Money Tips For Traveling Like a Pro
You’ve worked hard to save money for your trip, so why wouldn’t you plan to keep saving while you travel? We have a few tricks up our sleeves to travel savvy and save money on things like fees and exchange rates wherever we can. And don’t be intimidated, it’s really not that difficult!
Disclosure: We are not financial advisors, this is just what works for us!
First things first: keep your travel funds separate from your normal at-home savings and expense accounts.
However you have your funds arranged at your home bank, consider opening a new savings account for your trip fund. This will make it easier to save for the trip, and also keep you on track with spending while you’re on the go.
We use Barclays Online Savings accounts, because it’s so easy to use and they offer good rates. Another thing we appreciate about the Barclays online service is that we can open as many savings accounts as we want, whether they’re joint or individual accounts. Having several accounts here can help organize your funds - we have travel spending money kept separate from our emergency funds, for example. Heck, go big and make a fun money account! Then, if you decide to splurge on something while away, you’re not eating into your day-to-day budget.
Be smart with your cash while traveling internationally.
Don’t leave home with a big pile of US Dollars, intending to get local currency at an exchange service. Just don’t do it. Especially at the airport. If you do this, you’re cheating yourself out of a fair exchange rate, and you'll pay a commision fee. Especially when they tout “no commission” - where do you think they’re earning the money to pay staff and stay open? Just keep a small amount of USD, maybe $100 for when you get back home, but use an ATM to get local currency at your destination. You’d be hard-pressed to find an airport or train station without a single ATM in it.
What about ATM fees?
Good question! Do yourself a favor and apply for a Charles Schwab High Yield Investor Checking account. With the Schwab debit card, you’ll be able to use ATMs all over the world, without paying fees, and they always give us a great exchange rate. Even if you use this card at an ATM in Spain, where the bank says their ATM charges a 6 Euro fee for the transaction, Schwab refunds this fee to you when your monthly statement rolls out. If you’re traveling longer than a week or two, this debit card can save you hundreds in ATM fees. If you’re gone for a short time, this new checking account might be unnecessary, but at least consider how much it could save you. Look into what your bank’s fees are for foreign ATM transactions, and factor in that most ATMs will charge you a fee in addition to what your bank charges. Bonus points here for Schwab!
On the rare chance that an ATM offers you a conversion rate, so your bank sees a withdrawal of USD instead of the local currency, do not take it! One of us may have, in a hurry, accidentally hit the yes button to accept this on an ATM once, and it not only gave us a crummy exchange rate but also marked it up with a 12% commission. Twelve percent! On a €150 withdrawal, this set us back over $23 from the exchange rate our bank would have given us. Lesson learned - slow down and read, don't just press the green button.
On this note, we also suggest taking out small amounts of cash at the ATM. We usually go for $200 or less, unless you have something big to pay for (ie hotel bills if they offer you a discount for paying cash). Do you really need the stress of trekking through a busy airport or crowded city streets with a huge stack of cash when there might be pickpockets about? What if there’s no safe in your hotel, or locker in your dorm room? Just keep it light and stash a little backup cash in your locked bag, just in case. You can always go back to the ATM.
You know how I mentioned keeping travel funds separated from regular funds?
We break this down a little bit more by keeping the majority of funds in our Barclays Online Savings account - earning interest as long as it sits there. Then every so often, transfer funds into Schwab Checking - a couple hundred bucks to a thousand at most. Aside from earning a little bit more interest, the advantage here is two fold - keep yourself on budget by knowing how much you intend to spend before making another transfer, and only “allowing” yourself access to that much cash. You’ll also prevent a lot of heartache in the event your debit card goes missing - whether lost or stolen. You’ve probably heard stories of people being robbed, where they were taken to an ATM to empty their account. On the tiny one-in-a-million chance this happens to you, you don’t lose all your savings and end up calling home for a wire transfer.
We also don’t carry debit cards daily if we don’t have plans to use an ATM.
Be smart with your credit cards while traveling internationally.
In most places you’ll travel, credit cards are accepted. To us, this seems the safest method of making payments, because if the card is ever lost or stolen, you can call in and have your bank put a hold on the card. If you chose your credit card wisely, you’ll rest assured knowing you’re not responsible for fraudulent charges. We always travel with a second card for backup, you know, just in case one goes missing.
When you pay with a credit card overseas, the machine may give you the option of paying in USD or the local currency. Always choose the local currency! If you choose USD, you’ll be paying fees such as commission, and even get a sub-par exchange rate. Pick the local currency, and with your super-duper travel card you’re likely to get a great exchange rate from your bank, and pay no foreign transaction fees. Winning. We have often compared the machine’s USD rate offering to our bank statements, and our bank wins every time.
Be sure to check that at least one of your travel credit cards has a PIN. Many automated machines, such as at the metro or train station, require a PIN.
Another advantage of putting most charges on a credit card is that it makes it easy to keep track of your budget online.
Used responsibly, a travel credit card can be your best friend.
Travel cards rock because you likely earned some rewards with them in saving up for your trip, so why not continue the fun and earn some more on the road? Our absolute favorite is the Chase Sapphire Preferred, and there are plenty of reasons for this. The sign-up bonuses were great. No foreign transaction fees. Our exchange rates rock. We can each add an authorized user to our account, which gets each account a second card - great in case we are trying to keep spending on one account for the sake of budgeting. Or maybe you’d like a loved one at home to have access to making purchases if something goes awry? The points system is awesome - even more so when traveling. Almost every charge we put on this card while traveling earns 2x points, which we save up and use to book flights. Free flights! The points add up really quick when you’re buying flights, train tickets, using Uber, and eating out a lot. What’s not to love?
Click here to read more about all our favorite credit cards.
Keep track of your expenses.
This is especially important if you have a tight budget, or maybe aren’t used to staying on a budget. We had lofty goals when it came to living cheaply in Asia, so for three months we tracked every dollar and cent spent with an app, to make sure we had enough for all the other traveling we hoped to do. This can also be a good way to look back at your trip after the fact and find out where you actually spend the most money, allowing more insight when you start saving for your next trip. After a year and a half, we’ve gotten more lax about tracking expenses, but we do keep it at the front of our mind so we stay on track when it comes to spending.
There are heaps of budgeting and expense tracking apps out there, but we use Spendee.