20150527_105122If you’re like me and have champagne tastes but are on a beer budget, you will want to trim travel expenses whenever possible to have the most luxurious vacation within your financial means. To do this, it is sometimes necessary to reevaluate conventional wisdom and play by a new set of rules. Today’s savvy traveler makes a travel plan and sticks to it. Use the new discount travel sites at your disposal, research travel deals, go to exotic cheaper travel destinations. A less-expensive, if not cheap, vacation is your goal! The internet has made planning for travel easier than ever, but it also means that there is so much information that it may be overwhelming. To help you out, I’ve created some basic tips that I use to have fairly cheap vacations. In “5 Tips to Travel Well and Save Money,” I gave travel tips for reducing costs on transportation, accommodations, food, and sightseeing. In this article, I’m going a little deeper to debunk some of the myths I’ve encountered and show you how I’ve managed to shave a few pretty pennies off the price of my trips.

Myth: All currency exchange prices are basically the same.

When traveling abroad, exchanging currency can seem like a scary proposition. Will you be able get cash from an ATM? How do you get the best rate? Where do you exchange money? Getting the best exchange rates with the lowest fees can save you money. Sadly, convenience often reigns, which comes at a significant price. I’ve been provided some costly “advice” over the years: buy traveler’s cheques, change money at the airport, charge everything. Because I hate to waste money, I used my financial prowess (I was a stockbroker before becoming a history professor) to figure out a system that works for me.

  • I like to have a little local currency with me when I land so I can pay for first-day expenses without worrying about poor rates at airport kiosks or high ATM costs. A month before I leave, I start monitoring rates with an exchange rate converter (I use XE). Once I ascertain the average rate, I place a bank order for some currency. Many banks wrap their fee into the rate, so it’s good to call around and make sure that you’re getting the rate closest to the standard rate and that there are no additional fees. About two-three days later I have my cash.
  • I avoid exchanging cash at airports, hotels, or on cruise ships like I avoid the plague. They often have poor exchange rates and may also charge fees. At the time of publication, I found a 16 cent difference between the standard rate and a popular airport currency exchange company’s rate. That kind of difference will add up fast.
  • I switched over to debit and credit cards that have no foreign transaction fees, no international ATM fees, and exchange rates near the standard. Credit unions can be very competitive in the debit card department. Even if your bank eliminates their end of ATM fees, the machine owner may charge a fee though, so walk around and find a machine with the lowest price. Recently, I found one machine charging a $5.95 fee and one a block away for $1.95. Many credit cards designed for travel offer no foreign fees—find one with a competitive rewards program. Eliminating fees (generally 1-3% of purchase) can save a lot of dough.

And as for the advice I received about buying traveler’s cheques? Their acceptance is not as widespread as it once was. I’ve noticed that places that do accept them are often places with poor exchange rates. For me, getting a little cash before I go and using my debit and credit card has worked quite well (just remember to tell the financial institution you’ll be gone or your card may not work). I get competitive rates with little to no fees and am happy that my purchasing power is about as good as I can get it.

Myth: You don’t need cash when traveling to well-populated areas.

This may not actually be a myth; with a universally-accepted credit card, you can probably travel to most places without an issue. But do you want to do that? I think not. Cash is the savvy traveler’s friend. It allows one to visit any vendor, rather than being at the mercy of credit-accepting merchants. Some businesses are willing to negotiate prices to those paying in cash. Also, when shopping from street vendors and at markets, you may find that they don’t accept credit. I would hate to think that I missed out on buying a painting from the next Monet because I didn’t carry cash.

Myth: Points/rewards are a waste of time.

It took me a while to figure out the points game and I’m by no means a master (see The Points Guy for that), but I have learned to be smarter about rewards and let my money work for me. If you’re going to spend money anyway, you might as well get something for it. Travel credit cards often give extra points on travel and their rewards can be used for a host of things, including more travel. If you’re disciplined, it could be worth your while to charge your monthly expenses—as long as you pay off those expenses monthly. How lovely would it be to earn airline miles while paying your electric bill? Sign up for free hotel and airline rewards programs to earn trips, stays, and upgrades, as well as receive other perks like free Wi-Fi. Try to stay loyal to one airline carrier and 1-2 hotel groups to make this really work for you. Check to see if your hotel program allows you to earn miles on your preferred carrier. Mine does, so every time I stay at the hotel I earn points on the room price, as well as airline miles.

Myth: Once you’ve booked travel, you are locked into that price.

I once saved over $900 on a cruise for my husband and I when I noticed that the fare had dropped. I called the AAA travel agent who had booked our cruise and she promptly had the cruise line adjust the difference, plus they upgraded our room! Ever since that time, I’ve been vigilant about watching prices. Once I book a hotel, I monitor rates until we leave. If they drop, I contact the hotel and ask for the reduced rate. Many personal travel agents will check on this for you, but if you don’t have one it doesn’t take much time to periodically check prices before you leave. Even saving $10 a night on a hotel could add up to a savings of $140 on a two-week stay.

Saving money always gives me a thrill! Since I cannot control a lot of what happens when I travel (bags get lost, places are closed for renovation, rooms are not as pictured), it makes me feel good to be in control of my expenses. Plus a few extra dollars in my pockets allow me to visit more historical sites! I hope my process helps you save some money as you enjoy all the wonderful sites, cities, and cultures the world has to offer. Happy travels!