Right now you’re probably keeping yourself sane with daydreams about that next great getaway. No doubt, we’ll all be set to jet as soon as we can. But while you wait, rethink some of your practices on the road.
It’s great when you score a deal on your airline ticket and accommodations. But there’s more to getting the most for your money. Truth is, you can make major mistakes with your money that can eat into any gains made by saving on airfare and hotel expenses.
Here’s how to avoid financial pitfalls when traveling.
Use your credit card carefully
Nick Brennan is founder and CEO of Myuksimcard.com, which provides a prepaid U.K. and Europe SIM Card, so you avoid international roaming cell phone charges. He is a frequent international traveler and makes all his payments on a credit card. He explains that a credit card foreign transaction fee is an amount charged by your card issuer for purchases you make that are not in U.S. dollars. Typically, it’s a percentage of the U.S. dollar equivalent for that foreign currency amount. Banks differ but it’s usually between 1% to 3%, he says. For example, if you purchased something in England and paid in £ British pounds, it will appear on your credit card statement converted into U.S. dollars, and then the fee is applied to the U.S. dollar converted amount.
“The fee might seem low but it can add up, particularly if you’re paying for everything with your credit card. To overcome the fee, look for a credit card that charges no foreign transaction fees. There are several around. Consider applying for one with a different bank if your regular bank doesn’t offer such a card,” says Brennan.
What else is wise when using your credit card abroad? “Often when you pay for something on your credit card in a foreign country, the payment machine that the retailer uses will offer to bill you in the local currency or to bill you in U.S. dollars. Though it may seem attractive to be billed in U.S. dollars, there is a catch! And an expensive one at that! The payment machine will use a terrible exchange rate to convert from the foreign amount into U.S. dollars. In my experience this can equate to paying 10% more! I never ever accept the U.S. dollar converted amount and I always pay in the local currency!” says Brennan. This alone can save you a small fortune over a one or two-week trip.
Even if your credit card charges a foreign transaction fee, this will typically always be less than the terrible exchange rate that the payment machine offers. The bottom line says Brennan, “Always decline the offer to pay in U.S. dollars when overseas.”
Avoid sketchy ATMs
Dale Johnson, co-founder of travel website Nomad Paradise, offers advice, “Using the debit card linked directly to my bank account was a huge mistake I, and many travelers I know, have made. ATMs are rife with bugs and card readers in South America, Southeast Asia, and even in Europe. In Porto, after using an ATM, I didn’t have a good feeling about, within days I was getting fraudulent deposits to a service that looked like Uber from my account. Plus, the withdrawal fees are often hefty.”
He found a better alternative: Revolut and Monzo. “While both can operate as digital online banks, their cards are designed for travel, and to be used in multiple countries. They often have little to no ATM withdrawal fees [there are many others on the market], and their cards work like top-up cards. You simply add money to them from your bank or card via their app, and if the card is ever compromised, only the money on the card can be taken. With the click of a button on the app, also, you can deactivate the card. Unlike my bank at home, where I had to spend an hour on the phone in a foreign country, racking up huge call fees, this is a welcome feature.”
Use an ATM at a major bank, versus a lone machine in a bodega or small shop.
Understand too, that debit cards offer fewer protections against fraud, and your own money is on the line, says Nathan Grant, a credit card industry analyst with CreditCardInsider.com. “A credit card issuer can immediately take action against fraudulent transactions and get you back to using your card.”
Master the art of exchange
“Exchanging money at the airport currency changers at airports usually provide appallingly poor exchange rates. It’s better to exchange your currency before traveling, or at a reputable bank once you’ve reached your destination,” says seasoned traveler Joe Bailey, a business development consultant at MyTradingSkills.com.
Tell your bank you’re traveling abroad
Neglecting to let your bank know about your travel beforehand can be a big blunder. If your bank notices your card being used in a different country, it might shut down your account under the assumption that fraudulent activity is being undertaken with your card. The last thing you need is to be unable to access your money.
James, the Portugalist.com blogger, learned the hard way. “A few years ago, I was travelling around Eastern Europe. I arrived in Budapest from Zagreb to find out that my bank card had been blocked because I hadn’t told the bank that I was going to Budapest.”
He needed to phone the bank but didn’t have any money to make the phone call. “I didn’t have any Hungarian forint because I’d just arrived, and I didn’t have any Croatian kuna because I had tried to use it all up before leaving the Zagreb. This was before free Wi-Fi was so common, so I found an internet café and begged them to let me use the internet to Skype my bank.”
His advice, “I not only always keep my bank up-to-date with my travels, but I also travel with several cards from different banks, so this doesn’t happen again. It’s also a good idea to keep some money in a common currency like U.S. dollars so that you can easily exchange it to the local currency if you can’t get any of your cards to work.”
Read the fine print
Laurence Norah, travel blogger for FindingtheUniverse.com, says a common mistake people make, especially when travelling in Europe, is to forget to read the rules on the budget airline policies. “Some budget airlines in Europe for example require you to check in online and print your boarding pass yourself. If you wait until the airport to do it, they will charge you a hefty fee for the privilege of printing your boarding pass, in the range of $50-$100. This often catches folks off guard.”
Check prices ahead of time
Touristy places are often full of fraudsters, so you may be overcharged for certain services and products. Counter this by checking prices ahead of time. “You should research how much taxi costs, which markets are best for shopping and where to exchange money. When you reach your destination, show confidence when talking to locals and don’t let anybody trick you into paying more than you should,” says financial expert Tony Arevalo.
Keep a secret stash of cash
“When it comes to money, you always need a Plan B. Without it, you’re opening yourself up to some potential sticky situations,” says Mitch Glass, travel blogger for ProjectUntethered.com.
He knows first-hand. “One time I rented a dirt bike in Thailand and scratched the paint on the mirror. The rental shop refused to return my passport unless I paid $200 for the damages. They didn’t accept credit cards, the nearby ATM didn’t work, and I was five minutes away from missing both my ferry ride and my flight. I started panicking. At the last second, I remembered my $200 emergency stash hidden in my backpack. Without it, my whole itinerary would’ve been thrown off.”