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Investment Planning |
Savvy Tips for International Travelers
Have you ever been surprised when tallying up your expenses after a trip abroad? It can be hard to know exactly how much your U.S. dollar is worth when you're out of the country. And international purchase fees can really add up. Fortunately, there are ways to eliminate confusion and save significant money when shopping, sightseeing, and exploring in a foreign land.
When exchanging dollars for local currency, a variety of factors, such as handling fees, transaction fees, and the spread between a vendor's price and the market price for currency, influence your total cost. Understanding how to get the best exchange rate can help to keep your trip from becoming unexpectedly expensive.
Before you leave home, do some research. The exchange rates for ATM and debit cards are often better than for cash, credit cards, or traveler's checks. However, some banks and credit card companies may charge a fee of up to 3% on foreign transactions. So it is important to check with your credit card and bank before you go. Preferably, you'll have a Visa card and a MasterCard, since many merchants will accept only one or the other. Begin your research well in advance, in case you want to apply for a new credit card. It's also important to notify your bank and credit card company of your impending travel plans, so they can put a travel flag on your account(s); otherwise, they may freeze your card(s) if international transactions appear.
The Schwab Bank Visa Platinum Debit Card is a traveler's dream come true. It's an ATM and debit card, which means you can withdraw cash at ATMs worldwide and use it at retail establishments and other merchants who accept Visa. While credit cards are more ideal, the debit card's elimination of conversion fees makes it a great choice for foreign travelers. This card offers unlimited ATM fee rebates worldwide and no conversion fees on purchases or cash withdrawals. The card is automatically issued with a Schwab High Yield Investor Checking account. With this card, you actually have more purchasing power, because you pay no transaction fees, and your foreign purchases will cost no more than if you never left the country. It's accepted at any ATM machine with a Visa logo with Interlink or Plus networks. For more information, visit www.schwab.com, or call (888) 403-9000.
For pocket cash, find out if the U.S. dollar is accepted as the local currency in your travel destination by looking on a site such as Quezi. If you'll be exchanging currency, check the exchange rate online using a reliable website, such as Oanda, or the local newspaper. Signs on foreign exchange kiosks can be misleading and should not be blindly trusted. In general, you'll want to avoid withdrawing any more cash than you feel comfortable carrying.
The difference between the price at which vendors buy currency and the rate for which they sell currency is called the spread. Vendors make money (and you pay more) when the spread is wide. A vendor's stated "buying rate" is always less than the market exchange rate, while the vendor's "selling rate" is always greater than the market exchange rate. Kiosks may lure you in by posting appealing rates, but be sure to understand other costs, such as flat fees and commissions, that can make the deal unattractive.
Certain locations offer better exchange rates than others. Among the worst spots to exchange money are airports and other travel hubs, where many vendors try to deceive travelers by displaying only their selling rate rather than the lower buying rate. Hotels are convenient, but the exchange rates are often high. Banks often offer the best non-negotiable exchange rates, which are close to market price. Although larger institutions, like banks, will not negotiate their exchange rates, smaller vendors may be open to haggling. Rates differ from bank to bank, and for those up for haggling and armed with up-to-the-moment exchange rates, the smaller vendors can sometimes have the best rates.
Here's a brief checklist for preparing for your trip abroad:
- Notify your bank and credit card companies of your travel dates and locations.
- Request a mail hold online from the U.S. Postal Service.
- Hold your newspaper subscriptions.
- Check with your cell phone carrier to find out what your plan covers, and decide whether you need to add coverage.
- Set up online bill pay with your bank.
- For any bills not on automatic bill pay, estimate the charges you'll incur while you're away, and pay a little extra.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.