Going to Paris for the holidays? Gearing up for next summer’s big trip to Thailand? While booking a flight, setting up housing, planning your itinerary and packing your suitcases are tasks many soon-to-be travelers are eager to jump on, setting up your finances prior to shuttling off to the airport requires some work.
Nothing can put a damper on your holiday like getting to your vacation destination only to find you have a frozen credit card and a thin cash supply or worse, have your money or valuables stolen. Whether you’re headed out on a one-week skiing trip to Switzerland or a three-month adventure across Asia. Here are some important tips that will help stretch your hard earned dollars while protecting your personal finances before departing.
See the World without Breaking the Bank
Accessing and Managing Your Money Abroad
Foreign travel can be an expensive and difficult proposition for many families to afford. Still, there are ways to lessen the burden of accessing and using your money or credit cards during an international trip.
Alert Your Bank and Credit Card Companies of Your Travel Plans
Be sure to alert your bank and credit card companies of your upcoming travel plans, locations and dates. If you do not alert them before your travel, they may suspect a thief has gotten ahold of your cards or identity to make fraudulent foreign purchases without your knowledge. Many times they will automatically freeze your account or cards; a process which may require several days to rectify, which can be doubly difficult while traveling overseas.
Look into No-Foreign-Fee Credit Cards
According to an exchange rate study conducted by Card Hub, international travelers can save up to 15% by using a credit card for most purchases (sometimes this includes cash withdrawals). However, most credit card issuers charge foreign usage fees, which inflate the cost of any transaction processed outside the United States. No foreign transaction fee credit cards don’t have these fees, making them perfectly suited for overseas spending.
Foreign fees apply to purchases made through foreign-based companies whether you are outside of the U.S. or not at the time of purchase. Before booking your flights or foreign hotels, make sure your credit card issuer does not charge these types of international fees. If they do assess these fees, consider booking your travel on a no-foreign-fee credit card.
Though the majority of your purchases abroad should be made with a credit card, you will need cash for cabs, small incidentals or within remote regions. Ask your bank about opening a low-foreign-fee debit card which will allow you to make low-fee ATM withdrawals or debit purchases during your trip.
Compare Currency Exchange Rates
Weigh your currency exchange options carefully to get the best exchange rate. Then, only convert enough cash to comfortably cover your initial expenses but not more than you feel comfortable carrying with you.
There are essentially three ways to exchange currency: converting cash at a bank before your trip, using one of the currency exchange services at the airport, or simply using a low or no-foreign fee debit/credit card, in which case your currency exchange is converted automatically.
Compare bank exchange rates and watch out for fees. According to Card Hub’s study, there is at least a 4% disparity between the exchange rates offered by US banks. Some banks might charge shipping or processing fees, so make sure to inquire about extra charges before agreeing to a conversion.
Steer clear of Dynamic Currency Conversion
If a merchant offers to convert your purchase total from the local currency to U.S. dollars, they might be trying to help you out or they could be looking for an excuse to apply a high exchange rate and squeeze a bit more money out of you. It’s best not to find out, pass on the dynamic conversion and
simply use your smartphone to convert the price of a transaction to better understand how much things cost.
Upon returning from your vacation, review your credit and debit card purchases and ATM withdrawals with your bank or credit card companies. Do not wait for your monthly statements – if a thief is using your information, you will want to alert your financial institutions as soon as possible.
Protecting Your Money and Identity While Overseas
While it helps to have a credit card without foreign fees, get the best possible exchange rate when converting cash, and avoid costly merchant tricks, there are other ways to protect your personal finances so that a post-trip look at your bank account does not result in any surprises. Don’t let fraud, pickpockets or identity thieves ruin your vacation.
Here are a few tips for protecting your money:
- Photocopy the front and back of your passport, your travel itinerary, any traveler’s checks, debit/credit cards and foreign cash before you leave on your trip
- Leave a copy of this information with a friend or family member at home, then take a copy with you (secure this information in a hotel safe or a secured pocket of your luggage
- Carry just enough cash to cover incidentals, public transportation and, if needed, tips
- Use your (low or no-foreign fee) credit card for major purchases, like hotel stays, transportation, car rentals, meals and shopping. Most credit cards have zero-liability policies, and the Fair Credit Billing Act specifies that your maximum liability for unauthorized credit card charges is $50, so that is the most you would be stuck with for unauthorized charges if a card is lost or stolen
- Use caution at ATMs or when making purchases in public places. Try not to let everyone see how much money you are withdrawing or carrying, so as not to become the target of thieves
- Consider travel insurance. Depending on the policy, it may cover canceled flights, lost luggage, emergency medical treatment or disaster evacuation
Vacations are a time to focus on fun and relaxation. The last thing you want to worry about is dealing with money stress. Before you leave, spend some time with your trusted financial advisor, bankers and credit card companies to devise a plan for saving and protecting your money while traveling abroad.