The world has given us a lot of opportunities. Due to globalization, we have the possibility to travel around the world with more convenience and a lot of new changes make the process way quicker and efficient. For example, planes have allowed us to travel within hours even in the second half of the world, and the adaptation to the new country is now much more convenient and easier than it was in the past, due to the convergence of cultures. Now we are even given the opportunity to not even waste our time or energy on converting our currency into the national currency of the country we are visiting, because our credit or debit card does the job on its own, without us having to worry about it. However, after the direct payments, when we start to calculate our fund, it might surprisingly appear to be little more than expected and this is when people came across with the question, is it good to pay by card and convert the currency on its own, or it is better to take your funds and convert into local currency and spend it only after that? The article will review the main advantages and disadvantages of both sides, in order to be clear for the readers for their future voyages.
Main Differences
Although there should be no difference between the two rates in a perfect future, there is, and it’s a means for them to get more money from the newcomer and make the travel much more expensive. In a nutshell, pay in the local currency. If you don’t, you’ll not only be paid a mediocre cost to convert to your home currency, but you’ll also be charged a percentage. Although 3-3.5 percent does not seem to be a significant amount, it adds up. When you use your debit or credit card in a foreign country, your bank must translate the fee to US dollars in order to withdraw funds from your account. Fees for this will vary from 1% to 3% of the total. While this does not sound like anything, there is another advantage of having a card that doesn’t incur this tiny fee: you’ll stop the possible traveler scam.
USD VS Local Currency
Travelers also believe that the best currency to bring on an international trip is the US dollar. The US dollar is the most widely used and recognized currency in the world and other currencies are fixed to that. When traveling internationally, paying in USD seems to be the most practical choice. The concept is that you can use it anywhere in the world and share it if required. However, this is clearly not true. There are some reasons why the local currency payment can be favorable for the traveler:
Customer-focused service – When exchanging USD overseas, if you are struggling with language differences, you can find it difficult to secure a fair deal. If this is the case, there are always many options to avoid the inconvenience, for example, a lot of companies or even banks are offering services allowing to exchange foreign currencies online, however, it still may not happen at the same rate as it would in the case of using the currency exchange bureaus or companies. A reputable currency exchange company with English-speaking employees will assist you in determining how much you are getting for your money and the service becomes more convenient for the client. A customer-focused vendor would allow you to ask questions, will have clear prices, and will be open and honest with you, this sounds more professional and organized than the other way around.
Favorable currency rate: Plan ahead of time to ensure you have the correct currency for your travels (including stopovers). Look for a currency exchange provider that doesn’t charge any commissions or fees. These unintentional expenses can be avoided by this conversion. You know how much you’re paying for your currency when you buy it before your flight. You’ll still have plenty of time to learn about conversion rates and secure a decent deal before your journey. When you buy with USD in a foreign country, you will not be able to determine if you are having a decent price. Since the vendor must pay their bills, there will almost always be a secret bill. You have no say of how much you pay if you accept the overseas merchant’s currency exchange rate. You may be on a tight schedule, and the merchant may be able to take advantage of you.
USD – not always the best option – When the traveler arrives at the travel destination, the last thing he/she wants is to have a bag full of cash that you can’t use or exchange (usually at a high cost). Finding out exactly which currency you’ll need and purchasing it before you leave is a better choice. You’ll save time and money because you won’t have to convert currencies multiple times.
Although the US dollar is often used as a quasi-currency, paying in US dollars is not necessarily the best option. USD is generally accepted in countries such as Canada, Mexico, Belize, Panama, and Costa Rica. You can receive an unfavorable exchange rate from tour operators, hotels, department stores, and restaurants. Expect to pay a premium for the ease of shopping in US dollars. In countries like Cambodia, the US dollar is the legal second currency. You will collect the change in local currency, despite receiving a decent exchange rate. Rural and isolated areas in Cambodia, including those in Canada, would only accept local currencies. It’s quite possible that a credit card won’t be approved in certain locations.
Summing It Up
Finally, to sum up, before traveling to another country, there are a lot of details that should be taken into consideration. One of the most important is managing and organizing your funds, as direct credit card payments do not really sound to be an efficient move. If the traveler makes the proper research which way is better, the answer in many cases will be converting in local currencies before your flight, if you are not traveling from the US to Canada and staying at the luxury hotel.
In this case, it might not be necessary to make previous measurements, however, in more cases, it is better to avoid such payments and make the proper calculations prior to the travel and take the country characteristics into account. You also might need to carry the cash with you, because in some country’s specific regions, people do not even use credit cards.
