Believe it or not, using paper currency or traveler’s checks incur the most fees to the traveler; you can lose anywhere from 5% to 10% in conversion fees and other charges. So if you were thinking about trading in your US Dollars for Euros before your trip, don’t bother. Pack your plastic instead.
By using a credit or debit card, your fees will be much less. The standard percentage charged by the international networks is 1%. Credit card processing banks will also tack on their own fee, just because they can, but it’s rarely more than an additional 2%. And if you travel overseas quite frequently, you might want to open up a Capital One card. At this time, they do not tack on a surcharge for international purchases.
Be sure that the foreign merchant charges you in the foreign currency and not in US Dollars. Some merchants use this as a scam to charge a horrible exchange rate to make money and you wouldn’t be the wiser.
If you do end up needing paper currency when you are traveling, use your debit card at the ATM. Some banks just charge a flat fee for a foreign withdrawal no matter how much money you take out. If you open a debit card with Citi, they have ATMs in many foreign countries and do not charge a transaction fee when you use them.
So when you’re traveling, don’t forget that to save some money, leave the cash at home.