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Travel banking can be confusing for first time travelers, especially if they are heading abroad. Using your existing bank can actually cost you an arm-and-a-leg and see your funds dry up much quicker than expected. Or even worse, there are a number of travel scams and tricks that could be much more devastating.
Here’s what I’ve learned about managing my money while traveling over the past few years and what I recommend to all before they set out.
Best Debit Cards for International Travel
As you may know, your bank will often charge you for using another bank’s ATM. Likewise, the other bank will most likely charge you for using a card from another bank.
You will be double charged in order to withdraw money. And each of those fees is usually around $3-5.
Moreover, in almost all cases it is best to travel with small relatively amounts of cash (a hundred dollars or so) in case you lose your wallet, get pickpocketed, etc.
This means you may be paying around $6-10 or anywhere for four to ten percent per withdrawal. Losing that much of your travel fund on a long-term trip will add up to hundreds of dollars in fees.
If you’re from the US, this is an easy answer.
You need a Charles Schwab Debit Card.
There’s no monthly fees, it as a modest APY (interest), offers free checks, and no minimum balances, but… Best of all:
Charles Schwab offers reimbursements for withdrawals of other bank’s ATM fees, anywhere in the world.
This means that you can withdraw cash without worrying about those stupid fees, and you can withdraw smaller amounts more regularly (a few times a week or even daily) in order to avoid carrying too much cash with you.
I’ve been using the Charles Schwab Checking and Debit Card for years now, and it’s a no-brainer. There are no fees whatsoever, even when it comes to other banks. It’s a beautiful thing.
You need to get things setup BEFORE leaving the country and be sure to leave a good lead time, because the paperwork and process takes a little bit.
If you’re not from the US, you might check out HSBC Checking, which has received positive comments from other international travelers.
Managing Your Accounts
It is dangerous to put all your eggs in one basket.
It is best to keep your money spread out across two or three different bank accounts.
Here’s how I manage my money:
1) Primary Checking Account – This is where I keep all my money for paying any bills or non-travel things (except for paying for my travel credit card monthly bills, more on that in a minute).
I do not currently even have a Debit Card for this account, and you should NOT travel with a debit card for this account — either cut it up or leave it safe at home.
I keep my money in a local credit union, which I find to be much better than the big banks.
2) Travel Checking Account – This is the Charles Schwab Checking Account mentioned above. Here is where I keep my cash for travel which I use exclusively for ATM withdrawals (I don’t use this card for any purchases).
You should only keep around $1,000 or so in this account at any given time, so if your card is compromised or stolen, no one could clean you out totally.
I set up automatic transfers once a month between my other account and this travel checking account so it is always topped off. Be aware that funds take between 3-5 business days to clear, so if you wait to transfer cash manually when your account is near empty, then you may be left with NO CASH for a few days.
Just automate the transfers to go out once or twice a month and that way you will never forget.
3) Primary Savings Account – This is your third and final account where you can keep the majority of your funds isolated away from either of the above. Again, set up automated transfers FROM this account if you don’t have other income to cover the expenses in your debit card or primary checking account.
My bank of choice for this is the Capital One 360 account, which is free and offers great interest rates compared to my credit union’s savings or the Schwab checking account, so it’s the best place to keep the majority of your money before making any transfers.
What’s great is that a new account with Capital One 360 includes a checking account with a debit card, which you could use in emergencies if your Schwab card was lost or stolen. I don’t keep any money in this checking account, and set the card up to automatically deny when there are insufficient funds (overdraft settings). Bury this card at the bottom of your pack or somewhere hidden, just in case of emergencies, because they don’t reimburse other ATM fees like Schwab.
Travel Credit Card
Here we will be talking specifically about use while traveling or overseas — and not travel rewards credit cards (which are used to earn free flights around the world or even free nights at hotels), so if that is of interest, you’ll want to read more about how to travel the world on a budget.
In any case, this travel credit card is meant to be used overseas while traveling, so you want to ensure that your credit card has NO foreign transaction fees.
I use a Capital One Credit Card for this purpose. It doesn’t really matter what you use, but it should meet the following two requirements:
- It is a VISA card (most widely accepted) and
- It has no foreign transaction fees
You must set up the card to pay off the balance in full each month (best from your primary checking account, not your travel checking account) in order to avoid any fees whatsoever. Separating your checking accounts ensures you always know how much you need to have to pay for incoming bills and how much you have for cash during your travels, so you don’t accidentally deplete one account and then not have enough cash or enough money in your account to pay your bills (incurring overdraft fees or other late fees).
I use my travel credit card in order to charge any purchases (again, I never hand over my debit card to anyone, which could be skimmed), like for hotels, gas stations (since I’m road tripping through multiple countries), grocery stores, etc.
Even if there was a fraudulent charge (it hasn’t happened to me yet in oh so many countries), a credit card is much easier to refute than a debit card (although Charles Schwab says they will reimburse fraudulent charges too).
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In some countries those are about the only chance you have to use a travel credit card because cash is still king in most of the world…
Protect Your Cash
Cash is the main way I pay for things while traveling because it’s accepted literally everywhere. But you must take proper precautions to keep your cash safe while traveling.
Again, the best way is to withdraw small amounts, more frequently, as mentioned above.
Generally speaking, if I’m on the move, I use a money belt to keep my debit and credit cards safe and tucked away, alongside my passport and any cash that I don’t need for the day. It’s a peace of mind knowing that your most important items are tucked away and safe.
Previously I’ve also made secret pockets inside the lining of my pants — simply by buying an old button up shirt which also had button closures the pockets (Goodwill for 99 cents!) then cutting out the pockets and affixing them inside my pants.
I found that I didn’t use them that often though and just resorted to a decoy wallet which is essentially a wallet with an old driver’s license, an expired credit card, some old grocery store club cards and a little cash.
That way if I was robbed or pickpocketed, they’d get the decoy wallet while my debit card and cash was simply kept loosely in my front pocket (harder to pickpocket without noticing).
Since then I’ve adopted the old-school money belt which I find to be more handy (you can more easily take out cash or cards, without halfway taking off your pants).
It is a good idea to keep any extra cash hidden somewhere discrete, I also like to keep at least $100 USD or more in twenties somewhere on hand as an emergency fund in case I am left without a card, need to exchange money unexpectedly at a border crossing, or for whatever other reason.
Trust me, it’s way easier to stash away five individual bills, rather than a stack of 300,000 Colombian pesos (as an example of the equivalent of $100).
I also keep one other credit card on hand (which isn’t a no foreign transaction fee card, but it could be) which is well hidden, just in case of even bigger emergencies, along with that emergency debit card associated with my Capital One 360 account.
I avoid or minimize exchanging money wherever possible.
If you use your debit card at the ATM you will get the best possible exchange rate. If you must exchange money, try and do so with another traveler heading the opposite direction in order to get the best and fairest rate.
I’ll never forget the time I traded over the last of my Bolivian money with an Australian on a bicycle at the edge of one of the most remote border crossings (we had to carry extra gas cans just to cover the distance) in Bolivia.
Otherwise, I simply try to spend the last of my local currency on any essentials before I make the crossing.
You will get a lousy rate at any exchange kiosk or from any informal border currency exchanger, that is a given.
If you are changing at one of these places, hopefully it is for a low amount and ALWAYS be aware of the current rate (keep the XE app on your phone) and be sure to double check the math with the rate they quote you. Many have been known to use a rigged calculator that skims a percent when it shows the result.
Keeping Track of your Finances
With the earlier tips about trying to manage three different accounts, plus a travel credit card, you may think that is just too much to keep track of.
It would be without the added help of Mint.com. Mint is a site that aggregates all your personal finance information across all your accounts — no matter how many checking, savings, credit cards, or investment accounts you have.
Here you can always log in and get a great picture of your overall financial health, including tracking any transactions (be mindful of any strange or fraudulent transactions) as well as ensuring that your various “buckets” of money are topped off if you need to transfer funds.
I’ve been using Mint for many, many, years and is something I also credit with helping me manage my money in order to set out traveling in the first place. It’s free. Get it, there’s no reason not to.
Tips for Fraud Prevention
Being watchful of your charges and transactions on a weekly basis is step one, but what else can you do?
One, never use a public computer for financial purposes unless it is an absolute emergency.
Two, be cautious of using public wifi networks as well — they are surprisingly easy to hack — whether on your cell phone or laptop.
I use a VPN on both my phone and desktop for any sensitive purposes like banking which keeps my connection protected and safe. I use ExpressVPN if you are looking for a great provider.
Finally, be sure to advise your bank about any upcoming travel plans — it will help them be aware of any fraudulent activity, and it’s super important in order to ensure that your card actually works upon arrival and isn’t blocked by them.
So there you have it! A comprehensive guide to travel banking that should keep your money safe, the fees to an absolute minimum (zero, I hope!), and keep you happily traveling for some time to come.
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