How to Manage Your Finances While Traveling
Perhaps the most stressful part about preparing for any major trip is figuring out the logistics of managing your money. Bank accounts, credit cards, currency conversions, transaction fees… It’s a lot to wrap your head around when all you want to do is let loose and have some fun. I’ve made many missteps over the course of my travels and have learned a lot about how to better organize my funds. Follow these steps with your finances, and you can look forward to smooth sailing.
The best favor you can do for yourself is to open a checking account with no ATM fees, immediately. Many online-only banks, for example, allow you to withdraw from any ATM overseas without incurring withdrawal or conversion charges. Some will even refund you for any fees imposed by the local ATM you’re using. The first time I traveled around the world, I used my regular Bank of America ATM card and was dinged up to $10 every time I made a withdrawal. I shudder to think how much I wasted in unnecessary fees over the course of that year. Now, I have a Capital One 360 online account and can withdraw without a care. Don’t make the same mistake I did!
While you’re at it, make sure the new account you open has a different symbol on its ATM card than your current one does. Many ATM machines outside of the country accept cards with the Visa or MasterCard logo, but not both. The second time I spent a year traveling, I just got lucky with this tip, and it saved me on more than one occasion. Don’t get caught somewhere with an account full of money you can’t access!
Now that you’ve got yourself covered by traveling with two ATM cards, for Pete’s sake don’t carry them both in the same place! If your wallet gets lost or stolen with both cards in it, you’re in trouble. Personally, I like to stash my backup card somewhere deep and hidden in my large pack while carrying my main fee-free card in my wallet or carry-on. Keep a few hundred dollars in this secondary account, and use it for emergencies only. One time in the Buenos Aires airport, after withdrawing the remaining funds from my bank and exchanging them for South African rand, I was denied my flight to Cape Town (for not having enough blank visa pages in my passport). The currency exchange facility was already closed, and I didn’t have any Argentinian pesos to get back into the city. After a quick dig through my luggage, thankfully I was sorted!
Remaining funds you may ask. How could you be out of funds in the middle of your trip?! I don’t like the idea of traveling with huge sums of money in my checking account. There are plenty of horror stories about ATM robberies and account hacking, so you don’t want every penny you have to be vulnerable. Set up an account that is NOT linked to any ATM cards (perhaps a savings account at your bank, or an investment institution like Fidelity) and store your precious nest egg in there. You can set up automatic “paychecks” every few weeks or month on the road, which not only protects you from fraud but also helps you stick to a budget!
Speaking of ATM security, be smart when you pull out money. Try to stick to big-name banks that are less likely to have had their machines tampered with. Only make withdrawals during daylight hours, whenever possible. And, my personal favorite, stash that cash. Rather than walking out with a purse or pocket full of money, I like to hide the majority of it in my shoe, bra, or better yet, both. Dividing up your cash will ensure that even if a malicious stranger tells you to hand it over, you’ll always have some on reserve.
One final tip with regard to ATM cards: Make sure your pin numbers are four digits long. Some banks issue longer pins, and many ATM machines overseas don’t work with more than four digits. Another pesky detail that could really ruin your holiday!
ATMs, of course, aren’t the only fee imposers you have to worry about it. Credit card companies can charge hefty foreign transaction fees for using them abroad. A little research will yield several credit cards geared toward travelers, which will spare you from these unnecessary costs. Do a little digging, read the fine print, and make sure the annual fee (if any) is outweighed by the savings and benefits!
This probably goes without saying, but make sure that your card earns points that are useful to you. I’m always looking for a way for my current travels to fund my future travels. Chase Sapphire Preferred, Capital One Venture Rewards, and Blue Sky from American Express have all been recommended to me by fellow vagabonds. I use the Southwest Rapid Rewards Visa, because I fly with the airline most often when I’m home in the States. Since enrolling in the card and using it for just about everything, I haven’t paid for a single domestic flight. Find the card that works for you, and begin racking up the rewards!
When all else fails, there are few jams you can’t get out of with a good crisp American bill. Even in places that don’t officially accept the currency, it will often work in a pinch. That’s why I always travel with an emergency $20 hidden beneath the insole of my shoe. The key is crisp. I once found myself in Egypt’s White Desert, with no working ATM or credit card machine for miles. The bus dropped us off at an inn that thankfully agreed to take my U.S. dollars—until I pulled out the bill. The manager inspected its tattered edges and insisted it was “broken.” I learned my lesson, and next time, I protected my emergency bill in a small plastic baggie. Still not foolproof, but better than nothing!
I am often asked whether I prefer to use cash or credit while traveling, and my stance is this: In developed countries, use credit cards whenever possible. You’ll earn rewards, you can easily keep track of your spending, and your purchases are more protected. In some places, of course, this is just not an option. In destinations where credit cards aren’t widely accepted, you’ll have no choice but to use cash for everything. So there is no strict answer here, but my philosophy is if they’ll accept it (with no added fees), swipe away!
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Any other financial tips for traveling to share? Tell us below.
Opening photo: Jessica Sample