HOW TO ACCESS YOUR MONEY
1. CASH. Cash is, of course, king all over the world, but do you really want to take all your funds in cash? This is a risky strategy and it’s best that the cash you set off with from home be just your emergency source of money and certainly no more than enough for your first week . It should be well hidden. Find out what you are insured for and remember it’s probably all at your own risk. If you can help it there is little point changing your money twice paying commission each time.
Be warned about old style dollar bills won’t be welcomed Do make sure dollar/euro notes are in a brand newish condition (no tears). Don’t take old designs of notes. It does happen that less than mint condition or old style high value notes will be unwanted.
As soon as you arrive at your destination country, get the local currency at an ATM, always your best exchange rate.
a. Local “hard’ currency. This is always the best to use as can use anywhere in the country you are in. There is no calculating exchange rates. The locals know it. The best exchange rate will always be from an ATM.
Changing money from a US$ or Euros is rarely is a problem but is often a hassle involving a visit to a bank or money exchanger who will not give you great rates.
b. US Dollars. Easily the dominant currency in the world, it can generally be used anywhere. Green backs are always accepted with open arms even in places like Iran or Cuba (although it is cheaper to change euros). But generally, the only US$ should be in your emergency stash (equivalent to 200$US) that should be keep separate from your main money supply. Some should be in a lower value – US$10/20 bills (make sure all is clean and crisp and not the old style).
c. €uros are more useful than US$ in Europe, eastern Europe, the Balkans and West Africa (forget US$ here) but are generally fine in any major city worldwide. Everywhere else ‘undeveloped’ US$ are the currency of choice.
d. Your home currency is often difficult to exchange and is best avoided. The only place where it is easy is in the Gulf states where there are so many expatriates that all money exchangers can deal with most foreign currencies. Even many banks won’t want it.
2. ATMS. The best way to get money almost anywhere is out of an ATM using a debit card (MasterCard Cirrus or Visa Plus) to draw from your bank account or with a pre-loaded travel card.
This offers numerous pros such as getting the most favourable daily exchange rates, running no risk of being ripped off, having the security of a PIN code, keeping track of your rates and balance on-line and having the option to specify exactly how much money you want to change. There are even occasions where you can pull dual currencies out of machines (local and US$/EU€).
You will almost certainly find ATMs in larger cities – all over the world – that you will use as transport hubs. There are very few exceptions to this (Iran, Uzbekistan). Check ATM locations on the Visa, Amex or Mastercard’s website. It is worth telling your bank where you are going if exotic, depending on the bank you can get your card blocked on first/high use.
Typical bank and travel card ATM fees
ATM fees can really add up and if you are wise (being careful with the cash) you will make fewer larger transactions than many smaller ones.
Fees comprise of 4 parts:
1) the fee your bank makes – this is where you can seek out the lowest cost and find zero fee ATMs on alliances or account deals. Normally about 2% or as set amount of 5$ (normally set within a minimum and maximum)
2) the fee the withdrawing ATM makes – there is nothing you can do about this. In some countries they are zero in others a 1-2 US$.
3) the commission spread, i.e. the difference between the spot exchange rate and the exchange rate you get. So if the spread is 3% you will pay 3% over the market. Cash exchange will have a similar spread (normally higher) and travel cards have some of the lowest spreads.
4) Hidden fees. For travel cash cards these are often loading fees of 1-2% or issuing cost.
Money on Arrival. You will normally find an ATM at the airport if arriving at a major international one, but just in case you don’t or the ATM is empty, always carry some hard currency cash. The same goes for borders where there are rarely ATMs, but nearly always money changers for some ‘see-you-over’ cash until you reach a bigger city with better rates.
It’s a good idea to make sure you know what the exchange rate is before you reach a country, preventing you getting ripped off and generally letting you know how much the room you are checking into or taxi you hail is costing. This exchange rate can be found on the Internet with ease and noted before you leave. Oander.com or xe.com are great tools. It’s wise to calculate costs plus a few % to reflect normal tourist rates.
Look for the Visa Plus or Cirrus symbol you see on your card. Generally speaking ATMs work on both networks, but this is not always the case and every now and then ATMs really are everywhere in major cities and always have an English language option. Not all ATMs you find abroad can access international networks, but this varies widely from country to country. For example, in Pakistan you will find tonnes of ATMs, but only a few international ones in each big city, as opposed to India or Sri Lanka where you can’t walk 500metres in many a town centre without finding one. Therefore, if on a long trip it is handy to have (say your partner’s card or credit card) on an alternative network as a back-up. If you had to pick only one, go with Visa Plus that is more common in Latin America and West Africa. And remember when somewhere exotic never panic if your chosen ATM does not work, simply find another [bank/provider] and try again.
ATM withdrawals concerns:
Occasionally, ATMs are empty or out of order machines or many other eventualities. So common sense says don’t rely totally on your ATM card.
There are also rare cases when due to artificial exchange controls (e.g. Uzbekistan, Venezuela, Argentina or Zimbabwe pre-dollarisation) using an ATM will get you a terrible (official) rate and you need to change hard currency [on the black market]. Bring enough US$ to cover the entire stay in those countries and shop around for the best rates.
Always fully cover your PIN number when using an ATM – card skimming is a possibility anywhere.
Don’t use ATMs in weird locations. Using ATMs in hotels, hostels, local 7-11’s, or some other random place can be a bad idea. They’re convenient, but they tend to charge high ATM fees and offer horrible conversion rates. Skip those ATMs and find a major bank.
When changing money always re-count and check your money carefully.
Eliminating ATM Fees
ATMs are best way to obtain local currency overseas. It’s quick, easy, and you’ll get the best exchange rate.
But ATM fees can really add up. Often both your bank and the bank that owns the ATM will charge you a fee – usually US$5-$7 every time you withdraw money from a different bank’s ATM.. When you are traveling for a long period of time, this can add up to hundreds of dollars! Let’s say you withdraw money 2 times per week while on the road (I’m not a fan of traveling with tons of cash). That is $10 per week, $40 per month, or $520 per year – easily enough to continue traveling for another month.
Choose the right bank, and you will pay $0 in ATM fees from now on.
1. Pick a bank in the Global ATM Network. This is a network of large banks that have come together and waived fees and allow for free ATM withdrawals. While they have the highest fees ($5 USD per withdrawal) for banks outside their network, by using partner ATMs you can avoid ATM charges.
Below is a list of major banks in this alliance:
• Bank of America (United States)
• Barclays (England, Wales, Spain, Portugal, Gibraltar and certain countries in Africa)
• BNP Paribas (France, Ukraine)
• China Construction Bank (China; Bank of America card holders only.)
• Deutsche Bank (Germany, Poland, Czech Republic, Spain, Portugal and Italy)
• Banca Nazionale del Lavoro (Italy)
• Santander Serfin (Mexico; Bank of America card holders only.)
• Scotiabank (Canada, Caribbean, Peru, Chile and Mexico)
• Westpac (Australia, New Zealand, Fiji, Vanuatu, Cook Islands, Samoa, Tonga, Papua New Guinea, and Solomon Islands)
• ABSA (South Africa)
• UkrSibbank (Ukraine)
Be sure to check with your local bank on specific coverage areas. There are some exceptions i.e. if you use your Barclays card in one country, there might not be a fee but in another, there is a fee. Double check before you go! Note: Bank of America charges a 3% foreign transaction fee on all withdrawals not in USD, though in Mexico you can use Santander to avoid the fee.
2. Charles Schwab.
If you are a US resident, the best bank to use is Charles Schwab. The Charles Schwab Investor Checking Account is a high yield checking account needed to qualify, but there is no minimum deposit required and no monthly service fee. They reimburse all your ATM fees at the end of each month even those charged by other banks, anywhere in the world. Their ATM card can be used in any bank machine around the world. Customer service is great.
3. HSBC Checking Account.
HSBC is an international bank, and they have ATMs all over the world. Unlike Schwab they will charge you $2.50 USD per ATM transaction when you use a non-HSBC ATM. (the 2nd bank may also charge you). While it’s not as good as zero, it’s still better than what a lot of other banks charge.
Capital One doesn’t charge any withdrawal fees, but you do have to pay any fees charged by the local bank.
4. Royal Bank of Canada. I personally bank with RBC. They offer the RBC VIP Banking Account. For $30/month ($22.50 for seniors), I get as many ATM withdrawals anywhere in the world. It also waives all other bank fees and includes overdraft protection. I think it is a great deal. It also provides me for free the Visa Avion credit card that normally has a $120 annual fee. It earns 1 RBC Reward point for every $1 spent on purchases and 15,000 welcome points upon enrollment. Plus, I earn 25% more RBC Rewards points on eligible travel related purchases and up to 5X bonus points when shopping through the RBC Rewards eMall. Choose any airline, any flight, any time with no blackout periods or seat restrictions. If there is a seat available, you can fly, including during peak seasons. Consistent redemptions without surprises — choose air travel rewards from the Air Travel Redemption Schedule with flights starting as low as 15,000 RBC Rewards points for a short-haul flight worth up to $350. This card has a Premium and Extensive Insurance package — including trip cancellation, emergency medical and protection for your trip, hotel, rental vehicle, and purchases. It offers exclusive travel offers, as well as special deals on vacation packages, last-minute travel, cruises, tours, and car rentals
5. Ask your local bank or credit union to not charge fees. Not charging ATM fees has become a widespread practice over the last few years.
6. Some other banks that don’t charge overseas ATM fees:
In Australia Citibank visa debit Plus is the best option and Westpac let you make fee-free withdrawals from their ATM ‘alliance list’.
In Switzerland: Post Finance plus account
In the UK: Nationwide you can get free withdrawals (and travel insurance) for £10/Chf12 a month. Norwich & Peterborough Building Society has free ATM withdrawals.
It can be worth paying for such a service and it is certainly worth comparing a few commission rates and/or service fees for overseas withdrawals – it pays to shop around and check before heading off (especially if going for a while). It is always cheaper to use a debit card than a credit card to withdraw money.
3. TRAVEL MONEY CARDS
If you don’t have such a bank card or fees are too high for your liking (as they often are in Australia/USA) then an option is a travel money cards such as Visa Travel Money or an OzForex card, which works pretty much in the same way as a bank card only you don’t need a bank account. You preload cards with cash before use.
4. TRAVELLERS CHEQUES
Travellers cheques are a safer option compared to cash, but with a number of drawbacks. Firstly they are pretty prehistoric these days with travel money cards replacing them. Secondly the commission required to buy and sell them and thirdly in some places they can be somewhat of a pain to change restricting you to bank opening times and long drawn out procedures. This is not always the case, but can often be when you need the cash the most and are in a hurry. The irony is where it’s easy to cash cheques you are going to find numerous international ATMs (and vice versa). Any international brand of travellers cheques will be fine (Visa or American Express). Don’t forget to carry your purchase record/receipt with you – you may need it to cash your cheques and very importantly keep it in a safe place away from your cheques and make a note of the claim phone number(s) and cheque number(s) in case of theft. Travellers cheques do have a place where ATMs can’t be found and as a good backup, but can also be costly and a pain – a pain in less developed countries not so much in developed ones – ATM use – if possible – is generally much more practical and the way to go.
5. CREDIT CARDS
Useful, but much more so in developed countries. In less developed countries they can be used for larger purchases (e.g. a flight or Scuba course), but will normally have commission added to the total of around 2-3%. They can be used to obtain cash advances in most ATMs or banks world-wide (always with a commission of 2-3% + a service charge + you start paying the bank’s interest rate immediately) – not the best value way to obtain funds, but extremely useful to fall back on when having ATM problems. For all uses MasterCard or Visa are the best bet; Amex will have higher percentage rates. Remember to consider your bills piling up at home with interest being charged and the fact if you are using them to draw money, it makes sense to be in credit by paying more money onto your card before leaving home, setting up a standing order or paying yourself online whilst away is prudent.
Avoiding Credit Card Transaction Fees
The next major fee we need to get rid of is the credit card foreign transaction fee. Most credit cards change a 3% fee on purchases made overseas. That can add up since most of us use our credit card for everything. The following cards have no overseas transaction fees:
Capital One No Fee Hassle Card
Chase Sapphire Preferred
Chase Ink (Business card)
United Mileage Plus
Some Discover cards
Barclays Arrivals World
Also earn points for free flights and hotels as well, but any of the cards listed won’t charge additional fees while you’re abroad.
For non-US citizens, check the following websites that list cards that might not charge an overseas fee:
http://www.creditcardfinder.com.au/travel-rewards-credit-cards (Australia)
http://uk.creditcards.com/travel.php (UK)
http://www.rewardscanada.ca/ (Canada)
For UK citizens, check out this no overseas fee card: Post Office Credit Card UK
Always pick the local currency – When you use your credit card abroad, you will often be given the option to be charged in your home currency (i.e. instead of being charged in Euros, they will charge you in US Dollars). Never say yes. The rate at which they are converting the currency is always worse than the rate your bank will give you. Pick the local currency and let your credit card company make the conversion. You’ll get a better rate.
Travel Rewards Credit Cards. Get the most out of your credit card by using it for air miles and other rewards. To learn more about finding the perfect travel credit card, check out the post Travel Credit Cards.
6. E-WALLETS
Turn your vulnerable physical magnetic-stripe cards into virtual payment systems that require no card to be present.
Americans are one of the last countries in the world to still use obsolete and vulnerable standard magnetic stripe ATM cards issued by most U.S. banks for the last 50 years. Almost everyone else in the world uses modern chip-and-pin cards that are virtually impossible to hack. American banks have opted to not use chip and pin cards for financial reasons – the cards are more expensive to produce and all card reading machines would have to be changed to read chips.
But it is a false saving – magnetic strip cards are easy to hack. ATM machines are easy to compromise with card skimmers – little inserts that copy only magnetic strip cards. Once your card is hacked, it is easy to clean out your bank accounts. Then your card needs to be cancelled, leaving you with no ATM cards to obtain cash in foreign countries. And in most foreign countries, most small merchants deal only in cash. Credit cards – if even possible to use – incur a 3-5% service charge.
Protect Your Cash with E-Wallets
This advance in transactional security can allow Americans to bank abroad safely even with chip cards.
LevelUp, Square or Snapscan (used by Standard Bank in South Africa). These are simple, secure payment “apps” for Apple iPhones. Then use a U.S. credit card to purchase a prepaid debit card from a local bank that has a partnership with your home or U.S. bank, saving on foreign transaction fees. Enter its details into Snapscan, then walk in to the nearest Standard Bank branch, go to a Snapscan terminal, hold up your phone to the screen with the app open, enter your desired amount, and voilà … out pops a pile of local bank notes.
Besides obtaining cash, purchases can also be made directly.
They are actually safer than credit cards, including the advanced chip-and-pin cards. And e-wallets have the happy side effect of often reducing or entirely eliminating costly foreign transaction fees (for you) and credit card terminal fees (for merchants).
This illustrates the secret to safe banking abroad: “cloud computing.” That’s a fancy term for large “farms” of remote servers that allow centralized data storage and processing for a variety of always-available Internet-based services, like E-wallets. Cloud computing has created endless opportunities for innovative, competitive software companies to develop and deploy new smartphone apps for paying for goods and services, without having to own and run their own expensive server farms.
But Is It Safe? Given the dangers lurking on the Internet — which is where banking is moving – It’s safer than using a traditional debit or credit card. A lot safer. That’s because these payment apps don’t actually store your debit/credit card details on your smartphone or on their own servers. Instead, they use a sophisticated encryption technique called “tokenization.”
This involves converting your Primary Account Number (PAN, a.k.a. your card number) into a unique, randomly generated sequence of numbers and/or alphanumeric characters. This “token” is stored in a special part of your smartphone’s memory that’s impossible to decode — even the phone’s manufacturer can’t read it.
When you make a purchase with a payment app, your card information is “tokenized,” encrypted and sent to the bank, which decrypts it and authorizes the transaction. The token is never stored by either the merchant or the bank. This avoids exposing your real card information number to theft. You, the customer, never notice the difference in the way transactions occur.
Of course, all this encryption magic doesn’t do you any good if your smartphone is lost or stolen … but if you have (a) a passcode to secure the device, (b) a PIN for opening your payment app and (c) a way to “wipe” all the data from your smartphone remotely, as is available with Apple’s “Find My iPhone” app, you are as protected as you can be.
Saving You Money
Besides convenience and safety, cellphone-based transacting abroad can save you a lot of money.
As discussed above, consider the fees when you use a conventional ATM card outside the U.S., or even inside it, when using another bank’s ATM:
• Flat fee from your bank: This is a fixed fee that your bank charges for using ATMs outside of its network. These fees usually vary between $2 and $5.
• Flat fee from the foreign bank: You also have to pay a fixed fee to the foreign bank which owns the ATM you’re using. This again is usually in the range of $2 and $5.
• International transaction fee: Instead of a fixed fee (or in addition), your home bank may charge a percentage fee for foreign withdrawals. These range from 1% to 3%.
• Currency exchange fee: The ATM interbank network — like Plus (operated by Visa) or Cirrus (MasterCard) — will also take a 1% cut.
Now consider an e-wallet. Buy a prepaid foreign debit card in a single transaction using your foreign credit card, on which you pay an international transaction fee of 1%. Load its information into the local payment app, and from that point on, you pay no foreign transaction fees. Of course, you wouldn’t pay any such fees if using the foreign prepaid debit card directly, but then would lose the extra security of encrypted tokenization.
Other Advantages
Easy Payment Reconciliation. The bank you deal with can provide daily, weekly or monthly transaction reports to reconcile your total payments. Referencing is customizable to suit your exact business need.
Simple Payment. Link your SnapCode to a cell number to receive SMS confirmation of payment. It can integrate with the point of sale giving online access to your payment details in real time. All accounts are settled on the following business day.
Payment Apps You Can Use Abroad
The wave of the future — and of the present in much of Europe, Asia and Africa — is therefore a hybrid system in which banks provide money-storage and credit facilities, but independent application developers provide secure, Internet-based POS systems that largely bypass traditional credit card processors such as Visa and MasterCard. Where can you use them?
Europe remains the leader, with mobile payments averaging 24% in 2014. The U.K. leads Europe and globally, with mobile payments averaging 41%, followed by the Netherlands and Spain at 26%, France 18% and Germany 16%.Asia now has the second-highest proportion of mobile transactions globally, at 17% of total POS transactions.
North America remains steady at 16.7%, and Latin America remains below other regions, at 6% for the quarter.
a. Apple Pay
Globally, Apple-based payment apps are the most popular in every region of the globe. In most places, twice as many people use Apple-based apps than Android (which runs on most non-Apple smartphones). The only place where Android apps are close to Apple levels of usage is Asia.
Apple Pay works only on the iPhone 6 or the Apple Watch. You register your supported credit cards in the device’s Passbook app. When you want to buy something from a retailer that supports Apple Pay, you point your device at the near field communication (NFC) payment terminal, and your payment information is delivered from your iPhone over a radio frequency connection. Then you do a fingerprint scan on your phone’s TouchID sensor to verify your identity. If everything is OK, your phone vibrates and tells you the transaction was approved.
Apple Pay uses tokenization to keep your transaction safe. The token is stored on a special chip called a Secure Element. If the iPhone is lost or stolen, for instance, you can use “Find My iPhone” to suspend all payments from that device. There’s no need to cancel your credit card, because the card information isn’t stored on the device.
Apple doesn’t get to know what you bought, how much you paid for it or any
other personal details. The guy behind the counter doesn’t get to see your name or your credit card number — all of which are potential weak spots of the current system, under which cards are occasionally cloned and ripped off.
Where: Apple Pay is rolling out rapidly in the U.S., U.K. and Europe. Two things are required to use Apple Pay: The merchant must accept it and your bank must authorize use of your card abroad. As things stand, most major and many smaller merchants in these regions will support Apply Pay by the end of 2015. Apply Pay is also making rapid inroads in Asia, but with the popularity of Android smartphones there, it may take a little longer. In those regions, you can use local payment apps in the meantime.
Pros: The safest system of all, with end-to-end tokenization and no storage of your card or personal details on Apple servers.
Cons: You must upgrade to iPhone 6 or an Apple Watch to use it. Also, not all countries allow prepaid debit cards to be loaded into Apply Pay.
Who it’s for: Essentially everyone who uses an Apple iPhone, especially in the U.S., U.K. or continental Europe.
Apply Pay is significantly ahead of the competition, and given the iPhone’s wide and deep penetration in the U.S., U.K. and Europe, it will inevitably set the standard for smartphone-based payment solutions in those areas, even for non-Apple services.
b. Google Wallet
Like Apple pay, Google Wallet involves tapping your phone on a POS terminal, entering your Wallet PIN and completing your transaction as usual. And like Apple Pay, Google Wallet uses tokenization — your real 16-digit card number is never exposed to merchants. But instead of securing the token in a chip on your phone, Google uses something called Host Card Emulation (HCE), which stores your token virtually in “the cloud.” This makes Google Wallet compatible with any near field communication (NFC)-equipped Android phone.
The app also lets you store club cards and gift cards as well as credit and debit cards.
Who it’s for: For security reasons, I would use Google Wallet only if you are resolutely against Apple.
Where: Widely available in the U.S. and expanding rapidly in the U.K. and Europe. Not yet available in most of the rest of the world.
Pros: Increasingly available in the U.S., U.K. and Europe. Also, Google Wallet is potentially compatible with highly secure Android-based phones such as the BlackPhone (although there are rumors that BlackPhone is developing its own super-secure payment systems).
Cons: In order to use Google Wallet in stores, you’ll need an NFC-capable Android phone, which is only 25% of Android phones on the market right now. Major players such as Samsung are rapidly adopting NFC technology. If you aren’t an Apple fan, you should choose one of their phones if you’d like to use Google Wallet in future.
The biggest con, however, is that is that anything that operates in the cloud — instead of locally, on your phone, as with Apply Pay — is automatically more vulnerable to security attacks.
A third drawback is that the HCE technology Google has chosen requires that your phone be connected to your cell service to use, because the phone needs to retrieve its tokens from the cloud. That could be expensive if you’re traveling abroad.
c. PayPal
Like Apple Pay and Google Wallet, PayPal transactions are tokenized and encrypted, and merchants never see their customer’s complete identity, personal information or financial data. Plus, if your phone has a fingerprint scanner (like the Samsung Galaxy S5), you can use that to authorize transactions.
Where: Restricted to U.S. merchants at the moment (Jan 2016), particularly on the West Coast.
Pros: Secure and widely accepted in the U.S. You also have the option to make purchases at credit card terminals using your phone number and a PIN code.
Cons: Because it moved in early and missed some more recent technological innovations, PayPal has struggled to get merchants to sign on to its systems and is therefore likely to be eclipsed rapidly by Apple Pay. Like Google Wallet, you need cell service in order to use PayPal.
Who it’s for: People who already have PayPal accounts and for whom adding another payment option is essentially costless. But not for overseas travellers.
d. Other Apps
In most countries outside the major markets of North America, Europe and Asia, you will need to use a local smartphone app to make payments. For example, use SnapScan in South Africa using your Apple iPhone.
However, you are allowed to do so because SnapScan allows you to load a local prepaid debit card into the app. That might not always be an option in every country. Most foreign countries will not let a foreigner open a bank account without permanent residence. In such cases, you might want to stick with cash until your U.S. bank issues you a chip-and-pin card sometime in the coming year.
Of course, if you have a bank account in a foreign country, you can probably use a compatible local app with their bank cards.
When using a foreign payment app, the key is to ensure that it uses tokenization to encrypt your card details. At the moment, the only sure way to know that (other than to research the app yourself) is to see whether it is compatible with all types of smartphones. If it is, it’s probably not secure. Token-based apps only work with iPhone 6 and recent Android phones.
The Key to the Puzzle
Where your money is ultimately stored is not a major issue. But the ultimate source of your banking facilities does indeed matter. For reasons of privacy, wealth protection and overall peace of mind, having at least some of your money in a secure offshore bank account that you can access via payment apps — or directly — is essential.
That’s where the i-Account is the essential linchpin of your offshore transaction strategy. The i-Account is based on one of the world’s safest and most private banking jurisdictions, Hong Kong. Funds are stored in a Chinese bank with the highest possible global ratings, far beyond the prying eyes of Uncle Sam. Even though you must report i-Account balances if you fall under FATCA and FBAR thresholds, the actual data related to your overseas transactions is entirely inaccessible to the U.S. government.
That fact alone makes the i-Account the preferred choice for the debit card I’d load into Apply Pay or another app for use when travelling. Besides the intrinsic security of your i-Account details, tokenization means even those i-Account details will be completely secure.
But there’s another huge advantage to the i-Account that basically makes it the ultimate deal for global travelers.
You can hold your i-Account funds in any one of 10 currencies (USD, EUR, JPY, GBP, NZD, CAD, AUD, SGD, HKD, CHF), with more on the way. You can exchange among these currencies instantly with no added fees at competitive rates. So instead of having to pay your U.S. bank currency exchange fees when using a payment app, either on every transaction or when purchasing a foreign prepaid debit card, you can simply load your i-Account with the appropriate foreign currency — say, euros — and away you go … no currency conversion costs at all.
With Payment Apps, the Future is now
Payment apps have already started to make inroads in the U.S., but mainly amongst merchants that cater to younger and more tech-savvy shoppers. That will change rapidly in the next 12 to 18 months as such payment options expand to nearly all merchants.
Follow this strategy for transacting securely and cheaply in foreign countries and protect your hard-earned money from hackers and bank fees.
7. EMERGENCY FUNDS
Of course keep your cash, debit and credit cards separate to reduce the risk of losing access to all funds, but disasters do happen or you just run out of money. Money wires, such as those from Western Union then save the day.
There are many ways to send cash – best to check online and give the details to a friend or family back home. They charge fees, but paying $20 to get an emergency $200 to the middle of nowhere within minutes is a bargain. You’ll normally find offices in remote locations, even where there is no bank.
Overall, the best general strategy to get at your money is always a combination of methods and back ups (i.e. have a debit (ATM) card, credit card and some cash or even some travellers cheques – with the latter being for emergencies) and use an e-wallet where ever possible. It’s also recommended that you do not carry your card (ATM or credit) around with you at all times if you can help it. For various reasons, it’s best kept in your main bag unless you are using it.
EXCHANGING MONEY – The Best Exchange Rates
Every time you use your card overseas, your local bank converts the transaction into your local currency for billing purposes and take a little off the top for doing so. Thus the official rate you see online is not what you actually get. That’s the interbank rate and unless you become a major bank, you’re not going to get that rate. All we can do is get as close as we can to that rate. To avoid getting on the real losing end of conversion, follow the following tips:
1. Exchange with Travelers: While this is definitely the cheapest way to exchange foreign currency, it’s not something you’ll be able to do all the time. Usually when leaving or entering a new country, you’ll find fellow travelers heading in the opposite direction. This is a great opportunity to trade currencies with each other. There are zero fees involved, unless one of you can’t provide exact change…
2. Credit Cards: Credit cards will give you the best exchange rates — slightly better than using an ATM. But you start paying interest immediately and there are service fees. Depending on where you’re traveling, many businesses only except cash.
3. ATM Machines: Using your debit card to withdraw cash from an ATM is the best thing to a credit card. Exchange rates are very competitive, and ATMs are available all over the world. Insert the card from your home bank, and instantly receive local currency to use as cash. Exchanging money using an ATM is both super convenient, and relatively cheap. If your bank refunds ATM fees or doesn’t charge any to start with, it’s the best option out there.
4. Currency Exchange Booth: Don’t change money at airports – most exchange bureaus in airports are so far down the financial food chain, they don’t have the clout to offer good exchange rates. Use only when you absolutely have to. Some currencies (Bhutan) can’t be exchanged anywhere. Sometimes your only choice is to use airport exchange booths.
Also avoid using the company Travelex at all costs – they have worst rates and fees. Avoid their ATMs too! You’ll often see these places at airports or bus terminals. They offer terrible rates, and there is always a commission of some sort tacked on. Even if their sign says “No Commissions”, the exchange rate they give is padded to make a tidy profit off your ignorance.
5. Money Changers: If you thought currency booths were bad, these guys can be even worse. You’ll find them hanging out around international land borders. Sometimes it’s an outright scam. Taxi drivers will take you to the country’s border, where you’ll need to get out and jump into another taxi, but this 2nd taxi won’t take the last country’s currency. If you’re not prepared, this can force you to use the local money changer who just happens to be waiting with an absolutely horrible deal. If you find yourself in this situation, make sure to count the money you receive twice, and check for counterfeit bills before you hand over your cash.
Some tips for changing money on the street are: In some countries, these are to be avoided (Myanmar comes to mind), but often they are the only means to change money and often give the most competitive rates. Here are some rules:
• Use an app like xe.com to figure out the official rates. You will often not bet that rate but it gives a guideline. Get the rate for both US$ and Euros if you have both or a choice. In west Africa, either one may get much better rates depending on the country.
• Determine if this is a black market money country (Venezuela, Uzbekistan, Nigeria, Angola come to mind). If it is, never use an ATM or credit card and bring all your money as cash, and more than you think you will need. Everything you buy, including tours will be purchased at black market prices. And the rate may change, in very fluid economies, very quickly even on a daily basis and may be different in different parts of the country.
• Have a calculator or phone with a calculator to make your own calculations.
• Have a notebook or paper to keep track of everything: start with the official rates and expected rates when not changing $ or €. On paper, write down the rates and how much you are going to change and figure out the resulting amounts.
• When dealing with the money changer, always work from 1US$ or 1€, not from what you are changing. That’s the only way to be able to compare. You may decide to change the amount you want to change depending on the rate. Language can pose problems in getting this figure.
It also gets confusing when changing from one countries currency to another when they are not $ or €.
• If there is a group, separate one changer at a time and deal with only him. But it is compulsory to check several, including many of the businesses around, as they will often change money too. Stay away from groups – it only gets confusing.
• They will want to take your money, but never give it to them. Keep it in a safe pocket and simply write out the amount you want to change. Many are slight of hand artists, or you may simply forget they have your money. This is especially in a group or with more than one, as things can get distracting.
• Shop around. Get quotes from several changers in the group, along the street and in the businesses.
• Only bring newer notes, for example nobody will change older, small faced, pre-2006 US bills. Avoid bills with tears, writing on them or that look well used and old. Having perfect, uncreased notes is not necessary in most countries in 2017.
• Try to change the largest bills you can. 100 denomination notes will always get the best rates, usually the same as 50 denomination bills. Sometimes it doesn’t matter but the difference can be appreciable. Larger bills take up much less space.
• Walk away easily and quickly especially if the quoted rate is way out of line or the guy is too high-pressure. They will almost always return with a better rate.
6. Changing on the Street is only worthwhile rarely. In the event of a black market exchange rate, changing where you are staying, at a travel agent or other established business is the best bet. Only change money on the street where you can see it is day-to-day practice of locals and not in large amounts. In West Africa (Morocco to South Africa, this is by far the most common method to change money, and generally they are reliable here.
Some tips for exchanging money on the street are. In some countries, these are to be avoided (Myanmar comes to mind), but often they are the only means to change money and often give the most competitive rates. Here are some rules:
• Use an app like xe.com to figure out the official rates. You will often not bet that rate but it gives a guideline. Get the rate for both US$ and Euros if you have both or a choice. In west Africa, either one may get much better rates depending on the country.
• Determine if this is a black market money country (Venezuela, Uzbekistan, Nigeria, Angola come to mind). If it is, never use an ATM or credit card and bring all your money as cash, and more than you think you will need. Everything you buy, including tours will be purchased at black market prices. And the rate may change, in very fluid economies, very quickly even on a daily basis and may be different in different parts of the country.
• Have a calculator or phone with a calculator to make your own calculations.
• Have a notebook or paper to keep track of everything: start with the official rates and expected rates when not changing $ or €. On paper, write down the rates and how much you are going to change and figure out the resulting amounts.
• When dealing with the money changer, always work from 1US$ or 1€, not from what you are changing. That’s the only way to be able to compare. You may decide to change the amount you want to change depending on the rate. Language can pose problems in getting this figure.
It also gets confusing when changing from one countries currency to another when they are not $ or €.
• If there is a group, separate one changer at a time and deal with only him. But it is compulsory to check several, including many of the businesses around, as they will often change money too. Stay away from groups – it only gets confusing.
• They will want to take your money, but never give it to them. Keep it in a safe pocket and simply write out the amount you want to change. Many are slight of hand artists, or you may simply forget they have your money. This is especially in a group or with more than one, as things can get distracting.
• Shop around. Get quotes from several changers in the group, along the street and in the businesses.
• Only bring newer notes, for example nobody will change older, small faced, pre-2006 US bills. Avoid bills with tears, writing on them or that look well used and old. Having perfect, uncreased notes is not necessary in most countries in 2017.
• Try to change the largest bills you can. 100 denomination notes will always get the best rates, usually the same as 50 denomination bills. Sometimes it doesn’t matter but the difference can be appreciable. Larger bills take up much less space.
• Walk away easily and quickly especially if the quoted rate is way out of line or the guy is too high-pressure. They will almost always return with a better rate.
Money changing tricks
Money changing tricks are one of the easiest way to get burnt whilst abroad, especially if doing so on the street.
1. Your original money could be returned to you as a fake or lower domination note when the deal is voided by the changer. If you are worried you could make a note of serial numbers of larger bills before you pass them over to make sure you get back the original. When you are handed back your money, do not return theirs until (no matter how much they try to fluster you) you establish that the carefully folded $100 bill is not a $1 bill – it’s easily done.
2. Be wary of receiving money no longer bank recognised or carefully folded to deceive.
TIPS FOR FRAUD PREVENTION
Credit & ATM card fraud is a reality. Following a few simple rules will help protect you from disaster.
Avoid Public Computers: All over the world you’ll find internet cafes where you can rent a public computer to manage your online banking. It’s relatively easy to install a key logger on these machines, which will track every keystroke you make, giving a hacker all of your login details. If you must, make sure to use a secure password manager like Last Pass.
Call Your Bank Before You Travel: Let your bank & credit card issuer know what dates you’ll be in certain countries. This will help them identify & block any fraudulent activity on your account. It’s also important if you want your cards to work when you get there!
Keep Eyes on Your Credit Card: When paying by credit card overseas (especially at restaurants & bars), never lose sight of it. Don’t let anyone “take it out back” to swipe the card. If the machine is not near you, ask to accompany the cashier. Card skimming scams are often accomplished this way.
Don’t let all of this scare you too much though. International travel is a very safe activity, despite what you watch on the evening news. The key to having a great time is to be prepared for all of these possible scenarios. Chances are you’ll have nothing to worry about.
Use a VPN: VPNs encrypt your web traffic. Go to the section of VPNs on this page. The cheapest are Chrome Extensions.
PROTECT YOUR CASH
Cash is what I use most while traveling internationally because it’s accepted everywhere. But the problem with cash is that it’s not traceable, so if it’s stolen you’ll never see it again. Go to the post on Travel Security on the Travel page.
Taking proper precautions when carrying cash is a must. Secret pockets sewn into my pants & shorts are the safest and a lot cheaper to make ($3-$7) then buying travel pants with a similar feature built in.
Many travelers use money belts that are worn under their clothing, but I’ve never been a big fan. These removable pouches are uncomfortable and it’s easy to forget them somewhere.
It’s also wise to hide a stash of emergency cash in your luggage somewhere. My favorite places include: dirty socks, toiletry kits, under shoe inserts, sewn behind a patch (attached to your bag).
Dummy Wallet. In particularly risky locations, you can also carry a dummy or mugger’s wallet. This is a cheap 2nd wallet that’s filled with about $20 in local currency, an old driver’s license, some receipts, and an expired credit card. It’s used as a decoy, so if you’re ever mugged, you can throw it at the thieves and run away. Helpful against pickpockets too. The tactic is best used in cities with high crime rates — I’ve carried one before in Guatemala City, Managua, and Tegucigalpa.
Bank fees can add up to some serious money over the course of a long trip. If you want to save money, you need to be proactive when it comes to banking and currency exchanges. Be smart and bank smart. Give the banks less and your trip more. I haven’t paid a bank fee in years and you shouldn’t either.
And with these simple tips, you’ll never have to again.