With all this talk of a potential recession, travelers should consider “recession-proofing” any planned travel. But what does that mean, exactly? Well, there are many ways– first, travelers can book quality budget-friendly vacations with a low per-person cost. Travelers can also look for alternative budget accommodations like these Airbnbs in the Bahamas or look for destinations, like the Philippines, that are overall budget-friendly. But one universal way to make sure vacations go off without a hitch and don’t unexpectedly go over budget is to trim the fat on purchases made while abroad! This doesn’t mean travelers need to be a pro at Excel and keep track of every penny spent, but rather they can get in the habit of making smart choices while abroad and developing clever habits to home to make money-saving a regular practice.
One major way travelers can habitually save money is actually by shopping and spending money… That may sound completely antithetical to recession-proofing or keeping money in the bank, but in all seriousness, there are some significant ways for folks to keep some coin while fully enjoying and/or indulging themselves while on vacation. Read on to find out how!
How To Save On Conversion Fees
Currency conversion fees, service transaction fees, and poor currency exchange rates are the silent killers for money savers. These hidden fees can unknowingly drain the bank, especially after repeated transactions abroad. The good news is, there are several ways to strategize these fees away!
Avoid ATM/Merchant Conversions
When withdrawing cash from an ATM or money point abroad, a traveler will usually get the option to “charge” the transaction either in the current currency of the country they’re traveling in or in their domestic, home currency. If given this choice, always choose the current currency of the country. The reason being–a traveler’s bank will always have a more favorable exchange rate for their clients than that particular ATM or money point system does for the general user. The bank associated with the ATM hopes to cash in on travelers, not realizing that exchange rates fluctuate so drastically from bank to bank.
Pay terminals like this one will often give you a choice of charging in the current currency or in your home currency. Choose the currency of the country you’re in!
This principle of exchange rates is also true for credit card transactions at merchants who also offer the same option to charge in either the currency of the country of travel or in a traveler’s home currency. Always choose the currency of the place of travel, not one’s home currency– a better exchange rate awaits!
Pre-Order Currency At The Bank
This tip is for the uber-prepared traveler! While currency exchanges/bureau de changes are readily available at airports and shopping malls, it’s also possible to order currency straight from the bank without the mark-ups from those aforementioned currency exchanges. Depending on one’s banking institution, travelers can either order currency online from their bank and have the monies charged straight to their bank account, or travelers can go physically to the bank to exchange cash in hand or also charge it straight to their bank account. Depending on the currency ordered, the transaction may be instant–in the case of visiting a physical bank, it’s possible to walk away with the exchanged currency the same day. However, if ordering online with one’s bank or ordering an “uncommon” currency in person, it may take a couple of weeks to arrive at the bank for pickup. Be sure to budget that time when preparing for an international vacation. This all sounds easier than getting into a fight with currency workers at the bureau de change, right?
Credit/Debit Cards With 0% Transaction Fees
Even for folks who don’t travel abroad often or don’t typically use cards when traveling, it’s a smart idea to get a bank card with no transaction fees when abroad. Cards will often charge a service or transaction fee on top of the currency exchange, so those hidden fees can add up, even for that once-a-year traveler. Having a 0% transaction fee card doesn’t alter any domestic spending, so think of it as having a travel-proof card one can use on the regular but is very helpful in case it needs to be used while traveling! Here are some thoughts on the best credit card for travel if anyone out there is thinking of getting one.
Shop Smart With VAT Refunds And Duty-Free
VAT or “Value Added Tax” is a consumption tax added that’s regularly added to goods. While the term VAT is most synonymous with shopping in Europe, the term has been adopted by many international countries. Think of it as a sales tax, simply put. Duties can be thought of similarly as well; things that are duty-free are exempt from various levels of taxation.
Get A VAT Refund When Shopping
Though some countries make claiming a VAT Refund easier than others, the same principle is in practice throughout the world. When one wants to claim a VAT Refund, he or she is requesting the taxes (usually built-in to the price of the item) be refunded as he or she does not live in that country. Upon purchasing the item from the vendor, inquire about the VAT Refund possibility– that vendor will either do the paperwork necessary (takes about 5 minutes) there or will direct you to the VAT Refunds desk in the store to do that paperwork. Travelers will need passport information when doing this paperwork as well as the receipt of the purchase.
Complete your VAT Refund at the airport before departure,
After this paperwork is all squared away, travelers can finish the VAT Refund process at the airport on the day of their departure. Simply visit the VAT Refunds desk or kiosks in the departures area of the airport, present the paperwork from the vendor, the associated passport, and sometimes even the items themselves need to be inspected by the officer. Travelers may have the option of refunding their VAT directly to the bank card the item was purchased on or receiving the VAT Refund in cash. Bear in mind that many countries have a minimum purchase threshold to be eligible for a VAT refund, and/or not all stores participate, so do some research if planning to shop!
Shop Duty-Free For Hassle-Free Shopping
Duty-free shopping, unlike VAT Refunds, already has tax savings built into the cost of the item. Duty-free is most accessible at international terminals in airports, and common things travelers can purchase there include cosmetics, alcohol, luxury items, and domestically famous goods. This is a great option if planning on purchasing something that one knows will be offered at Duty-Free but may not be eligible for a VAT Refund. Also, no additional paperwork is involved; all one needs is a passport and a ticket of departure outside of the country, while shopping and checking out in order to successfully shop duty-free!