photo by poolie
As I continue to research for our frugal European vacation in 2010, I’ve come across a new dilemma: what should we do about money overseas?
We’ve decided to carry only a limited amount of cash. Not only are currency conversion fees really high at banks and other institutions (at ATMs we could end up paying 10% or more once you tack on all the fees), but I don’t feel secure keeping a lot of cash on me in a foreign country. So we’ll probably convert about $500USD to Euros and GDP before the trip just in case we need a little cash and carry only a little with us at a time.
Instead of using cashing, we’re looking into other options. Here’s what we’ve learned:
Our checking accounts are through Wachovia, and our debit cards are Visa. Since Visa is widely accepted in Europe, I thought this would be our best option. But then I learned about the transaction fees. We’d pay a 2% foreign transaction fee to Wachovia, another 1-2% to Visa, plus flat transaction fees for ATM withdrawals. I also read something vague about additional fees to convert the money from foreign currency to US dollars. Um, no thanks.
If we moved our travel money to an ING checking account, it’s the same deal.
There are also security issues with a debit card. Our entire account could be wiped out, and it could take up to 2 weeks for the money to be replaced by fraud protection. That’s a hassle I’d rather not deal with on vacation.
Pre-paid debit cards
We briefly considered a pre-paid Visa card. I don’t know why we did, because it’s a pretty dumb idea. If we fully loaded the card with the maximum of $1500, the flat fees just to purchase the card are about 2.5%. (If we were only putting $100 on the card, it’s close to 33% in fees upfront.) On top of that, there is a foreign transaction fee of 3%. Not happening.
Travelers checks spend like cash with added security. You sign the check, hand it over, and receive cash back in change. They’re also widely accepted in Europe. I’ve been unable to get a clear answer on whether there are transaction fees, though. I found something vague about “commission fees,” but no clear numbers. They also seem like a pain in the butt to use, and would most likely result in carrying more cash than we’re comfortable carrying.
We currently have an American Express card and a Bank of America Visa card with no balances. Our Bank of America credit card would work just like our Wachovia debit card — 3% to the bank and 1% to Visa. Ugh. American Express is a little better. We’d end up paying just 2.7% total. Unfortunately, American Express may not be as widely accepted. We could take out cash as needed, but credit card ATM fees are incredibly high.
Apparently, Capital One is the only credit card that currently does not charge any foreign transaction fees. They even waive the fee that would be charged by Visa, so we’d end up paying no fees at all. As of now, I feel like it might be worth opening another credit card to save $100-$200 in fees. As long as we pay it off immediately after our trip, it shouldn’t have any negative effects on our credit scores or interest.
What do you think? Should I suck it up and add the transaction fees into our budget, or increase our credit line with another credit card that we’ll never use after the trip?