Exchange rates Paying abroad the right way

Summer's here – it's vacation time! But what's the best way to pay abroad? If you play your cards right, you can save a lot of money.

by Stephan Lehmann-Maldonado 10 Aug 2017
Go local: It’s worth paying with local currency when using your credit card abroad. This is also true when shopping online from foreign suppliers.

The perfect vacation: dining out in a romantic restaurant every evening, strolling through the markets snapping up bargains – and now and then sampling different kinds of delicious ice cream along the beach. Your wallet is never as open as during your vacation.

The surprise usually comes later, when the first bills land in your mailbox at home and you check your balance. How can you cover your vacation expenses without facing a rude awakening later on?

Firstly, it is important to set a realistic vacation budget. People who set aside money only for travel and accommodation soon realize they haven’t done the full calculation. A vacation budget should also include money for food, leisure, shopping, and some pocket money for family members.

1. Not too much cash

The risk of having your pocket picked is especially high during a vacation. Droves of tourists attract pick pockets, while the many new impressions provide distraction. A simple rule of thumb is therefore: only take as much cash as you need when you're out and about, e.g. for unavoidable expenses like taxi rides.

The most popular alternatives to cash are credit cards (e.g. Mastercard and Visa) and debit cards (e.g. Maestro and V Pay). When you pay by credit card, you can be more flexible. The amount is only billed at the end of the month – for which interest is charged. When you pay by debit card, however, the amount is charged immediately to your account.

A credit card scores points because of its versatility. It’s a secure and convenient method of payment that is accepted all over the world. For some hotel and car reservations, it's even indispensable. Car rental firms like Europcar even drop the usual security deposit and offer additional discounts if you pay by credit card. Credit card products also often come with insurance protection, which you can choose to upgrade.

But what happens if your card is lost?

If this happens, stay calm and block the card right away. At UBS, you can even do this via the mobile banking app. You’ll be sent a new card right away. The best thing to do is save the UBS emergency number on your smartphone (+41 44 828 31 35).

2. Debit cards for cash withdrawals

People traveling in the eurozone are better off taking out the cash they need right away from their home bank in Switzerland. In most cases, you won’t face any extra fees. Debit cards are good for cash withdrawals abroad. Any resulting fees are lower than for credit cards. Countless cash machines are available wherever you go. Just like credit cards, debit cards will be replaced if they are lost.

3. Paying by credit card – opt for local currency

And what about the exchange rate risk?

When you pull out your credit card abroad, some hotels and stores offer to settle the amount in Swiss francs. The problem: it's often not clear what exchange rate is being applied and what additional charges there may be. That’s why it always pays to opt for the local currency.

The currency conversion shown on your credit card statement gives you transparency: you can see the original amount and the converted amount along with the conversion rate used and the processing fee, which is shown as a percentage. And paying in the local currency is often less expensive.

Paying when shopping online

Who hasn’t ordered something online from a foreign supplier? What many don't know: fees can apply here, too. Certain online retailers and some airlines give their customers an option to pay in the local currency (e.g. in euros) or in francs. Our advice is clear: always pay the amount in the local currency – and not in Swiss francs. That’s the only way you’ll get a transparent credit card bill. And you’ll often pay less too.