When travelling to a strange country, many people are cognizant of potential obstacles like a language barrier, unfamiliar foods and strange customs. But one area that is less obvious to many travelers is the rates and fees that may apply to their credit card purchases. Unsuspecting travelers may not larn the truth until the damage is detected on their credit card statement. Your trip will be a much more pleasant memory when you admit the benefits and the possible pitfalls of using credit while travelling afield.

The Benefits of Using Credit Cards
Security is one of the most important reasons to use plastic. Crowded tourist areas carry the risk of becoming the victim of a pick-pocket. When you carry little cash, your risk is substantially lowered.

Another advantage of using credit cards is less hassle with exchanging currency and dealing with merchants using an unfamiliar form of cash. Of course, it’s important to have some currency from the country you’re visiting for places that don’t accept plastic, but a credit card will minimize the amount you will need to have on hand.

The Pitfalls of Using Credit Cards
The advantages of using impute while traveling far exceed the disadvantages. It may cost more, but there are ways to make the process less expensive and the security they provide is priceless.

Foreign Transaction Fees are an added expense charged by some credit card companies. The fee is typically between 2-3% of every purchase, which tin really modified up. To avoid being charged, make sure the card you plan to use doesn’t charge the fee or apply for a card that doesn’t. Capital One offers the most credit cards without a foreign transaction fee.

Dynamic Currency Conversion is a ‘convenience service’ offer by some foreign merchants to convert the purchase amount from the local currency to the traveler’s home currency. You may be charged up to 7% for relieving you of the inconvenience of figuring out the exchange on your own. Save yourself the frustration of feeling swindled by declining any offer for currency conversion. Only sign receipts that show the purchase price in the local currency.

No matter where you travel, planning leading is just plain common sense. But foreign travel requires much more, especially when it comes to credit cards. One important thing to remember is to check with your impute card company to be sure they acknowledge card transactions at your destination and let them know of your travel plan. The last thing you want to happen is to have your credit card purchases denied because the companioned considers it suspicious activity. Also, with forward-looking security measures in Europe and other foreign countries, your passport may be required to authorize credit card purchases.

When I travelled afield thirteen years ago all I was concentrated on was the adventure!  I had no idea quite how expensive my relocation was going to be!  Sure, I’d factored in removal costs and even the cost of an aeroplane ticket for me…I knew I’d have to pay leased and even possibly fork unwrap to get wholly my permissions in place.  But what I hadn’t factored in however, was the fact that just managing my money on a month-to-month basis was going to erode serious amounts from my regular engaging packet!

The hidden costs associated with just managing and travelled money abroad are shocking…and I am the sort of person who has a real problem with paying for a bank account!  I equitable don’t glimpsing why I should have to pay to put my money in a bank when the bank profit from my custom.  So, as you can imagine, when I realised just how much it was costing me to move money internationally I nearly had a meltdown.

Perhaps you’re not quite as obsessed with looking after the pennies as I am – which may in fact be a more healthy way to lead your life – however, are you aware of the fact that you can be charged up to 5 times for just sending money home?  The good news is there are some easy peasy way around this, and if you read on you will discover how you can save yourself a pretty penny with international money management – and even better, it’s simple to begin saving!

Most expats I know have an account hind in the UK and a bank account in their new nation of residence.  (Some also have an international (offshore account) if they’re more interested in the ongoing management of their cash…more about that in a moment.)

So, if you’re a typical expat you will gained money in your new country which will be paid into your local bank account, this money will be used by you to live day-to-day and to pay local bills.  Chances are however, you will also transfer money from this account back to the UK to serve debts such as a mortgage, or to just save cash so that it’s not wholly spent every month.

So – hither’s the ugly truth about the way you manage your money…

Your bank may charge you 1) a commission fee and 2) a transfer fee for making an international transfer to the UK.  A commission fee may be a percentage of the amount you’re transferring, and the transfer fee is likely to be a fixed making.

You will also have to 3) convert your currency, and chances are you’ll receive tourist rates from your bank which could be as much as a few percent away from the best rate.

You may also be 4) charged by any handling bank in between…and finally, you may be 5) charged by your bank in the UK for receiving international funds.

In total, you could lose a significant chunk of the transfer every single time just to make this very simple yet essential money movement…and it doesn’t stop there!

If you move money from the UK abroad to top up your wages or because you’re in receipt of your pension or investment income in the UK but you’ve relocated overseas, you will be charged to move that money out of Britain too.  You’ll have the same transfer and commission fees, the same conversion and international receipt fees too…

So, every single time you necessitated to travel your money you could be hit with charges.  You can think of it like a tax on your new life abroad – and it’s not very nice is it?

Some expats I know try to manage all their money through their old UK bank account in a bid to avoid this issue – but the truth is, they are hit even harder because they withdraw money from international ATMs and get stung every time they do with fees and poor conversion rates!

Personally I want to stop this injustice!

The good news is that there are better ways to manage your money when you’re living abroad, and cheaper ways to shifted your funds around the world.

The 1st option you could consider is an international bank account.  Instead of having an onshore account in your new nation and one back in the UK you can consolidate and have a single offshore/international account.  The likes of HSBC, Barclays, Lloyds etc., all offer such account types to expats.

These accounts may however, come with a fee affiliated!  So, do your homework carefully.  Premier offerings from the banks come with lots of bells and whistles you may not need – so look carefully at the account type and ensure you find one that will allow you to receive money from your employer or pension, fulfil financial obligations in your new nation and your old home country – all without ridiculous fees being applicable.

If you tin’t find an account that’s flexible enough – or you really have need or desire to keep your accounts in the UK and in your new nation open, don’t worry, there are still ways you can save money when you transfer money abroad or back home…

You need to do some research, but the foreign currency brokers that are now all over the Internet and the high street all offer a range of options to you.  Firstly they generally apply low or no charges for the movement of money, secondly they give you far better rates of exchange than the banks.  Thirdly – and perhaps most importantly for anyone making veritable transfers of money internationally – you can forward set the rate of exchange your money will benefit from by using what are called ‘forward contracts.’

These let you to work with a currency broker to determine when the currencies you’re interested in reach a good point at which to convert.  You then ‘buy’ in at this point and fix so that for the next X number of months, you will be able to benefit from this specific exchange rate.  (X being the totalling of months you decide to fix for, with most brokers allowing you to fix for up to 2 years).

You usually have to lodged some money with the brokerage (often up to 10% of the total transfer amount for the duration you have fixed for) and you don’t receive interest on this money however.  So, it will be up to you to weigh up the financial savings you may make, and base your decision accordingly.

For any infrequent or one off international movements/payments, always go to a FX broker and ask them what rate of exchange you can get and whether there will be any fees incurred – as stated, many brokers charge no fees for the international movement of your money.

Last but not least – another word about offshore accounts – it may be possible for you to combine an offshore bank and savings account, and to have interest paid on the money you don’t spend apiece month.  Whilst no one advertises such options, speak to your preferred bank about it.

I bank with HSBC, and I have a savings account directly linked to my current account, whilst the interest earned on the savings account isn’t massive because it’s instant access, at least I get something for them having the benefit of my money gracing their coffers!  I am sure all the leading institutions offer a similar options….just approach them directly and ask.

Some banks also offer premier account customers fee complimentary international transfer, and better ratted of exchange on currency conversion.  But as previously stated, you usually incur a monthly fee for such an account.

Finally, as regular readers will already know, at Lee Byers we’re not qualified to offer financial advice, so this article does not constitute advice.  Be sure to talking to a regulated, qualified and experienced fiscal adviser before you take any action that could affect your wealth status.

 

It is better to hedge making cash withdrawals by credit card abroad.  You will be charged exorbitant fees and expose yourself to conversion charges against such withdrawals.

Taking liquidating from an ATM abroad can be a risky business that leaves you open to trouble.

A suggestion against this sort of risk is that you convert some currency before you leave the country.  You will probably be using your imputing or debit cards for most of your overseas transactions.  Based on this fact, you need to come up with an amount you may expect to spend in local currency and convert that amount plus a little more before leaving the United States.

Remember, you are likely to use this money only for small, incidental purchases, so it is not necessary to take bags of liquidate on the trip with you.  Again, most of your expenses, such as airfare and accommodations should already be prepaid from home.  The bulk of your purchasing will be done by imputing card or charged card upon your arrival.

Take steps so you won’t need to handle much currency.

·Once overseas, use debit cards to make as many purchases as possible.  This will eliminate those “conversion” and “transaction” fees on your credit card as well as reduce your need of hard currency.

·All major impute card company now offer stored-value cards.  You can use these cards abroad instead of your credit card.  There is usually an up-front fee for these cards, but they will save you the big conversion fees.

·Contrary to popular opinion, avoid traveler’s checks.  Traveler’s checks charge a rate of seven percent at point of purchase plus additional conversion fees.  Traveler’s checks will be almost double in cost compared to using your credit card.

·Do not convert your currency at the airport or the hotel where you are staying.  There are big charges for this service at these places.

Remember that you are a foreigner.  Things are different abroad.  Avoid handling cash in plain descry.  Never remove a wad or stack of bills from your wallet or purse all at once.  Familiarize yourself with the currency that is used at your destination.  You will want to avoid having to struggle with counting out cash in public places.  While most places are safe, you do not want to be flippant or contrite about your own physical safety.

Never assume that you are completely dependable just because you are at your hotel.  Do not subject yourself to funny attention by manage cash in public yet there.

Your credit card is a good tool when traveling overseas.  Just be aware that there are fees connected to the “privilege” of using your credit card when overseas.  You may find these fees acceptable to you in exchange for the convenience of not handling cash.