Finances during travel: Pt. 1 – Having spending money

In this part, we cover the basics of how we ensured we had spending money abroad.

One of the issues to which we gave tremendous thought was how to deal with finances while traveling abroad. Wrapped into that seemingly simple question were both the obvious and less clear ones. The most obvious questions were: how does one get money while abroad and how do you pay for the things you need? The less obvious ones involved figuring out how to access money, reduce expenditures, etc.

To get to the first question, we had two alternatives for finances: stick to tradition, or put our faith in modern banking technology. The former being to carry enough cash around for the trip. Exchange enough for 3-4 days’ worth of travel, and pray no one finds your cash. The benefit is that it works terrifically well in countries that transact primarily in cash/have few banking services. And yes, those countries exist (see Myanmar). Additionally, some countries require that you pay for visas in cold, hard cash (like getting into Vietnam). The downside is that cash is valuable and easily stolen. Money changers are also good at extracting high exchange rates, leaving you much worse off than market rate.

We took a hybrid approach, which is:

  • Have enough USD to get past customs
  • Carry a no-foreign transaction-fee (FTF) debit card for when cash is necessary (Charles Schwab is a good example, with a bonus ATM fee repayment)
  • Pay for most transactions with a no-FTF card (Barclaycard Arrival Plus and Chase Sapphire Preferred both stand out due to their nice rewards schemes)
  • Have a chip-and-pin card for any countries on the system (Barclaycard Arrival Plus is one of the select few that has this, and others will be adopting it over the next year)

The benefit of this system is that it should work well in most countries with banking systems. Additionally, you save lots on not paying transaction fees and pay a much smaller spread (the hidden-fee version of FTFs) since you’re paying what your bank pays, rather than what you pay. One thing we haven’t encountered yet is dynamic currency conversion, where a merchant conveniently converts your purchase into USD, while secretly tacking on a big FTF. The issue with this approach is theft (much bigger potential upside of loss) and getting money in places without developed banking systems.

We’ll cover some of the less-obvious travel finance issues later.

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