Travel Money Tips
You will want to spend money whilst overseas. There are a number of ways that you can carry your travel money.
Cash for Travel Money
Where to exchange?
Travel money
When exchanging money, look for exchange houses that show both sell and buy rates. This way you can verify that the spread is reasonable and you are not being ripped off. If this is not possible, look it up on www.xe.com or in the currency exchange below and add a few percentage points to determine what a good exchange rate should be. Haggle.
In India I saved between 5% and 10% by shopping around and haggling over the exchange rate.
You may want to carry a small amount of currency for when you arrive. Airports always give the worst exchange rates. Hotels also give very poor exchange rates traditionally. Banks can take significant time to change money. Money changers, especially where there are multiple changers together are your best bet.
Bring cash in a variety of currencies such as $US, GBP, Euro, AUD and CHF. Also, possibly bring it in your own currency or the currency of your host country. Where do I change the currency? Given that labour rates make up a large percentage of the commission, it is normally better to change money in the country with the lower labour rate.
If your own currency is in a downward spiral and you are heading off in 6 months, it can pay to obtain some cash at home.
Bring new notes
Always remember to bring crisp new notes. Often torn, written on or old and dirty notes will not be accepted. Also, be aware of counterfeit notes.
Larger amounts
Exchange in fewer larger transactions to get the better rates.
Black market
In some countries, there is a black market in the currency. This happens where the country ‘pegs’ its exchange rate artificially high or low. This ’black market’ is illegal to access but in some countries is accessed quite readily. In others, police are there ready to extradite or fine those people accessing it.
Currency limitations and declarations
Some countries have limitations as to the amount of currency that you can bring into or export from. Other countries require you to complete currency declarations, even for small amounts.
ATM for Travel Money
Depending on where you are travelling, using an ATM may be an option. If you are travelling in first world countries such as Europe or USA, you can use credit cards and ATMs more easily.
Availability of ATMs
In third world countries, however, normally, this means carrying cash. In some third world countries there are normally ATMs at the airport or in the capital city but not necessarily in other areas.
High transaction costs
However, these ATMs may have very small cash advance limits. This translates into large transaction costs. In a first world country, you may be able to withdraw $1000 per transaction. If there is a $4 transaction cost then this becomes 0.4% of the transaction. However, when the limit is only $100 then the transaction cost becomes 4%.
If withdrawing from an ATM make it the largest possible withdrawal to save on withdrawal and exchange fees by your bank and the foreign bank. Some banks have reciprocal ATM arrangements in certain countries that may make international withdrawals cheaper.
Citibank advertise a fee free Visa Debit card that allows fee free international transactions on purchases and ATM withdrawals.
Apps for finding ATMs
There are apps for finding ATMs such as ATM Hunter and ATM Finder. These will help you find the nearest ATM. Your bank may also be able to provide you with information on ATMs in the countries you will visit.
Travellers cheques
Travellers cheques are an alternative. However, they will cost you money and may not be easily changeable. They are not used very often these days. I recommend against using travellers cheques these days.
Credit cards for travel money
Transaction costs
Credit Cards are a good alternative for larger purchases. On smaller purchases, the transaction costs can be too high to make it worthwhile.
Local or home currency
Be careful. Often vendors will ask if you wish to pay in local currency or your own currency. If you ask for your own currency then exchange rates can be very poor.
Let credit card company know you will be away
Let your credit card company know you will be travelling so that transactions are not cancelled by the company in your interest when they are flagged as abnormal.
Good credit cards
Hailfax Clarity in the UK is advertised as a card without ATM charges worldwide. If you are from USA, then a Charles Schwab account makes sense. It allows you to withdraw money from any ATM worldwide without paying a single cent for the transaction.
Travel money cards
Travel money cards allow you to lock in an exchange rate before you go. This can be useful. However, exchange rates can be poor and running and transaction costs can be high.
The Travelex Multi Currency Cash Passport Prepaid Mastercard is an option for Australians. There are no overseas ATM fees and there is a $15 setup and $10 closing fee. Providing you do not switch currencies, withdraw in Australia or keep it open over 12 months after you stop using it, it is worth considering.
See www.travelex.com.au
Fee Free Cards
Revolut offers a no fee and great exchange rates for 90 currencies. See revolut.com. They use an APP on your smart phone for the transactions.
Wiring travel money
You can even wire money across to yourself or have someone wire it to you from home. If you wish to wire yourself money, this can be done over the internet from a bank account or credit card you setup.
See www.westernunion.com and www.moneygram.com
You may be thinking if it is that dangerous to travel why travel at all? In fact, most places are much safer than reported. Also, if you start heading into dangerous areas, locals will usually tell you that you should not be there. If you develop the travel bug, you will probably go to places that people warn you against travelling to because of crime or disease or something else. However, these places can sometimes provide the most amazing travel experiences. If you lost money, you can make some more. If you contract a disease, in most instances, if you are prepared, you will recover quickly. However, if you don’t go, you will never have the experience.
