[Practical Finance] From Currency Exchange to Payment... Summer Vacation Money-Saving Tips

No Currency Exchange or Payment Fees... Start by Applying for a Travel Card
If Small Amounts or Finding Overseas ATMs Is Inconvenient
Get Better Exchange Rates with Online Currency Exchange at Your Main Bank
Convert Leftover Foreign Coins into Points After Your Trip

As the summer vacation season approaches, more consumers are making plans for overseas travel. Once you have chosen your destination, the first thing to consider is how much you can save within your limited budget. Fees for currency exchange and overseas payments, in particular, can feel like a waste. With the won-dollar exchange rate still hovering in the mid-to-high 1,300 won range, increasing the burden of travel expenses, here is a summary of ways to spend 'smartly'.

'Free Currency Exchange' Travel Cards Become Mainstream, but Check the Conditions Carefully

Travel cards, which are debit cards specialized for overseas travel, remain extremely popular. Most banks in Korea?including major commercial banks, Toss Bank, and KakaoBank?are launching new products and competitively offering a variety of services. If you are preparing for an overseas trip, it is a good idea to choose one of these cards and get it issued in advance.

With a travel card, you can make payments at local merchants overseas or withdraw cash from ATMs. You can also use your regular credit card issued in Korea for most payments abroad, and if you exchange local currency in advance, you should have no trouble during your trip. However, travel cards offer various benefits such as free currency exchange, exemption from overseas payment fees, and even exemption from ATM withdrawal fees, which help save on fees. As they are debit cards, there is no annual fee either.

However, as the number of products increases, it is important to carefully check which card best suits your needs. While most banks offer free currency exchange when converting to foreign currency, the fees for converting unused foreign currency back to won differ by bank. Some banks also waive ATM withdrawal fees when withdrawing cash locally, while others limit the number of free withdrawals. The same applies to local merchant payment fees. For example, Toss Bank's foreign currency account-linked debit card, which contributed to the popularity of travel cards, offers both free currency exchange and free reconversion fees. However, the ATM withdrawal fee is only waived up to five times per month.

There are also differences in the types of currencies supported for free exchange. The number of supported currencies has increased significantly over the past year. Among these, Hana Bank's 'Travelog' and KB Kookmin Bank's 'Travelers Check Card' support the most currencies, with 58 and 56 types respectively. If you plan to visit a lesser-known country, these cards may be advantageous. The maximum amount you can load onto the card also varies. Shinhan SOL Travel and Woori Bank's 'Wibitravel Check Card', as well as NH Nonghyup Bank's 'NH Travely Check Card', allow you to hold up to $50,000. In contrast, KB Kookmin Travelers has a limit of 2 million won, and Hana Travelog has a limit of 3 million won. If you are planning high-value shopping, you should check each card's maximum load limit or whether there is an automatic currency exchange function in case of insufficient balance.

In addition, there are differences in supplementary services such as airport lounge access, hotel booking discounts, and convenience store discounts. Shinhan SOL Travel Card allows free access to airport lounges (The Lounge) once in each half of the year. NH Travely Card also offers one free lounge access per year if your spending in the previous month exceeds 300,000 won. KB Kookmin Travelers offers up to 20% discount on hotel bookings through Agoda and Hotels.com.

If Small Amounts or Finding Local ATMs Is Inconvenient... Use Your Main Bank's Mobile Currency Exchange

Although travel cards offer free currency exchange services, cash withdrawals are only possible locally, and there may be ATM withdrawal fees. If you want to exchange some foreign currency in advance before departure, your main bank's mobile currency exchange service remains a useful option.

Most banks offer a 70-90% discount on currency exchange fees when you use their mobile application (app) for currency exchange. This means you only pay 10% of the usual fee. After applying for currency exchange via the app, you can receive your foreign currency in person at a branch inside the airport. Airport currency exchange counters charge the highest fees. If you are planning to travel to a country like Vietnam, where exchange fees are high, double exchange is more cost-effective. You can exchange won for US dollars in Korea, and then exchange the dollars for local currency upon arrival. Most local airports or hotels offer currency exchange services.

Leftover small change in foreign currency after your trip can be inconvenient to exchange. Some banks do not offer this service at all, or only at certain branches. The types of currencies that can be exchanged are also limited. If you do not want to keep the leftover foreign coins, you can use coin exchange services provided by domestic and international fintech (finance + technology) companies. In Korea, services such as Dongjeonhwanjeonso and Moneyplex are available.