These tips are catered towards long term travel and based on being a Canadian citizen, but many of the strategies are universal and useful for a trip of any length. In addition to getting insurances, vaccinations and everything else that is involved in planning for travel, there is the question of how to deal with your finances while on the road. Luckily we had no theft or financial concerns during our fifteen months of traveling around the world. Hopefully the steps we took would have made a theft, loss or crisis easier to deal with had it occurred.
Have As Many Money Sources As Possible
You want to have as many ways to access funds as possible, never rely on one money source. The last thing you want is to be one of those travelers who gets robbed or runs into some kind of situation that leaves them stranded without any money. Have a couple of bank accounts, credit cards, emergency travelers checks, bank cards, and spare cash. The other key is to carry these items in different places. If you get robbed you don’t want to be wiped out of everything you have.
What About All Those Fees?
I’m sure there are ways we could have incurred less transactions fees if we looked into it further, but we didn’t have a lot of time to research. Our main concern was to minimize our risk of getting stranded without access to funds. After fifteen months of traveling we ended up paying a couple of hundred dollars in bank and credit card fees. If you have the time and are on a really tight budget, then by all means see what the absolute cheapest solution is. We just accepted these fees as part of our overall travel expenses.
- ATM’s are usually the cheapest and easiest way to access money while traveling.
- ATM’s are all over the world and surprisingly in some very remote places, usually with an option for English instructions.
- Try to avoid ATM’s not run by a major bank, they have higher fees.
- We’re always warned not to carry around large amounts of cash, but can you imagine how quickly the fees would add up by accessing cash in small increments. We took out larger amounts of cash and split it up between the two of us, concealing it in several places.
- An ATM card from a bank that is part of the Global ATM Alliance allows you to use other banks machines around the world that are also part of the alliance. You will not be charged an ATM international access fee.
Here are websites for locating ATM machines that accept Mastercard and Visa throughout the world.
Our long term bank account is CIBC. We did research on banks and didn’t find a lot of differences in fees, we decided it would be easiest to keep our existing account. At the time CIBC was charging a $3.00 transaction fee and 2.5% on funds withdrawn outside Canada. Then there is the charge issued by the bank machine you are using. The currency exchange rate is whatever the currency rate is with CIBC at the time of the transaction. At first we were overwhelmed with the amount of fees, but in the overall big picture the amount we paid over the duration of our travels wasn’t that much.
There was a bit of strategizing done in case something went wrong with our bank account. We did not keep all our money in our CIBC account. That way if our bank cards were lost or stolen it would be a smaller amount of money at risk. We had a separate account with the ING bank that held our money for the duration of the trip. The added bonus is that we gained a nice amount of interest while it was in there. As needed we transferred money from the ING account to the CIBC account online. Usually in an increment of around $3000 to $4000 dollars. There is no charge to transfer your money, but it’s not immediate. You need to allow two days for the transfer.
- You want to make sure your card is part of the Cirrus or Plus system to have the most access world wide.
- Consider having more than one account to minimize risk and take advantage of collecting interest.
- The pin number for your card should be 4 digits, 6 digits may not work in overseas ATM’s.
- Have the bank card accessing your funds from checking, some machines will not allow you to select savings as an option.
- Smaller banks such as Credit Unions may offer better international transaction fees.
Consider Adding A Trusted Person Onto Your Bank Account
If your credit card is lost or stolen during your travels there are solutions to deal with it. I have heard of cases where travelers have had a new card in their hands within 48 hours. If your bank card is lost or stolen the bank will not issue a new card while you are out of the country. We found a way around this by putting my mother in-law onto our bank account as a 3rd person. She had full signing authority and all the same rights as we did on the account. If our bank card was lost or stolen or a bank machine ate it, we could immediately cancel it. She could go in to the bank and get a new one issued and have it safely sent to us by courier.
Another option I have heard long term travelers do is to provide someone with Power Of Attorney. It would allow that person to do a number of things in certain situations and emergencies.
Flights, accommodation, restaurants, shopping and anything else we could charge went onto our Mastercard. This usually gave us the best exchange rate and allowed us to collect airmiles. Using a credit card also offers some protection in case of fraud or other issues with a purchase.
- Visa is on the Plus system and Mastercard is on the Cirrus system, in some places you will find ATM’s that only take one or the other. Carry one of each to offer the most world wide flexibility.
- To minimize risk one of us would carry both MasterCards and the other both Visas. We figured the likelihood of both of us being robbed was less, we would only have to report the loss of one card and still have access to the other.
- Keep your credit cards in a separate spot from the bank cards on your bodies. It’s all about minimizing loss in case of theft.
- More often than not your credit card is going to give you the best exchange rate. Depending on your card issuer there may be an international transaction fee, our cards charged 2.5 % and a $3.00 cash advance fee. The ATM will charge a fee as well. The exchange will be calculated by the credit card company for what the rate was at the time of transaction.
- Interest starts immediately on your credit card cash advances. We would go online and make a payment from our CIBC account as soon as we did advance. Sometimes we would even do a payment ahead of time. There’s nothing wrong with making a payment to put your card into a positive balance and then making the cash advance.
- Make sure you let your bank and your credit cards know you are traveling to avoid your accounts being suspended.
- Look into a cash cards/prepaid visa or mastercards as an option, but they can have restrictions and transaction and reloading fees. Pros and cons of prepaid debit cards.
- Capital One is said to have a card that does not have a foreign transaction fee.
- If you don’t have a pin and chip card you may run into places that can’t accept it.
- For extra security cover the 3 digit Security Code on the back of your credit card with a small sticker.
- Only use your credit card at trusted establishments. Don’t let it leave your sight, go to where the clerk is putting through the transaction.
- In North America this is not legal to charge and extra fee for using a credit card, but is common practice in some foreign countries. Ask before using your card.
Avoid (DCC) Dynamic Currency Conversion On Credit Card Purchases
Dynamic Currency Conversion is a fast growing way to make extra money from foreign card transactions. The merchant can put your credit card transaction through in your local home currency.
- At first it seems like a great service, but if you accept you can end up paying between 7 and 10 percent more for your purchase. Insist your card is charged in the local currency of the country you are in. The merchant is not supposed to do a DCC transaction without your approval, but this isn’t always the case. You have the right to refuse this service, but you may run into some resistance.
- The exchange rate for DCC can be set at what ever the merchant wants. It will be a least 3% higher than if you just let the transaction go through normally and allow your credit card to do the conversion. To make it even more costly your credit card company may still consider the DCC transaction as an international one and tack on an extra fee.
- If your receipt lists the price in two currencies it may have been done as a DCC transaction. If it shows the transaction in your home currency it certainly has. Ask that it be reversed, speak to a manager if you have to and if you don’t get any satisfaction take it up with your credit card company. Write on the merchants receipt copy that the local currency was not offered.
I think the days of travelers checks are pretty much over. It can be quite difficult to find places that accept them and establishments that still do often charge a large fee. That being said we decided to take some with us anyways, as an extra money source to access if needed. We took $1000 worth in U.S. funds. The majority of them never got used until we returned back to Canada.
Emergency Contact Information
Make sure you have emergency contact numbers for all of your bank accounts and credit cards. The 1-800 numbers you would normally call from home will not work in other countries. For your credit cards they should be able to provide you with a 24/7 number that you can call collect from any country. Ask your bank if they have an international call number as well. Keep a copy of these phone numbers and your credit card numbers safely stored separate from the cards.
- Some good sites for world currency exchange information are Oanada.com and XE.com
- It’s always a good idea to get a small amount of local currency for your destination ahead of time. You want enough to be able to cover the cost of a taxi or bus and to grab something to eat when you arrive at your destination.
- It’s best to avoid exchanging money at hotels, airports and train stations, they usually offer very poor rates.
- You may find better exchange rates in larger cities over small towns. Be careful when traveling to remote areas or small villages, it’s best to have enough money to get by for a while. You don’t want to get stuck without access to funds.
- Know the going rate before hand so you don’t get ripped off the first time you exchange money.
- In most countries the currency exchangers must be licensed. There is usually a specific sticker or government stamp they have on display. Take note that you are usually required to show your passport to do a currency exchange. If a rate seems to good to be true or significantly less than the usual, something is probably not right.
- Exchange rates are displayed in many different ways, making it difficult to make comparisons. A lower posted rate may have a fee or commission percentage added on to it. Make sure you account for this fee in your calculations, it could make the rate significantly higher than the next guy. The rate displayed may be the sell rate, but you will get charged the buy rate, or it may only be applicable for a certain amount of money to be exchanged. There are all kinds of tricks to confuse the traveler.
- If communication isn’t a problem we have asked for the exact amount of local currency we will get in our hands in exchange for a certain amount of money. We then ask the same question at several places, it’s astonishing how the amounts can vary from one kiosk to the next.
- A small currency converter comes in handy for extended trips or travel to multiple countries. They can come in handy for changing money as well as making purchases. I’m sure we can all relate to a mistake when purchasing something, you think you got a deal and then realize you paid a lot more than you thought!
Do Your Research
We started our world trip out by taking around $1000 U.S. cash with us. We carried this is several places and used it as spare cash when needed. In some foreign countries the vendors actually prefered U.S. cash to their local currency. It worked as a good bargaining tool. and in some countries they may actually prefer it.
- Find out as much information as you can about the local currency. You may be traveling in a country that has a very devalued currency. In this case it is best to never hang on to a large amount of it.
- There may be bills that are no longer in circulation, someone might try to scam you by returning them to you as change.
- In certain countries they can be very picky about the condition of the bills, accepting nothing with any rips, tears or writing on them. We came across this in several countries that accepted U.S. dollars, they had to be in mint condition.