Do You Need Local Currency in Every Foreign Country?

Do You Need to Visit a Currency Exchange Every Time You Travel?

You may assume that every time you visit another country that you should arrive with some local currency in your pocket. However, that’s actually not always the case. Not only do some countries operate almost exclusively on digital or electronic payments, but some even use multiple currencies. For example, if you’re from the United States, you can use dollars in Mexico (though the exchange rate makes using pesos a better idea).

Similarly, if you’re in Cambodia, you can use American dollars, too. When I visited Cambodia, I didn’t actually get any money switched into the local currency there. I’d already paid for almost everything we’d do in Cambodia, and we tipped our Cambodian tour guides in dollars, which they were totally fine with.

Sometimes, it’s better to use the local currency when you pay for things with locals because there’s an exchange fee associated with the person’s ability to get the money transferred into their local currency. However, sometimes this doesn’t matter – like in Cambodia. The exchange rate is such that getting a tip of $20 in USD is well worth it, even after the eventual fee that the exchange place will charge.

You may find it helpful to have at least a little money in the local currency because you never know when a credit card terminal won’t work or when you’ll find yourself standing in someone who will only take cash. Let’s figure out how much “walking around” money you might need when traveling and where to get your money exchanged.

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Do You Need an Emergency Fund of Money When You Travel?

I will admit that when I flew to Iceland, I didn’t bring any local money with me. I had a few $20s in my wallet (American money), but since everything I read suggested that Icelanders use cards for absolutely everything, I figured I’d just go get money exchanged after I landed if the need arose. Interestingly, I never saw that need come about because we (my traveling partner and I) used our credit cards for absolutely every purchase.

However, I wouldn’t necessarily suggest that you do the same (well, maybe if you visit Iceland). During our travels, I might have encountered an issue with a credit card machine, which would have made cash quite necessary. If I had it to do over again, I’d have probably brought a few Icelandic Króna, just for a meal or a gas fill-up along the way (we rented a car for a road trip around Iceland).

I would recommend having the equivalent of around $100 USD in your pocket in whatever local currency is used where you’re traveling. I had local money for my travels in Vietnam and Colombia, but I ended up coming back with around $200 from each trip, which I transferred from Colombian Pesos and Vietnamese Dong when I returned.

Obviously, carrying money is always risky when you’re traveling, which is why I tend to estimate on the low side how much money I might need on a given trip. If I’m the victim of a bag grab or a purse snatching, I don’t want to lose anything significant. Take a look at your international itinerary before you travel, and add up all the expected costs you’ll have after you arrive. Don’t take any more cash with you than the amount you estimate you’ll spend in the country.

Digital Countries Where Your Credit Cards Don’t Work

If you’re an American and you travel to any random country on the planet, you probably won’t have too much trouble using a credit card, at least in big cities. In other countries, you’ll just use the local currency as cash because the locals usually use cash rather than electronic payments. However, what do you do when you visit a country that performs most transactions digitally but won’t accept your MasterCard or Visa?

If you’d traveled to the Netherlands about a decade ago, you might have encountered this problem. Their main type of transaction was digital, but much of the country only accepted cards connected to domestic accounts, so things could get dicey if you were holding an American MasterCard or Visa. Fortunately, this has changed as of 2024, with the Netherlands making it much easier for travelers and foreigners to pay with their own country’s plastic.

However, even in highly metropolitan countries like those throughout Europe, you’ll still find pockets of people who either won’t take credit cards (or debit cards) at all or only accept local cards. If you’re unsure whether your card is usable in another country, just call the bank that issued you your card. They’ll let you know whether you can use your plastic or whether you should think about putting some cash in your luggage.

Remember, too, that your bank might not allow you to use your debit card in another country, even if businesses in your destination country will accept debit card payments. Some banks restrict all international purchases, and others just restrict the use of debit cards in certain countries. If you plan on using your debit card when you travel (a questionable practice, but that’s a discussion for another time), call your bank before you travel to let them know you’ll be using your debit card and to check on whether the country’s businesses will accept it.

Using Credit Cards While Traveling Internationally

I use credit cards almost exclusively while traveling and avoid paying in cash unless it’s a cash-based society. I normally carry a wallet designed for travel to keep my cards safe (this is the wallet I use during travel). There are multiple reasons for using credit cards when you travel, and the most obvious is that it reduces how much cash you might have on you at any given time. If you have cash stolen, you’re probably out of luck, but if someone steals your credit card, all it takes is a quick call to the card issuer to lock the card and prevent fraud.

Some credit cards also come with built-in insurance for certain purchases. For example, if you pay for a rental car with your credit card, the card company might automatically offer vehicle insurance with the purchase. Although your own insurance might cover your driving in another country (it’s always a good idea to ask), you might save money by relying on the insurance offered through your credit card company rather than the added insurance sold by the rental car company.

Another reason to use credit cards is that card companies also provide built-in fraud protection, which is especially helpful when you travel. If you swipe your credit card at a terminal and someone lifts your card number without your knowledge, you can start a fraud claim with your credit card company. The same isn’t always true when you use a debit card, with many people experiencing some serious delays or problems getting their money back when it’s been taken directly from a bank account.

A final reason credit cards are a good idea on vacations is because of the points you can accumulate on various rewards cards. If you have a card that offers points based on different travel purchases (like a credit card associated with a particular airline), you can rack up extra miles, points, or rewards by using the credit card when you travel.

Choosing a Currency Exchange Carefully

As I mentioned before, it’s usually a good idea to have some cash on you when you travel, even if you don’t have a giant wad of money in your pocket. You usually have a few choices for currency exchanges. Large cities often have dedicated currency exchange businesses, most banks will exchange money at the window (though it can take time for less popular denominations), and all international airports have currency exchanges.

I would recommend against using a currency exchange at the airport unless you are desperate. The fees at the airport are sky-high and will seriously eat into your budget. I remember trying to get some pounds exchanged for dollars at a place in the Netherlands once (I was traveling back from England), and the exchange fee was more than the entire amount of money I wanted to exchange!

I’d recommend calling any of the options you have in your area, whether that’s banks or currency exchange businesses, to see what their rates are. Some exchanges have seriously great rates (I use one in downtown Los Angeles every time I travel), while others are a little pricey. I made the mistake of choosing a nearby exchange before going to Vietnam, and their fee was INSANE. The next time I traveled (to Colombia), I went to a different place (the downtown exchange I always use now) and paid way less to switch my US dollars over Colombian pesos.

A final option for exchanging money is using a local ATM in your destination country. Sometimes, you’ll enjoy the lowest rates with this sort of transaction, but remember the fees your bank might charge. Not only may you need to pay a fee just to use the ATM, but your bank may also charge an exchange fee for receiving money in a type that isn’t the same as what’s in your bank account.

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