Q: My 23-year-old daughter will be leaving for France and Spain next week. What is the best and safest way for her to carry money? —K. Bird, Charlotte, N.C.
A: Assuming she's going for a short time—anywhere from few weeks to several months—her best option will be to carry a debit and credit card issued by an American bank, says John Gower, senior banking analyst at NerdWallet. But she'll want to be strategic about which institutions she gets these cards from and how she deploys them.
Typically, U.S. banks charge a fee of 1 to 3% of the total transaction amount each time you use a debit or credit card internationally. If you use your debit card to pull out funds from ATMs abroad, you’ll also get hit with an international ATM fee that's typically around $2, though Gower has seen banks charge upwards of $5. That's in addition to whatever the ATM you use will charge. So your daughter could be looking at costs of $10 or so each time she takes out $100. This may tempt her to just take out large sums at once, but carrying large amounts of cash through foreign cities isn’t ideal either.
Instead, to cut down on those ATM fees, consider having her open an account with a U.S. bank that has international branches in her destination so she can avoid the international ATM fee. (Citibank is one with many branches overseas.) Or she could open an account with a bank that has international partnerships. Bank of America, for example, is part of the Global ATM Alliance and because of this allows its customers to use their cards at any member banks' ATMs for free.
Since credit cards offer greater fraud protection than debit cards, Gower recommends that she have a credit card with her as well. The best choice: A card aimed at international travelers that waives foreign transaction fees and has “chip and pin" technology, meaning a microchip is embedded in the card. Because most European countries use this style of card, she will decrease the chances that stores will have trouble reading her card. MONEY likes the GlobeTrek Rewards Visa from Andrews Federal Credit Union, which she can join by signing up for free with the American Consumer Council. This chip-and-pin card has no annual fee and no foreign transaction fees.
If your daughter gets this card, she'd be well advised to use it for her everyday purchases—rather than paying the 3% foreign transaction fee her debit card will charge. Of course, this only makes sense if she's responsible enough to pay her bill off in full every month.
Does she have plans to be away for quite a while—maybe studying abroad for a year? In that case, she should consider opening an account with a local bank. While there can be hassles involved with understanding another country’s banking rules, she will avoid out-of-network ATM fees and have a debit/credit card that is more universally accepted than an American card might be, says Gower. But she should also keep a U.S. account active in case of emergency, so that someone at home can easily transfer funds to her.
No matter which option your daughter goes with, she’ll want to bring at least two different types of electronic payment. That way if her debit or credit card isn’t accepted by a store or is stolen she has a backup option. She’ll also want to alert her financial institutions prior to departure of where she’ll be going and how long she’ll be there so that the provider doesn’t cancel or halt her card thinking the charges are fraudulent activity.