Happy birthday – your debit card has been hacked.
That's basically what happened to Donna on her five-day birthday trip to Clearwater, Florida.
She wrote me about it out of concern for other solo travelers. Her situation got sorted out with the help of her bank so she didn't end up out of pocket but on the downside they had to cancel her debit card leaving her with only one credit card. When going overseas Donna has more backups but being in her home country she didn't take that extra care.
All this brought up a point that I have made before. We need financial backups on the road.
Managing your money, cash, credit and debit cards while traveling is a challenge that must be addressed. And because what works for one person may not necessarily work for another, I'm going to give you lots of options here. Below you'll find:
- The Basics of Cash and Card Management for Travel
- How to Keep Cash and Cards Safe as You Travel
- Avoiding Foreign Exchange Fees as You Travel
- Saving Money with a Premium Bank Account
- How to Manage Your Finances as You Travel
The Basics of Cash and Card Management for Travel
- Carry multiple credit and debit cards. Not everyone has a credit card. If you're in that group please read Travel Without a Credit Card & Within Your Budget: Top Tips. If you do travel with credit and debit cards like I do, have backups and see below for How to Keep Cash and Cards Safe as You Travel
- Carry at least two credit cards in different places. I carry two credit cards. One that I use day-to-day and an Amazon.ca card which is what I use when I'm out of the country as it charges no foreign transaction fees. See below for How to Avoid Foreign Exchange Fees as You Travel.
- Carry more than one debit card if possible. Not everyone banks at more than one financial institution but if you do carry a debit card from both. As per the caption in the photo at the top, this saved me in Jordan.
- Carry a small amount of American cash or Euros. They are both readily accepted internationally.
- Exchange money at your destination. Now not everyone is comfortable with this. Some prefer to go to their destination with some local currency but I have yet to find this a necessity. I've written a whole post on how to buy local currency. Read Saving as You Change Money.
- Make ATM withdrawals at local banks only. Avoid ATMs in convenience stores, train stations, restaurants… as they charge extra fees.
- Don't carry more than you can afford to lose. See below for strategies to keep the cost of getting cash low so that it's reasonable to take out small amounts frequently.
- Ensure you have room on your credit card. If you have a small credit limit on your card, make a payment before you leave to create a positive balance on your card in the amount you expect to spend.
- Never take a cash advance with a credit card. If you do so, interest will start accumulating right away, the interest rate is almost always higher than that for usual credit card transactions and there may also be a fee for the cash advance. They hit the consumer hard for cash advances.
- Always pay off the balance on your credit card. No amount of accumulating points counterbalances the cost of interest on a credit card balance. Always make paying off your card your first priority.
How to Keep Cash and Cards Safe
There is no place to keep your cash and cards perfectly safe and have them accessible at the same time. The solution is to divide both into multiple places so as to reduce your risk of losing (in one way or another) all your access to money at once. I like to carry two debit cards and two credit cards.
I stash my cash and cards in at least two or three of the following places:
- My purse or pack – this is my main supply and it's for purchasing items from stores and other establishments. If I'm in a busy place like a subway my day pack always comes to my front. If there's a sign that says watch for pickpockets don't check for your wallet. Pickpockets may be standing by looking for the easiest wallet to take.
- My pocket – I carry small amounts of money in my pocket for small purchases and because, in some cases, I give cash to panhandlers – especially if for some reason I think it will increase my safety. Having a bit of cash in my pocket so that there's no need to open a purse or backpack keeps things simple and safe.
- My bra – I know this doesn't do much good for the men but I always tuck spare cash and a credit card in my bra. This is my backup should I misplace my purse. A money belt, passport pouch, hidden pocket or bra stash are good alternatives.
- My luggage. I always keep backup cash and a credit card in my luggage which is left as securely as possible at my accommodation.
- Other places to stash extra cash:
- An almost empty pill bottle. Fold a few bills in the bottom and add a few pills so that it rattles like normal – a recommendation I heard from Journeywoman.com.
- The hotel safe though I have read that the safe at the front desk is more secure than the one in the room.
- Your shoes.
Avoid Foreign Exchange Fees as You Travel
Yes, money costs money when you travel. There can be hefty charges to exchange cash for the local currency, take money out of ATMs and use credit cards. Here are some tips on how to avoid ATM and foreign exchange fees:
- Save on foreign exchange fees when using credit cards. Credit cards automatically calculate the exchange rate on foreign currency on your credit card bill. The fee for doing so is usually 2.5% – 3% of the amount of the charge. This fee is determined by the financial institution that issues the credit card not the credit card company. Choose a card for travel that has a low or no foreign exchange fee such as the Amazon.ca Visa card that I have. Again, for details I'd suggest you read Exchange Rates, Destinations and Saving as You Change Money.
- Save on foreign ATM fees when using debit cards. Get a bank account that does not charge you to withdraw cash from a foreign ATM. You can look for one with your current bank (I have a premium bank account with TD Canada Trust that, with a minimum balance, waives the foreign ATM fee) or choose a bank that is part of the Global ATM Alliance. Either way, you can save up to $5 per ATM withdrawal. Here's the financial picture of my premium account.
- My premium bank account normally costs $29.95 per month ($359.40/year) but I took a loan at 3.5% for $5,000 and leave that balance in the account. Doing this waives the monthly fee so my actual cost for the premium account is $175. I know taking a loan is not possible for everyone but this is one of the benefits of age and using credit cards while paying them off every month. If this doesn't work for you, check out the Global ATM Alliance bank offerings. Perhaps there's a good option for you there.
- What I get for the $175 cost of my premium account is worth about $700/year:
- My premium Visa travel card is free – worth $120/year.
- Premium points with my premium Visa card that earn me cash faster than a free card. Because I put everything possible on my card this is valuable – worth more than $400 a year.
- No bank or network fee for ATMs on the PLUS network anywhere in world. Note: this saves up to $5 per transaction on my bank's end but does not include any bank or institution fees that may be associated with the ATM at the point of withdrawal. – worth about $200 per year.
- Don't go to foreign exchange kiosks. The foreign exchange kiosks you see in airports and on the street typically offer a worse exchange rate than banks. Their fee (which is usually advertised as no fee) is hidden in this exchange rate. Avoid using them whenever possible.
- Balance the cost of money with peace of mind. Despite the cost of using an ATM, you may feel safer taking out smaller amounts of cash more frequently – by having less cash on you as you travel. Sometimes it's worth paying the price to feel safe.
Manage Your Finances as You Travel
In addition to spending money on your travels you may need to make bill payments, transfer funds, accept Interac transfers… in your account as you travel. Here are a few things to consider:
- Sign up for online banking. If you don't already bank online, sign up to do so well before you leave. Get accustomed to it while you have easy access to customer service.
- Protect Your Online Identity with a VPN. A public WiFi network is not secure. Never access your financial accounts, never book a flight or room with your credit card, never do anything with information that should be secure over public WiFi including hotel, coffee shop and airport WiFi. To protect your online activities read VPN for Travel: What, Why and an Easy Setup Guide.
- Schedule payments. Many transactions that you'll need to make as you travel can be arranged in advance of leaving. Schedule payments via your bank account or to your points accumulating credit card.
- Assign a friend/family representative. While you're gone, it's good to have someone responsible receive your mail and notify you if there is something that looks important. They should have all your financial information and copies of your travel documents so that they can help you at home while you're on the road.
- Plan for important deadlines: If you're gone over tax season or other financial deadlines make sure that you have made arrangements for their management before you leave.