Managing your moolah on the road
Someone of an informed nature advised that if I was to successfully raise enough funds for a big two-wheeled trip, I’d have to adopt the mantra ‘Don’t be too stupid to be poor’. Being frugal was the easy part – surrendering the daily deli sandwich, monthly Sky subscription and quarterly visits to the hairdressers. Savouring the bigger picture of my imminent biking bliss made it painless to sacrifice the unnecessary spend and simply save, save, save! But what about managing your dollars and cents on the road? Or perhaps it’s pounds and pesos for you. As modern travellers we can’t simply pack the panniers with dinero in all denominations and off we go, what are the options?
Although carrying cash is a must, I prefer the idea of spending somebody else’s money. Cue the credit card. The issuer protects every transaction I make and moreover from anyone that fraudulently attempts to make on my behalf. There’s automatic peace of mind should your credit card get lost or stolen, this source of spend is a safe bet. I always carry two credit cards (one Visa and one Mastercard) and stow in different places should one stop working for example. Whether you’re planning to use the credit card as a main source or for emergencies only, it’s prudent to call the issuer before every trip, carry their international phone number while away and determine which fees will apply to your purchases, letting them know when and where you will be travelling. Any international activity on your account won’t then activate your issuer’s panic button and trigger a block to your account.
There’s a mind-boggling range of bespoke credit cards now geared towards the international traveller; where to start? Money Saving Expert’s Martin Lewis publicises that most cards add a 3% cost to the exchange rates banks themselves get. You can dodge this by packing a specialist card that doesn’t add this ‘load’, namely you’ll get exchange rates that trump even the best bureau de change. Golden rule number one: repay in full to evade the interest. Personally, I like the Halifax Clarity credit card; it has no foreign exchange fee anywhere in the world so you can get the best possible rate. The rate you’ll get is set by MasterCard, which is generally accepted worldwide. There’s no fee for cash withdrawals either, though you’ll be charged interest at a fairly low 12.9% representative APR, until you pay it off in full. That’s about £1/month for every £100 withdrawn.
There’s a nifty trick Martin Lewis recommends in minimising this cost. You’re only charged interest until you’ve fully repaid the balance, so if you pay off the withdrawal amount as soon as you can – via Internet banking while abroad, or as soon as you get home – you’ll have minimised the interest costs. You don’t get charged interest on spending abroad, provided you pay this off in full by the date shown on your statement. Whichever plastic you prefer, it’s also possible to ‘load’ your own money – above the credit limit – onto the card. This will buy you a little buffer zone in keeping the daily interest charge to a minimum on transactions. Alternatively, you may wish to set up a monthly direct debit for the convenience of automatically repaying your card off in full.
Any cons to the credit card? Some credit cards push themselves as specialist overseas plastic – perfect for overseas travellers but issuers hope you’ll also use them in the UK where they’re not so competitive. Just invest in one for spending abroad and you’ll beat the system. It’s also worth noting that when buying foreign currency, a debit card unlike a credit card isn’t allowed to charge a fee. Alternatively, you could pay with cash although check for authenticity by a dotted strip that will turn solid when held up to the light, clear hologram and any raised texture on some bills for example to steer clear of counterfeit notes.
Some would argue that debit cards could be the worst way to spend. While any card that charges you interest is a bad deal, some debit cards (bank account cards) actually have the very worst fees – Money Saving Expert research informs us these include: Halifax, Intelligent Finance, Santander, LloydsTSB, and to a lesser extent, NatWest and RBS. Refrain from spending on these abroad. Your debit card however is useful for withdrawing cash in local currency although I still prefer the protection of a credit card in case a machine has been tampered with a skimming or imaging device that can unlawfully capture your personal identification number.
On the plus side, you’ll get the same great interbank exchange rate when you make cash withdrawals with your debit or automated teller machine (ATM) card as you do when you make a credit card purchase. However, each cash withdrawal you make will usually be subject to currency conversion fees, foreign ATM fees or other charges from your bank and, or the local bank that maintains the ATM. Debit cards work along the same lines as regular credit cards for purchases, but if your card is lost or stolen you may not have the same protection. If the ATM card from your home bank isn’t connected to the worldwide Cirrus or PLUS networks, you may wish to source a MasterCard or Visa debit card instead. While they look and can be used like regular charge cards, they actually debit your checking account the same way your ATM card does.
‘Wad is God’ but carrying a stockpile of cash can be a necessary evil on longer trips, travelling through country-to-country. Where’s best to stash your greenbacks? Anywhere your imagination can pinpoint that’ll give you peace of mind when without it. It’s shrewd to divide up your cash into small piles and stow among different places. Vacuum seal freezer bags from any supermarket make great protective cases to house your money. Most of the time, you’ll be wearing your motorcycle jacket and are unlikely to leave somewhere without it. Storing waterproof bags of cash into lockable hard panniers, top or tool boxes are also going to give your hard earned dollar greater security. A money belt makes sense but what about taking it a step further and creating a false bottom in your pannier.
If possible steer clear of changing money at the airport, rates tend to be appalling. You’re a captive customer at an airport or ferry terminal, and invariably subjected to atrocious rates. If you’re forced to source some currency from the airport, order ahead for pick-up to get a better rate. When overseas, shop around at the local bureau de changes to find the best rates; you could even try to play them off one another for a hard-to-beat rate. Bartering can save you a stack of money. It may also be wise to avoid exchanging currency at border crossings, especially while travelling through developing countries. If unpreventable, ask for low denominations and a receipt; receiving fake bills for your hard-earned cash is not altogether uncommon in some poorer countries.
Some would argue nowadays that traveller’s cheques are dying a death. Whichever camp over the currency you sit, they are completely safe and replaceable if they get stolen, easy to use and convenient because they’re accepted at thousands of amenities such as hotels, shops and restaurants. Just keep hold of the serial numbers should they get lost or stolen. On the flip side of the coin, research has revealed travellers’ cheques often offer among the worst possible value on holiday money. In contrast, the top plastic or right bureau de change gives you far more euros, dollars or yen to your pound. Personally I prefer the credit card, which usually offers better exchange rates and in some cases low or no fees.
Finally, leaving a few blank cheques with a trusted family member or friend might also prove handy while abroad should you face any unforeseen costs back home. That and leaving your banking contact information with them should you lose your details on the road. If a country only issues a closed currency, be careful not to over-withdraw as you won’t be able to spend it outside that particular country. It’ll save you the hassle of finding someone to sell it at a rate that will probably benefit them more than you. Caution might also stand you in good stead in carrying a ‘fake wallet’ – in the hopefully unlikely event of getting mugged, relinquishing a false wallet with a small amount of cash inside may just satisfy the robber’s instant gratification requirements. You’ll glean your own research on current travel money advice but better from the outset to be penny wise than pound foolish.
A version of this post was published on ADVPulse.