. “Not all people will accept them. But, in some countries, the people you’re paying might prefer them.”

Having cash on hand is generally a smart move so you’re not stuck in a situation where you can’t pay. “It’s important not to over-rely on credit cards,” Sokunbi said. “You want to make sure you are carrying enough cash. While credit cards are convenient, some places might not accept them ― especially in remote areas or local markets.”

As with airport ATMs, you’re unlikely to get a good deal at the currency exchange desks you see at the airport, French noted.

“In fact, the airport currency exchange generally tends to offer the worst possible exchange rates out there,” she explained. “It’s not uncommon to see airport exchanges charging 14% more than the current International Monetary Fund exchange rate. Some also charge additional fees on top of the poor exchange rate.”

If you can, try to wait until you can reach a bank ATM to withdraw local currency at a more favorable rate. For those who prefer to use a currency exchange, avoid the ones at airports and busy tourist areas. Try to research preferable options.

“To find the best exchange rates and lowest fees, go off the beaten path,” Woroch advised. “When exchanging U.S. dollars for the country’s currency, be mindful of the exchange rate you’re getting.”

As you enjoy your international travels, be sure to familiarize yourself with what local prices correspond to in U.S. dollars.

“Whether you’re dining out or buying a souvenir, it’s important to understand the currency conversion, as this may impact your decision,” Woroch said. “If you think it’s less than it actually is, you are likely to spend more.”

Try to get comfortable doing quick conversions and understand the kinds of prices you’ll be seeing as you navigate public transportation, restaurants, museums and more.

“Before you leave, you can practice ‘translating’ the cost of items while you’re still at home,” said Dimitri Pan, a wealth advisor at Ally Financial. “For example, you may say to yourself, ‘This pizza will cost me $X when I’m on my trip.’”

“Withdrawing small amounts of money from ATMs is a mistake,” Woroch said. “You will get slapped with a fee two times when you withdraw from an ATM from both the ATM machine and your bank.”

She recommended limiting how often you use an ATM and withdrawing the maximum amount you’ll need for your trip to avoid those hefty fees.

That said, be mindful of safety when withdrawing money from an ATM. Pay attention to your surroundings, especially if you are alone. Avoid ATMs in poorly lit areas at night and machines that appear to have been tampered with.

When traveling abroad and paying by card, you may notice card readers sometimes offer you the option to pay in the local currency or in your home currency.

You should avoid the latter option, which is known as dynamic currency conversion or cardholder preferred currency. Although paying in your familiar home currency may sound like a convenient way to know how much money you’re spending on your meal or souvenir, the reality is that this convenience comes at a cost ― in the form of exorbitant conversion fees.

Choose the local currency option, which involves the preferable conversion rate from your bank.

“People often overlook the importance of setting a budget for their trip,” Sokunbi said. “It’s easy to get caught up in the excitement of traveling and overspend, whether on meals, souvenirs, or excursions. Setting a daily budget and sticking to it can help you avoid going overboard.”

She recommended planning ahead to get a better sense of an appropriate budget for your vacation so that you can keep yourself in check.

“Work on implementing value-based spending to ensure your personal goals and priorities are top of mind when making money decisions,” Pan said. “Determine what means the most to you ― is it going to visit and spend time with friends and family? Having the freedom to be spontaneous?”

“Don’t forget to plan for your cell phone and internet,” Sokunbi said. “Not having a plan for managing your mobile data can be a costly mistake. Roaming fees add up quickly, and relying on Wi-Fi isn’t always practical or possible.”

To avoid scary phone bills, she suggested researching local SIM cards or setting up an international data plan before you leave.

“I’ve learned that preparing in advance can save a lot of financial headaches while you’re trying to enjoy your trip,” Sokunbi said. “Research the best ways to manage money in your destination, set your travel notifications with your bank, and decide how you’ll split your spending between cash and card.”

Woroch also emphasized the importance of doing research before you depart for your trip to avoid money mistakes like needless overspending.

“Spend time learning about a city’s public transportation options, as there are often cheaper ways to get to and from an airport and visit popular sites and attractions rather than hopping in a taxi cab,” she advised.

“Travel insurance is worth considering,” Sokunbi said. “It can be tempting to skip this, but unexpected things like medical emergencies, trip cancellations, or lost luggage can result in significant costs. Having travel insurance gives you peace of mind and protection in case anything goes wrong.”

The decision to purchase travel insurance depends on factors like the type of trip you are taking, the flexibility around canceling, costs relative to your financial means and more.

You might already have some travel insurance through the credit card you used to book your trip. Dedicate some time to understanding exactly what is covered and if you think you might need additional coverage.