How to handle Your Finances when Traveling Overseas

Going abroad with your standard debit card and nothing else? Ouch. Your holiday or work trip will not only be a lot more expensive, but you’ll meet loads of inconveniences, the inability to pay, and perhaps getting stuck calling your family back home to wire you over some money.

Want to avoid this scenario? The following advice will help you handle your finance when traveling overseas. It’s not just for travel newbies either; there are a few tidbits that may be useful for long-haul veterans as well!

Will Your Card Work Where You’re Going?

Don’t forget this piece of advice: research the place you’re traveling to carefully. If your American Express Platinum card won’t work at your destination, those points and airmiles you signed up for will be completely useless.

There are many places in Europe, for example, where the standard credit card isn’t accepted. They’re looking for a Maestro debit instead, meaning that you can sometimes get stuck at the register with no option to pay. Americans also often get stuck due to having magnetic strip cards instead of so-called ‘smart cards’ with microchips (the standard in Europe), meaning various stories of people being stranded without the ability to pay.

A stack of twenty pound notes

What About Cash?

Based in the USA or any other developed country? Look in your wallet. Little to no cash, right? Thought so. That’s because most of us no longer carry bills and coins around anymore, using our cards or smartphones for our daily transactions.

In fact, based on a recent study, 80% of Americans carry less than $50 in cash. Almost 10% carry no cash, and carrying less than twenty bucks is the most common occurrence. This often means that when we go abroad, we often forget to think about cash entirely. That’s a mistake. Many countries still use cash heavily, with markets, small stores, and public transport being common places where cards won’t be accepted.

Don’t forget getting your hands on at least a small amount of foreign currency before you step on that airplane.

You never know whether you’ll need cash on arrival. Maybe you need to pay your taxi driver in cash. Perhaps the foreign exchange office is closed when you arrive at your destination. Or you find that the airport has no big-bank ATMs (and if they do, they’re operated by foreign exchange companies).

Cash is also a great option in terms of preventing fraud. Credit and debit card fraud is rife in some countries, with ATMs sometimes tampered with a unit that can read your card, allowing scammers to make a copy for their own use.

Use a Card with No Foreign Transaction Fee

Debit and credit cards will often ‘get’ you with their small print. Going abroad without checking how much your bank charges for overseas ATM withdrawals and foreign exchange fees can have a huge effect on your expenditure. Some banks charge a minimum each time you use it, and a further % of the total of each transaction to top it all off.

Instead of going with your standard set of cards you use at home, consider opting for a card that is specifically made for those of us that rack up the air miles. Look for cards that offer no monthly fees and no international fees (both for ATM withdrawals and card transactions). Some digital banking options offer overseas medical insurance and delayed flight insurance for a small fee, which may be worth it for those that travel often for work (or are lucky enough to do so for leisure!).

A credit card being presented

Get a Prepaid Travel Card

We love prepaid travel cards. They work just like debit or credit cards, often operated by Visa or Mastercard, but instead of drawing money from your current account, you load up the card with the amount of money you want to spend while abroad. Many companies offer additional perks that make sense for travellers; think lounge access or discounts at certain stores.

The big advantage of this type of card is that there’s a limit to how much you can spend. It’s a good option for those of us that go a little crazy when shopping abroad, and it also offers peace of mind in countries where pickpocketing is common. If you lose your card, there’s no name, no attachment to your main current account, just a limited amount of money (and you can easily cancel the card anyway).

Credit Card > Debit Card

We always recommend using a credit card over a debit card, unless you’re drawing cash from an ATM. There are two clear reasons why it’s a good idea:

  • Limited liability. If your card is skimmed or stolen, you can get your money back pretty easily. Credit cards offer far more protection compared to your standard bank card.
  • Loyalty points, air miles, cash back (and other perks). Even when at home, you should use your credit card. Sign up to a card that gives you perks per transaction. Remember to pay it off every month without interest!

If you’re thinking whether you should use a credit or prepaid card, we usually recommend the former. Prepaid cards are good if you can’t get a card with no FX or withdrawal fees, for example. They’re also useful if you’re particularly worried about your destination. Otherwise, credit trumps prepaid.

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