If I knew then what I know now…
The words ring in my head. I was an incredibly irresponsible spender. My thirst for traveling consumed my bank accounts and overdrew my credit. It’s been one interesting journey, but financial recovery is not an easy endeavor to tackle.
I’ve likely spent thousands of dollars on ATM fees, foreign transaction fees, money exchanges, and international transfers. I’ve traveled through numerous countries, opened a multitude of banks accounts and dealt in a myriad of currencies. If I averaged only ten dollars per week on any of the aforementioned, which is not unreasonable, I would be spending almost $520 each year.
This is not an insignificant number, nor is it a number than can’t be avoided. To clear up that string of negatives for you, this is money you do not have to spend. These fees are easily avoidable. With a little bit of brain power and advance planning, you can travel much smarter than I ever did and save money while traveling.
Avoid ATM Fees
First of all, make sure you’re traveling with an account from a major bank. You can avoid paying ATM fees entirely by using one of their international partner banks. Check with your bank and find out who they partner with and which ATMs to use.
Note: Make sure you notify your bank of your travels so your account doesn’t get suspended!
If you’re a US citizen, open a Charles Schwab High Yield Checking Account and never pay another ATM fee. There’s no account minimum, no service fee, and every ATM fee you pay is refunded into your account at the end of the month. I’ve paid over $50 in ATM charges in a single week due to poor planning and unforeseen circumstances. With Charles Schwab, you never have to worry about this again. They don’t have branches or ATMs, but the card is accepted at ATMs worldwide.
Never Pay Foreign Transaction Fees
Many US credit cards charge a 3% foreign transaction fee when any payment is authorized in another country. Capital One, Chase, and American Express have options that won’t charge you anything. Use your card anywhere in the world without having to worry about extra fees.
Get the Best Exchange Rate
You’ll get the best exchange rate when you use your credit card. These companies get the best rates themselves, so that benefit gets passed along to you.
Next to credit cards, ATM machines offer the best exchange rates. There’s no need to carry excessive amounts of cash because you don’t want to pay so many fees. Withdraw whenever you’d like, get a reasonable exchange rate, and as long as you’re banking with Charles Schwab (or banking with an international partner), you’ll never have to pay the fees!
You should stay far away from exchange bureaus, especially the ones at the airport. Due to high overhead costs, these offices provide some of the worst exchange rates available, usually with added fees on top. Exchanging cash is not a cost efficient way to change money, so avoid doing it if you can.
Get Rewards on Everything
Make sure you’re getting rewards for every dollar you spend. By using a reward credit card you can earn cheap or free flights as well as other free stuff. If you sign up for a new credit card, find one with a big sign up bonus, and one that will keep rewarding you as you spend. If you’re spending the money anyway, you might as well earn big for it! You can easily earn 30 or 40,000 miles just by signing up for a new card (often times twice that with American Express), and the rewards thereafter can add up quickly. Just don’t let things get out of hand–it’s easy to ruin your credit while you’re traveling (like I did!).
International Money Transfers
If you’re going to be sending money overseas, consider using a cost-efficient option like PayPal or HiFX. Sending money with your bank, or even Western Union, can cost a lot, especially if you’re making frequent transfers. I often have to send money to family members or friends, and these options let me take advantage of great foreign exchange rates with minimal fees.
Note: Make sure you always travel with a few forms of currency (even multiple bank or credit cards), and keep them stored in different areas in your bags or on your person. If one should go missing or get stolen, at least you’ll have backup.
Image credit: Peter Hellberg