When traveling overseas, you need to be aware of two potential rip-offs that can cost you a lot of money: dynamic currency conversion (DCC) at ATMs and credit card machines.

Dynamic Currency Conversion (DCC) at ATMs

DCC is a process that allows ATM operators to offer you their own currency-exchange rate when you withdraw money from an ATM overseas. This rate can be as much as 12% to 18% higher than the official interbank rate, meaning you're losing out on a lot of money.

How to avoid DCC at ATMs:

• Find a local bank ATM. Avoid ATMs operated by third-party companies, such as Euronext.
• Always choose "Continue WITHOUT Conversion" when the ATM asks you if you want to convert the currency. This will ensure that your home bank processes the transaction and uses the official interbank rate.

DCC at credit card machines

When making a purchase overseas with your credit card, the merchant may ask you which currency you would like to use to complete your payment. Most travelers reflexively choose their home country, thinking that by choosing, say, dollars instead of the local currency they won't pay a currency exchange fee. However, this is not true.

How to avoid DCC at credit card machines:

• Always choose the local currency when the credit card reader offers you a choice between paying in dollars or paying in the local currency. Your U.S. credit-card company will handle the currency exchange and it will almost always be at, or very near, the official interbank exchange rate.

Best credit cards for traveling abroad

There are a number of credit cards that are good options for traveling overseas. However, not all cards are created equal.

What to look for in a good credit card for overseas travel:

• No foreign-transaction fees. Foreign-transaction fees can add up to 3% to 5% to every single purchase you make overseas.
• No annual fee. There are a number of good no-annual-fee credit cards that are perfect for overseas travel.
• Rewards program. There are a number of credit cards that offer rewards on travel, such as points that can be redeemed for airfare, hotel rooms, and other travel expenses.

Two of my favorite cards for international travel are:

• Capital One Venture Rewards: This card offers unlimited 2x miles on all purchases, which can be redeemed for travel at a rate of one cent per mile.
• Chase Sapphire Preferred: This card also offers unlimited 2x points on travel, but it also allows you to transfer points to a variety of airline frequent flyer programs at a 1:1 ratio.

Additional tips for saving money when traveling overseas

• Use a travel agent. A travel agent can help you research the best deals on flights, hotels, and other travel expenses. They can also help you avoid currency exchange fees and other hidden costs.
• Pack light. The less you have to carry, the less you will have to pay for baggage fees.
• Eat and drink locally. Eating and drinking at local restaurants and bars is a great way to experience the culture of your destination and save money on your trip.
• Take advantage of free activities. Many cities offer free walking tours, museums, and other attractions. Be sure to research what is available in your destination before you go.

By following these tips, you can save hundreds of dollars on your trips overseas.