7 ways to mind your cash when you are abroad

This post originally ran as a guest post on plonkee money. Not only the author of a great personal finance site, plonkee’s also got a great second blog over here. I’m about 90% in agreement with her… 🙂


Creative Commons License photo credit: bogers

American Express – don’t leave home without it! That may be one of the most famous phrases in advertising history, but it tapped into a deep fear for most travelers: the fear of being stranded in the distant unknown parts of the world without ready access to their money. What are some simple methods to safeguard access to your money when traveling?

1. If you are traveling to very remote areas, make sure you have plenty of cash, not just credit cards. The parts of the world that don’t accept credit cards or debit cards are dwindling, but there are still places. Keep plenty of cash, but keep it spread amongst your wallet, your luggage and even a bit hidden somewhere else. I used to prefer to keep some spare money hidden in my toiletry bag on the theory that nobody is going to check there.

2. Carry dollars (or euros). Despite the fact that the dollar is terribly weak right now, it is still the most accepted currency in the world. Carry $100 bills; these are far easier to exchange, ironically enough, overseas than in the US. If you are coming from another country (you’re a European traveler, etc.) I would still recommend carrying US dollars. Don’t count on your drachmas or forints being accepted everywhere.

3. Keep a list of your credit card numbers and customer service – and give a copy to someone at home. There is nothing like having your wallet stolen overseas. However, you want to be able to quickly cancel them if you do lose them or have them stolen, and the easiest way is to have a separate “panic card” ready. Give one to a friend at home in case your panic card is stolen, too.

4. Debit cards are convenient, but pricey – and see point #1, too. When I started traveling in the early 90s, debit cards were almost worthless when traveling. As time has passed, though, they have become far more useful. Be careful when changing money, though – you may pay a fee to your bank and the local bank. In addition, you may get hit with an exceptionally unfriendly exchange rate.

5. Go gray, but be careful. I can’t emphasize enough that you should stay in compliance with the laws of the countries you visit, which often prohibit individual currency exchanges. Depending on the country you visit, though, you may find significantly better exchange rates dealing with individuals than with banks or exchanges. In developing countries with high inflation rates local people will often be willing to give you better rates simply to protect their earnings by converting them to dollars. I would not recommend exchanging with locals, however, unless laws (and safety) permit.

6. Get rid of change. Spend your change as fast as you get it, and small bills, too. These are often difficult – if not impossible – to exchange on your return. Try to spend all of your local currency before you leave the country. Exchanging your money to local money and then back to your money is a terrible waste. Try to spend down to 0 before you leave; put your last few expenses on a credit card.

7. The most important money tip when traveling, of course, is to keep it and yourself safe. Never flash large sums, never discuss how much you have, keep it well hidden and ensure you know how you could get ‘emergency money’ if you needed it (for example, where ATMs are that accept your bank’s ATM network).

Fun (and safe) travels!

8 comments

  • I always kept enough for cabfare pinned in my pants pocket when traveling in Europe.

  • I was very surprised to learn that credit cards aren’t accepted in Japan. Fortunately I asked my friends about that ahead of time so I brought enough cash, but it seems really weird that people have to pay cash for everything. My friends even pay their rent in cash.

  • Given how much I travel, you’d think I’d at least follow one of these tips! 🙂

  • I would not exchange money with the locals unless they are very very good old friends of yours. Otherwise you risk being taken advantage of by : given obsolete currency, fake currency etc.. For example many countries in eastern europe have gone through at least one currency reform since the fall of the communism; thus if you go to Russia and someone tries to exchange your hard earned dollars for Roubles that were issued before 1998 ( or even 1990), run away!

  • I used to try to spend all my foreign money. But I realized that I am buying stuff that I would not buy normally just to get rid of the money. That is bad money management to me. I rather get some of my money back at the exchange than to trade for it for junk.

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  • Pretty good advice.
    A couple of things I’d like to coment on/add.
    Regarding 4. I was very surprised about your comment on the exchange rate. In my experience – and I’ve travelled quite a lot – the exchange rate you get when you use both credit and debit cards are much better than any rate you can get in a bank, even after you factor in the fees. The reason for it is that when you use your card ot buy something or when you use a debit card to get money out of an ATM, you get inter-bank wholesale exchange rate instead of a retail rate. In a local bank they have one rate to buy dollars and another to sell dollars; they make money on the spread. In an ATM, you get the rate in-between “buy” and “sell”, the actual rate used by banks.

    Regarding ATM fees. If a fee is charged by an ATM, it is usually a fixed fee, not a percentage. So you need to maximize the armount of money you take i.e. withdraw money in large chunks (provided you can spend it), then plan your cash/credit card expenses in a way that you can spend all of exchanged money yet don’t run out 2 days before the end of the trip. If I’ve taken too much, I often start using cash to pay for hotels, for example.

    As to the fee charged by your local bank – you can choose a bank carefully. For example, credit unions don’t charge anything for exchanges, so opening a small checking account with a credit union may help. Some large banks like Wachovia didn’t use to charge it as of few months ago.

    One thing I’d like to add about cash. When you take cash to “remote” places (including some Eastern European countries), make sure all of your $100 bills are clean, new and unmarked. I had a nasty experience in Russia where an exchange place refused to exchange a $100 bill that I got from a US ATM because it wasn’t clean. In the US, some bills may have something written on them – this wouldn’t go. Several of my friends had the same problems both with dollars and euros – one of my friends even went to St Petersburg’s stock exchange place where they offered her only 90% of value on her $100 bill simply because it wasn’t “new”. So go throw every single bill you got from an ATM, sort it by “cleanliness”, than go to a bank and ask them to exchange every marked, dirty or worn out bill for a new one.

  • @Kitty: Well, it’s a good point that as time goes on ATM/credit/etc. cards have started to have better rates. I think it depends on so many factors – where you are, what network you’re using, etc. – that I should probably just modify that to say “do some rate comparison in each country to find the best means of exchanging”. My experience has always been that a good credit card is the way to go, but that’s certainly not universally true in every instance.

    Excellent, excellent point on the clean bills. I’ve had the same experience in Russia many times, and you’re right – if you get a ‘funky’ bill you might as well just stash it away and wait until you’re back home to spend it, because bills need to be near-pristine in many countries to be exchanged. Great point, I’m glad you reminded me (and everyone reading)!