What does 'duty-free' mean?

If you're like me, you frequently browse the items strategically placed near the checkout lane at grocery stores as you wait in line, asking yourself if you need to add just one more item to your cart.

This idea of buying things you don't necessarily need also runs through my mind frequently at airports thanks to duty-free shops. They entice me with the allure of saving money by shopping sans an import tax on goods transported internationally.

I most recently shopped for duty-free items at Paris-Charles de Gaulle Airport (CDG) after spending a week trying to find simple shortbread cookies and plain chocolate for Mother's Day to no avail.

Not only did I find some at the duty-free store in CDG's Terminal 2, but I also realized if I was getting something for her, I should probably get something for my dad, too. As a result, I bought two boxes of cookies and a chocolate bar.

Whether your next international trip happens to coincide with shopping for a loved one or you just want a preflight snack, here's everything you need to know about duty-free shopping.

What is duty-free shopping?

If you've ever flown internationally, you've likely at least noticed (if not shopped for) duty-free items at the airport while on your way to another country.

In fact, some larger airports, including Heathrow Airport (LHR) and Los Angeles International Airport (LAX), have nearly 20 duty-free stores to choose from.

What exactly does "duty-free" mean, though? It all comes down to taxes.

Duty-free stores allow outgoing travelers to shop without being taxed locally, so you can purchase select items without paying a duty so long as you transport them across international borders, per U.S. Customs and Border Protection.

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Duty-free stores are typically located in international terminals, though regular terminals with international flights may also offer duty-free options.

Travelers can buy a range of luxury items at these stores, including food, alcohol, tobacco, accessories, fragrances and beauty products. Some of the most common duty-free store brands are Dufry, DFS Group, International Shoppes, Duty Free Americas and World Duty Free.

Along with duty-free stores, you can also shop duty-free at some airport retail stores. For example, the high-end British fashion brand Burberry says that "Items can be purchased tax free in selected airport stores," including at LHR.

Travelers can also purchase duty-free items online from duty-free stores and individual retail outposts. Once they decide which items to purchase, they can choose a reserved time to pick up their order.

How does duty-free shopping work?

To buy duty-free items, locate the duty-free stores at your airport. Most airports list their various shops online. However, you can also search for duty-free shops specifically, as illustrated below with Chicago's O'Hare International Airport (ORD).

Before heading to the duty-free store, be sure to grab your boarding pass since you'll likely be asked to show this as proof that you are departing the country on an upcoming flight.

If you buy liquids at the duty-free store, such as liquor, fragrance or lotions, know that duty-free items are exempt from carry-on liquid limits set by airport agencies, so you can pack larger liquids in your carry-on bag when coming back to the U.S. This is the case even if you have a connecting flight.

To avoid any issues with bringing your items through security, keep each purchase in the tamper-proof plastic bag it's wrapped in by the duty-free store employee until you leave the airport. Hold on to your receipt since you may be asked to show it as proof of your purchase.

Certain countries place purchase caps on select items, such as tobacco and alcohol. They also limit the amount of money you can spend on international purchases without being charged a duty tax.

Currently, Americans can spend up to $800 within 31 days without being taxed for their purchases, according to the U.S. Department of Homeland Security. To verify duty-free allowances for your particular country, visit the Duty Free Americas website.

Read more: Where are the cheapest duty-free stores? We checked 50 airports to find out

Can duty-free shopping save me money?

Although you can potentially save money by buying duty-free items, how much you may save depends on the specific item and your location.

A 2019 TPG cost comparison of items from duty-free stores at more than 50 airports across six continents concluded that the prices of items at duty-free shops varied by location and sometimes even between different duty-free shops at the same airport.

Overall, it's cheapest to buy alcohol in the Caribbean, cosmetics and fragrances in Europe, and tobacco in Asia, according to the study.

To get the best price possible, do your homework before your trip. Research the prices of similar or identical items at airports with multiple duty-free shops ahead of time. Also, remember to compare those prices to non-duty-free shops.

Don't forget to consider the strength of the U.S. dollar against the local currency where the shop is located. You can do this by using a currency converter such as XE.

If you're traveling to Europe, remember that the duty-free shops are free of a value-added tax, so you can save up to 27%, depending on the country you're visiting.

"The key to a successful duty-free purchase is math. There are some good deals out there, but all too often, I've found that I can get better prices at home," said TPG executive editor Scott Mayerowitz. "Know your prices and exchange rates. Don't be afraid to take out your phone and compare prices with online retailers."

Can you buy duty-free items outside of airports?

In addition to airports, some cruise ships, like Royal Caribbean's new Wonder of the Seas and Norwegian Cruise Line's new Norwegian Prima have duty-free shops on board.

"All bigger ships have stores on board, usually a few, that sell everything from cruise line logo wear to souvenirs," said Gene Sloan, TPG's principal cruise writer.

"Even if not specifically labeled duty-free, they are, in theory, all duty-free in the sense that there is no local tax as long as the ship is at sea in international waters. For this reason, cruise ships will not open their onboard stores until they are out in international waters — so they don't have to collect a tax."

Can you use miles to shop duty-free?

Even though you can use some airline miles at duty-free stores, you'll want to calculate how much value you can get from using miles on flights compared to duty-free items.

For example, you could spend 4,500 Emirates Skywards miles for a $20 credit at a duty-free store at Dubai International Airport (DXB), which gets you just 0.4 cents per mile, way below TPG's current valuation of Emirates miles at 1.2 cents apiece.

Before redeeming your miles this way, compare that earnings rate to the price of an Emirates flight using Skywards miles versus cash.

For example, you could book a round-trip flight from John F. Kennedy International Airport (JFK) to Milan Malpensa Airport (MXP) for 45,000 miles plus $141 in taxes or $804 in cash this April. By using miles, you'd get a redemption rate of roughly 1.47 cents per mile, a much higher rate than the duty-free redemption option.

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Instead of using your miles for duty-free purchases, you could use them to book an Emirates flight, which is likely to yield more value than using your miles to shop duty-free.

Using your miles to book flights instead of using them to shop duty-free is likely a better deal across airline currencies.

Bottom line

You may ask yourself whether you should shop duty-free before boarding your next international flight home. If you've done the appropriate comparisons and calculations, it should be clear whether it makes sense to buy duty-free based on projected savings.

It may not always make financial sense to buy duty-free items. However, when it does, use a credit card with zero foreign transaction fees when making your purchase. Also, keep in mind how difficult it is to find the item you're hoping to buy.

"I enjoy bringing home liquor, but I know the prices at my local store and if something is a good deal or not," Scott shared. "Usually, I only buy local spirits that I can't find at home. And even then, I need to factor in the hassle of lugging home a bottle or two and risking that it might break along the journey."

If the value you'll gain from buying that item outweighs the inconvenience of bringing it home, it may be worth the investment — even if it requires spending some extra money.