The Best Ways to Get Cash While Overseas

ATMs and credit cards are replacing traveler's checks as the method of choice.

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Dear Alpha Consumer,

I am going abroad soon and want to bring cash with me. Are traveler's checks still the best way to do that?

Traveler's checks, like VCRs, are on their way out. "No one uses them anymore," says Chris McGinnis, editor of Expedia Travel Trendwatch.

In fact, AAA Mid-Atlantic will soon stop offering them altogether. Ron Kosh, a vice president at the company, says demand for the paper checks has declined significantly, largely because of the rise in electronic options. Retailers abroad are often reluctant to accept traveler's checks because of fraud risks and additional fees associated with them, he adds. (Instead of providing traveler's checks, which it did for members at no additional charge, AAA Mid-Atlantic offers travel debit cards and foreign currency exchange.)

Because of the growth of online banking, withdrawing money abroad has never been easier. Travel experts recommend using debit cards at local ATMs, credit cards, and even U.S. dollars. Here are tips for accessing money abroad:

Wait until you get there. McGinnis recommends using your debit card at an airport ATM machine as soon as you arrive in the country. It will charge the standard—and unavoidable—$2 to $5 fee, and in some cases an additional percentage fee, but not the commission charged by banks in the United States or exchange counters at the airports. Taking out money in large chunks instead of making many small ATM withdrawals will keep those fees to a minimum.

Bring two credit cards. Mary Peters, president of Friendly Travel American Express, recommends having a backup credit card for emergencies. She also says to check your credit limit, because some purchases—such as renting a car—temporarily tie up a big chunk of it.

Watch for fees. A study by the website IndexCreditCards.com found that some credit cards charge extra fees for use abroad. It found that Capital One, for example, charged no fee, but that Bank of America and Citibank charged 3 percent fees. That means an extra $12 on a $400 hotel bill.

Tell your bank your plans. With banks on the lookout for fraud and identify theft, they might freeze your account if they suddenly see withdrawals made in a foreign country, warns Peters. And if you're traveling, they might not be able to reach you to confirm it's you doing the spending. To prevent a money lockdown while traveling, take two minutes to call your bank and let them know ahead of time that you'll be on the road.

Bring U.S. dollars. While banks will charge hefty fees for converting greenbacks to local currency, having a few American dollars in your pocket can provide some insurance for emergencies. As Peters puts it, "[There's] nothing scarier than no money in a foreign country."