You are ripped off all the time while traveling. You constantly negotiate transactions from a point of weakness. A taxi or tuk tuk overcharges for a ride—what are you going to do? You completed a ten-hour train ride and arrived at 5:30 am in an unfamiliar city and all you want to do is reach the hotel. An extra $2 for the tuk tuk isn’t the end of the world. Other times you are shopping for souvenirs with no price tags. You ask for the price and know the amount is double, possibly triple, what a local would pay. There are times you wish the pricing was transparent like back at home. That there were clearly visible, fixed prices. That’s an incorrect assumption because the pricing isn’t transparent back home. The frustration of variable tuk tuk fees doesn’t compare to hidden and exorbitant fees U.S.-based banks and credit card companies will take from your hard-earned savings. The biggest travel rip-off isn’t the local touts, it’s the ridiculous ATM and credit card charges from your friendly financial services providers back home. These are sneaky charges and if you don’t have a well-planned financial setup before leaving, these charges will add up and take a chunk out of your travel budget.
For a vacation that lasts a week or two, ATM and credit card fees are a minor inconvenience. You may not even notice these fees. For a year-long trip these fees could cost you two or three weeks of travel. The basic math assumptions: if you are spending $25,000 during your travels, assume $100 a week in cash withdrawals from the ATM, rounded to $5,000 in total for the year-long trip, the remaining $20,000 is expensed via credit cards. Certain banks charge $5 for an international cash withdrawal, on top of what the local bank may charge for using their ATM. A $5 charge to withdrawal per week equates to $250 in finance charges collected by the bank per week. Then there’re the credit card fees. Certain credit card companies charge a 3% international charge to any credit card bill. $20,000 x 3% = 600. In total, that’s $850 stripped from your around the world savings that instead of going to a pay for a night at the hostel, a local meal, or a high-flying adventure, goes to a bank. That’s 3.4% of your $25,000 budget, gone. Disappeared.
Research the fees your bank charges for using other bank’s ATMs. Find a low-fee bank. I maintained two bank accounts, a primary and a back-up. Be aware of the minimum balance requirements with your bank accounts. If you have an account with a high minimum balance (over $1,000) or has a feature that requires a minimum monthly deposit, switch your bank accounts to avoid the $10 (or higher) monthly service fees. Bank of America is brutal with their fee-waiving requirements.
The simple solution to reducing your credit card fees: go with Capital One. [This is not a paid endorsement. No hyperlinks. I’m not The Points Guy. I’ve used Capital One for my entire adult life and find it to be the card with the lowest fees available. I also believe that Capital One has better fraud monitoring and if, unfortunately, your card is stolen and used, Capital One is quick about addressing the issue and crediting the fraudulent charges. Capital One also has a no-fee ATM debit card. Other credit card companies now offer no-fee ATM cards and no international transaction fees. Not all do. Many banks still charge a high fee for an international ATM withdrawal. Research your bank’s ATM fees before you leave. Still no hyperlinks.]
I traveled with two Capital One credit cards, a Capital One debit card, and a TD Bank debit card [another non-endorsement, experience-based recommendation because of their low fees]. I stored the cards in four different locations and checked daily that the cards were still in my possession. I linked my Capital One and TD Bank accounts to be able to transfer money between the accounts.
If short-term interest rates rise to around 2%, considering opening a money market account. Assuming the withdrawal funds occurs evenly over the course of a trip, the average money market balance for the year would be $12,500. 2% interest on the $12,500 average generates $250 of income, enough to cancel out the ATM withdrawal fees.
Close all your remaining open bank and credit card accounts.
Other ATM and Credit Card Tips
Check the expiration dates on your credit cards and order new cards, if necessary. Call your credit card company to inform them you are traveling around the world. Enroll in fraud alert programs.
Currency exchanges offer a worse exchange rate than a bank’s ATM. Currency exchanges at the airport offer a worse exchange rate than those in the city center. Usually. Your best option is to avoid the currency exchanges all together. Know the local currency exchange rate before you arrive. Research the dominant local banks. Use your ATM card at one of those banks.
There is a banking network called the Global ATM Alliance that allows cardholders of several member banks to make ATM withdrawals free of charges from participating banks. Barclays, BNP Paribas, Deutsche Bank, Scotiabank, and Westpac are members. The sole U.S. member is Bank of America. If half your trip will be spent in Europe and Australia, consider opening a Bank of America account. Otherwise avoid Bank of America.
When you pay with a credit card, do not let the merchant convert the price to USD. Rookie mistake. Capital One, and even the worst banks, will convert from the local currency to USD at a better rate than the merchant. Many merchants never do this. When it does happen, it will likely catch you by surprise. You won’t think anything of the merchant’s request to convert the bill to USD and acquiesce, then you’ll sign the check, see the conversion rate, and go yikes.
Credit card and ATM services vary significantly by country. Japan is light years ahead of the U.S. with being cashless which means it’s difficult finding an ATM, finding one with English instructions, and then finding one that’s open. Always read up on cash accessibility before you visit a country.
Setup your financial accounts to receive online statements. I also changed my address to my parents’ address in the event I needed new cards or other information sent to a physical address.
Photograph the front and back of your credit and debit cards. The back of credit cards contain the customer service contact numbers, including the non-1-800, out-of-the-U.S. number you’ll need in an emergency if you lose your credit card.
Pre-travel consider signing up for several affiliate cards. If you are planning a trip three to five years in advance, you should be able to accumulate enough miles for free flights, particularly useful if you are heading to South America to start your trip, and a couple of free nights at major hotel chains. The Points Guy is the best resource for evaluating credit cards, however, I maintain that while traveling, simpler, no-annual-fee credit cards are a more cost effective approach and that the constant transportation and accommodation mix will hinder your ability to accumulate rewards.
Traveler’s Checks and Digital Payments
Traveler’s checks belong to a bygone era of travel. I wouldn’t know what to do with a traveler’s check if I had one. Digital payments, paying with a cellphone tap or application transfer, offer promise but as of May 2020 are not implemented at retail vendors throughout world.
Create a Paypal/Venmo, Cash, or Zelle account so that you can transfer money in an emergency. These applications are slowly making checks and wire transfers obsolete. The first time you transfer money, send a small amount and ask the recipient to confirm receipt. If you send money to the wrong account, whether from mistyping a name, email address, phone number or you are fraudulently tricked into sending money to an unintended account you are out of luck. Once the cash is gone, it’s gone.
With finances it’s not only important to have the initial setup correct, it’s also important to monitor your accounts while you travel. Bank and credit card fees change over time and you’ll want to ensure you don’t run afoul of any new requirements or minimum standards. My recommendations are Capital One heavy, and you may want to diversify your financial setup and find a low fee backup card from another financial provider. These tips should help keep your financial concerns and fee headaches to a minimum while traveling.
For a vacation that lasts a week or two, ATM and credit card fees are a minor inconvenience. You may not even notice these fees. For a year-long trip these fees could cost you two or three weeks of travel. The basic math assumptions: if you are spending $25,000 during your travels, assume $100 a week in cash withdrawals from the ATM, rounded to $5,000 in total for the year-long trip, the remaining $20,000 is expensed via credit cards. Certain banks charge $5 for an international cash withdrawal, on top of what the local bank may charge for using their ATM. A $5 charge to withdrawal per week equates to $250 in finance charges collected by the bank per week. Then there’re the credit card fees. Certain credit card companies charge a 3% international charge to any credit card bill. $20,000 x 3% = 600. In total, that’s $850 stripped from your around the world savings that instead of going to a pay for a night at the hostel, a local meal, or a high-flying adventure, goes to a bank. That’s 3.4% of your $25,000 budget, gone. Disappeared.
Research the fees your bank charges for using other bank’s ATMs. Find a low-fee bank. I maintained two bank accounts, a primary and a back-up. Be aware of the minimum balance requirements with your bank accounts. If you have an account with a high minimum balance (over $1,000) or has a feature that requires a minimum monthly deposit, switch your bank accounts to avoid the $10 (or higher) monthly service fees. Bank of America is brutal with their fee-waiving requirements.
The simple solution to reducing your credit card fees: go with Capital One. [This is not a paid endorsement. No hyperlinks. I’m not The Points Guy. I’ve used Capital One for my entire adult life and find it to be the card with the lowest fees available. I also believe that Capital One has better fraud monitoring and if, unfortunately, your card is stolen and used, Capital One is quick about addressing the issue and crediting the fraudulent charges. Capital One also has a no-fee ATM debit card. Other credit card companies now offer no-fee ATM cards and no international transaction fees. Not all do. Many banks still charge a high fee for an international ATM withdrawal. Research your bank’s ATM fees before you leave. Still no hyperlinks.]
I traveled with two Capital One credit cards, a Capital One debit card, and a TD Bank debit card [another non-endorsement, experience-based recommendation because of their low fees]. I stored the cards in four different locations and checked daily that the cards were still in my possession. I linked my Capital One and TD Bank accounts to be able to transfer money between the accounts.
If short-term interest rates rise to around 2%, considering opening a money market account. Assuming the withdrawal funds occurs evenly over the course of a trip, the average money market balance for the year would be $12,500. 2% interest on the $12,500 average generates $250 of income, enough to cancel out the ATM withdrawal fees.
Close all your remaining open bank and credit card accounts.
Other ATM and Credit Card Tips
Check the expiration dates on your credit cards and order new cards, if necessary. Call your credit card company to inform them you are traveling around the world. Enroll in fraud alert programs.
Currency exchanges offer a worse exchange rate than a bank’s ATM. Currency exchanges at the airport offer a worse exchange rate than those in the city center. Usually. Your best option is to avoid the currency exchanges all together. Know the local currency exchange rate before you arrive. Research the dominant local banks. Use your ATM card at one of those banks.
There is a banking network called the Global ATM Alliance that allows cardholders of several member banks to make ATM withdrawals free of charges from participating banks. Barclays, BNP Paribas, Deutsche Bank, Scotiabank, and Westpac are members. The sole U.S. member is Bank of America. If half your trip will be spent in Europe and Australia, consider opening a Bank of America account. Otherwise avoid Bank of America.
When you pay with a credit card, do not let the merchant convert the price to USD. Rookie mistake. Capital One, and even the worst banks, will convert from the local currency to USD at a better rate than the merchant. Many merchants never do this. When it does happen, it will likely catch you by surprise. You won’t think anything of the merchant’s request to convert the bill to USD and acquiesce, then you’ll sign the check, see the conversion rate, and go yikes.
Credit card and ATM services vary significantly by country. Japan is light years ahead of the U.S. with being cashless which means it’s difficult finding an ATM, finding one with English instructions, and then finding one that’s open. Always read up on cash accessibility before you visit a country.
Setup your financial accounts to receive online statements. I also changed my address to my parents’ address in the event I needed new cards or other information sent to a physical address.
Photograph the front and back of your credit and debit cards. The back of credit cards contain the customer service contact numbers, including the non-1-800, out-of-the-U.S. number you’ll need in an emergency if you lose your credit card.
Pre-travel consider signing up for several affiliate cards. If you are planning a trip three to five years in advance, you should be able to accumulate enough miles for free flights, particularly useful if you are heading to South America to start your trip, and a couple of free nights at major hotel chains. The Points Guy is the best resource for evaluating credit cards, however, I maintain that while traveling, simpler, no-annual-fee credit cards are a more cost effective approach and that the constant transportation and accommodation mix will hinder your ability to accumulate rewards.
Traveler’s Checks and Digital Payments
Traveler’s checks belong to a bygone era of travel. I wouldn’t know what to do with a traveler’s check if I had one. Digital payments, paying with a cellphone tap or application transfer, offer promise but as of May 2020 are not implemented at retail vendors throughout world.
Create a Paypal/Venmo, Cash, or Zelle account so that you can transfer money in an emergency. These applications are slowly making checks and wire transfers obsolete. The first time you transfer money, send a small amount and ask the recipient to confirm receipt. If you send money to the wrong account, whether from mistyping a name, email address, phone number or you are fraudulently tricked into sending money to an unintended account you are out of luck. Once the cash is gone, it’s gone.
With finances it’s not only important to have the initial setup correct, it’s also important to monitor your accounts while you travel. Bank and credit card fees change over time and you’ll want to ensure you don’t run afoul of any new requirements or minimum standards. My recommendations are Capital One heavy, and you may want to diversify your financial setup and find a low fee backup card from another financial provider. These tips should help keep your financial concerns and fee headaches to a minimum while traveling.