Americans Budget When Traveling Abroad - But There's Room for Improvement, TD Bank Survey Finds
Thursday, July 25th, 2019
The majority of American travelers (95%) plan to create a budget for international trips. However, despite their financial preparation, many travelers do not have foreign currency on hand when they arrive at their destination. Accordingly, 40% wait to exchange currency abroad and nearly eight-in-ten (78%) use their credit card to pay for international travel purchases.
TD Bank's Spending Abroad Survey, a national survey of more than 1,000 consumers, examined American's international travel plans, payment choices and budget habits.
"Traveling abroad is an exciting experience but knowing how to handle your finances is important for a smooth trip," said James Wolanski, Managing Director, Global Foreign Exchange at TD Securities. "It's a good idea to have some foreign currency with you before leaving the U.S. to cover immediate expenses such as transportation, food, tips, or local experiences."
International Travel is Heating Up
Young travelers plan to visit several international destinations. In fact, half of respondents age 18 to 34 report plans for three or more foreign destinations in the next two years.
The most common reason Americans travel internationally is for a family vacation:
- The survey reported 58% report they have traveled for personal reasons and most commonly with family members.
- The younger generation is more likely to travel alone with 37% reporting plans to travel solo within the next two years.
- In comparison, three-quarters (75%) of baby boomers plan to travel with a significant other.
International travelers have a special bond with their destination. A quarter (26%) select their destination because they have a personal connection.
The top three travel destinations travelers plan to visit in the next two years are:
- Europe (67%),
- the Caribbean (40%)
- North America (38%), excluding the U.S.
Young travelers are more likely to travel to Europe; 73% are planning a trip in the next two years compared to 60% of Baby Boomers.
When travelers are abroad, they plan to post pictures on social media. More than 60% (62%) report they plan to visit a trendy location to take shareable pictures. This number rises to 77% among young travelers.
Young Travelers are Budget Savvy
International travelers create a budget for personal trips. Respondents report their average travel budget is $5,800 and will cover a family of three. The top three expenses in a vacation budget include: food and entertainment (91%), tourist activities (79%) and tips or service fees (69%).
Young travelers seem to be financially prepared for international trips. 85% of young respondents spend below or within their maximum budgets, while nearly a quarter (21%) of baby boomers exceed their budget.
The survey indicated young travelers were more likely to consider important financial factors compared to their older counterparts, including:
- Three-quarters (75%) said they monitor foreign exchange rates before traveling compared with 59% of middle-aged respondents.
- More than half (51%) of the younger generation select their travel destination based on low or affordable exchange rates, much more than travelers over age 35 (15%).
- Over three-quarters (77%) factor card exchange fees into their budget, and 74% consider foreign exchange fees.
Foreign Travelers Prepare Financially – But There's Room for Improvement
Despite their financial preparation, travelers overlook some expenses in their budget as 37% of travelers do not factor fees on foreign transactions into their budget, and 35% do not include credit and debit card fees.
"Travelers should speak with a bank to understand currency exchange rates availability and find out how much currency is worth in U.S. dollars," said Wolanski. "Use your financial institution as a trusted advisor to ensure you have the right mix of cards and cash to handle everyday spending needs."
Travelers (72%) want to exchange currency with a provider that has better exchange rates. More than six-in-ten (61%) of travelers who do exchange their currency, do so within a week of departure. Seventy-three percent of travelers' exchange foreign currency back to U.S. dollars when they return. Ninety-three percent of respondents consider it important for a currency provider to have foreign cash available immediately.
TD Bank offers more than 60 currencies at competitive exchange rates. Many TD Bank Stores carry common currencies on site; if a traveler needs a currency that's not available on site at a TD Bank Store, they can order it and pick it up typically within 2-3 business days.
TD Bank also has several Foreign Exchange Centers that carry an extended selection of foreign cash, with up to 15 currencies available in inventory for immediate transactions. Travelers do not need to have TD Bank account to exchange foreign currency at TD Bank.
An infographic highlighting key survey data is available here.