4.1 Financial Strategies

This section contains information about: setting up your financial system of bank accounts, credit cards, ATM cards, cash, and traveller's cheques (TCs); how to carry all this with you; how to change money; and getting more while you are on the road. See the Headquarters and Maintaining a Home, Auto Insurance & Taxes sections for more related information.

You need several ways to access your money. I use an ATM or credit card in ATM machines most of the time. ATM distribution seems to be proportional to how fast I spend money. In the West, ATMs are everywhere, and I need them often. In less developed countries, ATMs are usually only to be found in the bigger cities, but then the money lasts much longer, with plenty to spare by the time I arrive in another city every few weeks.

When ATM machines aren't available, I usually go into a bank and get a cash advance on a credit card, although it can be time-consuming, especially compared to cashing a traveler's cheque or US$100 bill. Cash advances don't accrue interest, since I keep the account in a positive balance by periodically sending a check to the credit card company.

I used to use a personal check from a money market fund to buy cash and TCs at American Express (AmEx) offices, which isn't possible or convenient anymore in most places I travel.

I carry around $500 in TCs, and $500 in cash on me, unless it is a particularly dangerous place; it just depends on your confidence and how much you are willing to lose. They are mainly a backup, in case I run out of cash and the other methods aren't available. I like to change US$100 bills until I run low. I don't worry about getting a better exchange rate for TCs over cash, as that is a rarity these days. Try not to run out of either, since there are places that will only cash one or the other, typically when you are most desperate.

Before You Go
Bank Accounts and Money Market Funds
Many investment companies, such as Vanguard, Fidelity, and others offer the full range of banking services a traveller needs. The important thing is that you are able to leave the bulk of your savings in investments, and it is still accessible by transferring the money at a minimal cost to an interest-bearing money market fund as you need it. Most offer credit cards and personal checks, and allow you to make international collect calls to them for account management purposes.

If you want a bank account that allows you to walk into their branch overseas, to make withdrawals or money transfers, then look to large international banks, such as as Barclay's, Citibank, or HSBC.

Let your bank know you're going traveling, and for how long, so that they don't lock your account due to suspicious activity.

Having a laptop with reliable security software, including a firewall, and the ability to view, send, and receive encrypted files, allows me to access my financial accounts without compromising information, logins, or passwords. I login regularly to verify balances, check exchange rates on credit card charges, monitor automatic bill payments, send checks for sporadic bills, and change the password.

"I strongly recommend setting up overdraft protection on your checking account and also, if possible, arranging for automatic payment of the minimum amount due on your credit card each month. This way you do not find your card suspended because some payment was late or got lost in the mail, which can happen. Most of the companies (perhaps all of them) will accept collect calls from overseas if you want to find out the total amount due and pay it by mail or online. I used to have the credit card companies deduct a fixed amount each month equal to the minimum payment that would be due if I was up to my credit limit. But most companies will not do the fixed amount any more; they will only deduct either the minimum payment due or the full amount due (and you don't know what either of those is, because of variations in exchange rates and the varying times it takes to process your charges, so that is a nuisance). If you think the payment might be late, tell the person and they will make a note in your record. Be aware, however, that you may not be able to place a collect call from where you are (none allowed from Nepal, for example!)." <Larry Cotter>

"If you have shares of stock, you may want to open a margin account with your stockbroker and put the stock in it. Then, get checks to write on the margin account. This creates an instant loan against the value of the stock, but at very low interest, so can be good for emergency situations. You may also be able to arrange in advance for a bank wire of the money to an overseas bank, should you need to telephone for it from your hospital bed…" <Larry Cotter>

Credit Cards
Credit cards can be used like ATM cards in ATM machines to withdraw cash. They receive a rate better than you can get at banks, but some also have a transaction fee, and they accrue interest from the time you get the money, until you pay it off, unless you have a positive balance on your account.

You will want two different credit cards on the same account, in case one fails, or gets swallowed by an ATM machine. Even better, having cards from two different accounts in case one is cancelled or put on hold.

Before you go, notify your credit card companies that you will be traveling for an extended period of time. That way, when charges from all over the world appear on the card, they won't think it's stolen, and cancel or lock your account.

"Contrary to the propaganda of the credit card companies, credit cards are not widely accepted outside the First World, and almost never at any but the most outlandishly expensive establishments. I have seen many a traveller stranded for lack of money because they counted on being able to use, or get a cash advance with, a credit or ATM card. Remember that if your bank says, 'Of course this card is accepted in that country', that means (if it is true at all) that there is at least one place somewhere in the entire country that accepts it, not that it is accepted everywhere. The only card to count on is American Express, and only at their offices, not banks." <Edward Hasbrouck>

"I travel using Visa and Mastercard and have had no problems." <Bernd Wechner>

"The AmEx card can be used to cash personal checks up to $1000 every month (up to $200 in local currency and the rest in travellers' cheques). This is a great way to maintain liquidity while avoiding the bills back home, and is much better than wiring or other methods. I do not believe other cards provide this service." <Sean Connolly>

"Caution: changed their policy about cashing counter checks at their offices for AmEx card members. They formerly supplied counter checks usable for the full amount that you were entitled to cash using your AmEx card. Now, they will only allow emergency check cashing with a counter check for a very small amount of money, not even enough to get out of the country, if you have a hotel bill pending! So, if you lose your personal checks, you can be in trouble. Best to keep one or two sets of personal checks stashed away separately, in case of theft. Bank wire transfers can be very expensive, and replacement checks can take weeks to reach you from home. It is necessary to think carefully about how many checks you should take with you for cash and for paying any US bills you want to pay from overseas; it may take a long time to get more, especially if some of your mail gets lost from time to time, as happened to me repeatedly." <Larry Cotter>

American Express no longer publishes their "Worldwide Traveler's Companion". It was a small, and extremely useful booklet that had all the addresses of their offices for mail drops, as well as important phone numbers for card members. Their offices don't tend to move much, but their representative offices, usually travel agents, do move or change occasionally. Now you have to check their web site or call them for the information. In the US, call them at 800-528-4800. Overseas, you can call them collect (free) at 336-393-1111.

"The American Express card comes in several different colours and flavors (green, gold, platinum, corporate in the USA; your mileage may vary elsewhere). If you get your card right before you travel, you should not be surprised if AmEx will not approve cashing larger cheques right away; they want some proof through experience that you are not going to run off with their money before they sign on for the big bucks. In short, if you plan on getting 'the card' to use these benefits, then you should get the card several months in advance of your travel and use it a few times, just to establish your credit with AmEx." <Henry Mensch>

Do not quit your job before applying for a card, they will not give you one based on past history, just your current ability to pay. If you are taking multiple cards, stagger the expiration dates. You might want to let the credit card company know to expect large cash advances from overseas, so they don't get a surprise.

"It pays to think carefully about your cash flow on the trip and, if necessary, get a second AmEx card for your companion (they do not get their own check-cashing limit if they have an Associate Card on your account). You may want to try for a Gold card instead of a Green one, if the Green check-cashing limit is not enough. The same holds true if you plan to use a Visa or other cash-advance card. And watch the expiration dates carefully, as some credit card companies will not issue new cards in advance. It is wise to have more than one card available, in case of demagnetization, theft or loss, or expiration of one of them (allow many weeks to get the renewal or replacement card overseas, especially if the first one does not arrive). (American Express cards get replaced on the spot.)" <Larry Cotter>

"If you are spending an extended period in a locale, then you can often arrange to pay your AmEx bill in local currency. During a six-month period, I paid my US dollar AmEx account in Australian dollars at an Australian AmEx office. Be sure to calculate your bill in the local currency and round up a bit (to allow for currency fluctuation -- it takes longer than average to process your payment this way), and save the receipt which says you have paid into your account." <Henry Mensch>

"This also works in reverse; when you return to your home country, you can use your AmEx to cash non-home-country checks drawn in their currency for payment in your local currency. After I returned from Australia, I had a checking account with the National Australia Bank, which I kept open for one year. When I received my Australian tax refund (several thousand Australian dollars), I deposited that cheque by mail, and drew off that account by writing and cashing checks at the AmEx offices in the Boston area." <Henry Mensch>

ATM & Debit Cards
Withdrawing cash with an ATM card is a convenient way to receive a rate better than banks offer. These are useful in the richer countries, and the major cities in poorer countries. Some machines will even give you your balance in your home currency. There are competing networks, such as Plus, Cirrus, and Star. Some have transaction fees, and most of the time there is a fee for using another system's machine. They don't accrue interest like credit card cash advances.

Be careful in evaluating which method is best. The exchange rate may be better, by maybe 1/4%, but your bank may charge $1.00-$1.50 per transaction, up to $5 on overseas transactions, since the overseas ATMs charge them. Because most ATMs limit you to $200-$400 per transaction, you just lost what you gained, so withdraw the maximum when you use them. The difference in transaction fees between ATMs and AmEx are usually small.

"To avoid unpleasant surprises, it is important to check on the latest fees for using ATMs or AmEx Express Cash, as the rules change, are different for every ATM card, and may vary from country to country. As of June 1998, AmEx fees for Express Cash (debit card) are 2% in the US and 3% overseas (because overseas you get foreign currency). There is no daily limit on how much you can withdraw using Express Cash, but each AmEx ATM will have a limit; you may need to make multiple withdrawals to get additional money, and some AmEx offices overseas may have different rules." <Larry Cotter>

A common problem with cards issued in the US is that they use words or six-digit PIN codes, however many machines overseas use four-digit numbers, and the keypads do not have letters. Some machines just don't accept the system you are using.

Worse, if the card demagnetizes, which happened to me once, or is defective, good luck on getting it replaced. In addition, network failures and power outages stop ATMs in their tracks. Another scenario, what if the machine decides to keep your card when you are in a hurry, or you are in a country has a nightmare of a banking system on top of the usual language barriers.

If a PIN is keyed incorrectly multiple times, some ATM machines will keep the card, usually after the second or third failed attempt. If the machine is not physically located at the bank, or the bank lobby is closed, you may have to wait a few days, and would then need to present your passport before you can get your card back.

"The most useful thing to have when in a bind is US dollars. This is quite a commodity in places. I would recommend taking at least a few twenties along in case of emergency. US dollars also get the best rate on the black market." <Dave Patton>

"A small wad of $1 bills is also very useful, if you do not want to change a $20 travellers' cheque, or if you need to pay a departure tax or visa fee in US dollars (visa fees in Nepal are collected in US dollars, for example)." <Larry Cotter>

Traveller's Cheques
TCs typically cost 1% to buy, although they were 4% in China). They are free with all AAA memberships (and some bank accounts), so pay the $40-$60 fee and load up before you go. You lose a little more at the other end when you sell, through a lower exchange rate compared to cash, and/or a transaction fee which is usually a percentage of the total. AmEx office rates are usually comparable to the banks, and they do not charge a fee, unless mandated by the local government, or the office is only an 'affiliate', then they can charge up to 5%. Local banks will also cash them, with a fee around 3-6%. All totalled, I find the expense to be good risk insurance for a safe and portable way to carry money.

Some travellers like to carry large denomination TCs of $1000 or $500 because they take up less space in their money belt. When they change one at AmEx, they get the cash they need with the balance in smaller TCs, such as $100s, without a fee as long as they don't "split a pack" of new TCs (20s come in two packs of 10, 100s come in a pack of 5). I don't bring that much in TCs to need this, and prefer to leave my money in interest-bearing accounts.

Always record the TC numbers (bought and cashed) in several places, like your journal, and send a copy of the information home periodically. Keep all this information, even after you no longer need it. AmEx will take you more seriously as a regular customer if you lose TCs later -- they tend to be suspicious at first due to all the fraud.

"I would also recommend only AmEx travellers' cheques. The difference is that if you lose them, you will be dealing directly with an AmEx office. Any other traveller's cheques, and you will be dealing with a local bank acting as an agent, whose problem you are not! Generally, all TCs are equally acceptable wherever you are -- it is the replacement of lost or stolen ones where AmEx scores heavily. I have known people to wait weeks for telexes to fly back and forth between the local bank and Europe or the USA before they get their replacement TCs. Even in major tourist places like Kathmandu and New Delhi." <Nigel Gomm>

"I have had my Thomas Cook TCs refunded quickly and gracefully (though admittedly not as quickly as AmEx)." <Bernd Wechner>

Paying Bills
Inquire about pre-paying property taxes, car insurance, home insurance, utility bills, and safety deposit boxes. I always pre-pay my storage facility for a year or more, since I don't want to risk missing a payment with them.

Direct Billing Authorization
With your permission, some mortgage, rental, and insurance companies will directly bill your financial institution monthly, quarterly, or annually, and receive payments automatically. You will need to complete forms authorizing the transactions, and may need to provide the company with a voided check for the account from which bills will be paid. The setup process is similar to direct deposit. Some companies charge a sign-up fee for this service.

If overdraft protection on your checking account is available, and you plan to authorize direct billing or use ATM cards overseas, sign up for it, and make sure it is activated before you leave. Some financial institutions charge a fee for each overdraft, which is a lot less costly than the alternative. Of course, the funds to cover any overdraft should be available in your savings account.

Online Bill Payment
If direct billing is not available, most financial institutions provide the option for you to pay bills directly from your account. They will either transfer the payment electronically, or will print and mail a check, drawn on your account. To set up online billpay, you'll need to login to the financial institution's website, and provide the name, address, and phone number of the company, and your account number. You will find these on the company's bill. Some charge an enrollment fee for this service, but it is well worth having a system where you can specify payments without having to re-enter payment information every time.

If you expect to owe the company a fixed amount that will be due on a specific day each month or year, you can schedule regular payments to be made automatically. You will need to specify the amount, and the date you want the payment to be sent. Prevent missed payments by allowing enough time before the due date for the payment to arrive; if they are not able to transfer money electronically, they'll have to mail a check, so schedule it for a week earlier. Since billing amounts and due dates can change, you may still need to login to make adjustments ahead of the scheduled payment date. Utility bills are usually stable, while you are not at home and the house is vacant, so you can estimate how much they will be.

If you are not comfortable with having bills paid automatically on a regular schedule, or you don't know the amount or due dates until you receive a bill, you can initiate payments manually as needed. You then have to login to the website of your financial institution each time you want to make a payment, and provide the amount and date the payment is to be sent.

Don't forget to setup payments to your email providers and website hosts, especially if email is your preferred method of communicating with financial institutions.

If you don't have an account with a financial institution, or they do not offer the online billpay feature, there are companies such as Paypal that offer billpay services. Be aware that some companies that offer this service want you to have your checking account with them.

Electronic Checking
Financial institutions also provide the option for you to authorize them to send checks from your account to companies, as well as to individuals. They will print a check, then mail it on the date you specify. This can be arranged on a one-time basis, or scheduled to be sent regularly. You will first need to login to their website to establish a beneficiary record, and will need to specify the name and address, at a minimum, and your account number, if applicable.

Sending a Check
In case none of the previous options are possible, take addressed envelopes with post-dated checks in your luggage. To a large extent, companies and individuals can use email to keep you informed, and to send the bill amounts so you can pay in a timely manner.

Automatic Transfer
To ensure that there are always enough funds to cover cash withdrawals and automatic payment of bills, you can arrange for automatic monthly transfer of funds from your savings account, or from money market accounts at other financial institutions, to your checking account. The amount can be changed, or the transfer stopped, by calling or faxing the bank, or logging into their website.

Most travellers arrange for a trustworthy friend or relative to manage their financial affairs. This can be risky for you, and a burden for them, as they usually have enough to do just monitoring your mail. Hopefully, you will be able to automate the bill-paying process as much as possible. Have them open your bills and monitor the success of the automatic payments, and give them access to your account, so that any changes to payment amounts, or extra payments, can be made.

"If you do not have anyone you can trust with complete access to your account, you might open a small checking account for them, or just give them an emergency fund to operate with. Even if the emergency fund is not enough to cover the needed expense, most firms will accept the amount available as evidence of good faith while your friend contacts you for the rest." <Larry Cotter>

If you have nobody who can do this, you could contract a bank to handle your accounts, but this may be very costly. It would be beneficial to have this person or bank registered as an authorized contact for your accounts.

"Before we left, we added my mom to our bank accounts. Then on our trip, every so often we would buy $3,000-$4,000 worth of traveler's cheques. We would pay for the cheques by getting a cash advance on our credit card. Back at home, Russell's mom would pay the credit card bill by writing a check from our account. Worked great. Occasionally however, we would be in a place where we had to get the cash advance at one bank (one that took VISA) and buy the traveler's cheques at another bank (one that sold American Express traveler's cheques)." <Russell Gilbert>

"On our recent nineteen-month trip we set up a bank account with Laura's mother, who paid all our bills from it. This works great for a long trip, but only if your business manager back home is reliable. We found that we could get cash advances on Visa in all kinds of unusual places, including the Cameron Highlands of Malaysia. I highly recommend this as a way of handling money in those areas where banks are plentiful, provided someone is paying off the card back home (otherwise the interest adds up very quickly)." <Larry Lustig>

"I always write a letter to each merchant saying I am doing this, and giving them a name and address of someone they can call if there is a problem with my account. They may not pay attention to this but, if there is a problem, they are on the spot if they did not do so. (I found, in Nepal when I got my delayed mail, that there was a problem with one fixed-payment account and they had cancelled my account and referred the matter to a bill collector. But, when I explained and they saw they had failed to notify my friend, they and the bill collector were very good about re-establishing my credit and all has been well with them since. It turned out I had inadvertently set a date for stopping the regular payments, but I did not know this until I got back home.)" <Larry Cotter>

Carrying Money

Always resting on my lower back is my moneybelt, where I keep: airplane tickets, credit cards, ATM cards, some personal checks, all US$100 bills, a couple US$20 bills, most TCs, and the bulk of large local denomination bills. The rest of the TCs and small change is in my day pack or in my pockets. Some people like to sew pockets on the inside of their pants, but I haven't found a need for it.

If you are a couple traveling together, split-up cash, checks and credit cards -- if one of you is robbed, you won't be wiped out. When my wife and I travel, we each have our own complete sets for this reason, but also in case we are separated, or one of us has to go somewhere on business or on a family emergency.

An ever-present problem is what to do with your valuables when you want to go for a swim. If you have someone you *really* trust, then you can take turns. If you are alone, you have to decide between leaving most or all of it in the hotel room, with the hotel owner, burying some or all of it in the sand by your towel, or sealing it up really well and taking it out in the water with you. I don't ask friends, much less acquaintances, to watch my stuff, since my experience is that they invariably forget as soon as you walk away!

You can get a pretty cheap "seal bag" which is water-tight rubber bag with a waist strap. This can hold a wallet and even a small camera. Definitely worthwhile, if you will be spending a lot of time in the water. Remember that there will be a small amount of condensation in the bag when the tropical air meets the cooler sea water, so squeeze out all the air and wrap your camera in a paper towel or rag.

Changing Money

If you have never heard the expression, "Hello, change money?", prepare yourself for friendly people of all ages using this as a greeting in poorer countries. Taxi drivers and hotel staff commonly want to do you a financial favor or two! If the black market is good enough to tempt you to risk their scams, and possible prison from corrupt police, then at least pick who you are dealing with, preferably shopkeepers who cannot run. Expats are the best source of information on this because they as a group tend to have a few money changers that they trust, who give them a good rate.

It is always a good idea to get some local money before entering a country when it is possible. The rates are often better outside the country, especially in neighboring countries, which is convenient since you want to get rid of that country's currency before leaving.

Exchange booths, especially at airports, and near bus and train stations are the worst. Money changers sometimes refuse ripped or torn bills, so bring new US$100 bills. They also refuse old ones from the late-1980s and early-1990s, since they have been counterfeited so much. Avoid getting stuck with ripped or torn local bills, as merchants often refuse to accept them, and you will probably have to make a special trip to the main bank to exchange them.

TCs are widely-accepted at banks and many official money exchange booths. They are also accepted at most shops and restaurants in the West, but only the more upscale ones outside of the West. Another benefit of being an AmEx member is that there are much shorter lines in busier offices, if you have the card.

Save your exchange receipts in case the country you are in has currency declaration laws. If they ask you to declare how much you have coming in, then it is a good idea to keep them. If you have money stolen, get a police report.

Getting More Money

For AmEx members near AmEx offices: If you have left money with someone back home, or they can lend it to you, one of the easiest ways to get it quickly is to have them deposit it in your personal checking account. Then you can write a check for cash at the AmEx office, with no fees.

Outside of the information in the sections above, you can have money wired or sent to you in several expensive ways: through banks, AmEx, Western Union, overnight delivery services, some postal systems, and your embassy in an emergency. Bank wire transfers can be very expensive, and sometimes get delayed for long periods of time due to mistakes, and corrupt bankers. Overnight delivery of bank drafts drawn on a major international bank that is available at both the sender and receiver's end is one of the best ways.

Have the person sending the wire transfer specify as beneficiary your name as it appears in your passport, but use the name of a local bank official and branch location for delivery, as it may be a challenge to locate the money within a foreign bank.

If a friend visits you, ask them to bring US$100 bills, which you can pay back with a personal check.

"You may be asked to pay for an authorizing telephone call to the US in order to get a cash advance (e.g., in Cambodia)." <Larry Cotter>


MCO -- Miscellaneous Charges Order from travel agents or airlines can be used to purchase full-tickets or ship items, just like Travellers' Cheques. They are commonly used to show proof of onward transport when entering a country, but many countries will not accept them for this purpose. "However, refunds can take months, and if you are travelling for a long time the refund deadline of an MCO may have expired before you get back to where you bought it." <Edward Hasbrouck>

Travel Tips for Less Developed Countries
Sending Money to Destitute US Citizens Overseas
American Express Travel Services
American Express Travel Offices
Thomas Cook
Visa Worldwide ATM Locator
MasterCard/Cirrus ATM Locator
AmEx Worldwide ATM Locator
Surcharge-Free ATMs
Banks of the World
The Universal Currency Converter
Oanda Currency Converters
Traveler's Checklist

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