Dealing with money and currency when travelling is one of many backpackers biggest practical concerns. Find out everything you need to know about managing your money abroad with this handy expert guide.
Planning your gap year is exciting, there is no doubt about that. Dreaming of your new destination, what you will see and do, what you will pack, where you can go, it is all part of the process. Often the last thing you want to do is bring that exhilaration and anticipation down by dealing with the practicalities.
Unfortunately long term independent travel does bring with it a few practical considerations that backpackers have to contend with, and one of the most prominent amongst them is how to manage your money when you are travelling.
There are a wide range of options out there, from time honoured cash to debit and credit cards and even pre paid cards, so which do you choose? How do you keep a track of your spending? How do you protect yourself from unfair charges, from theft or loss?
Don’t worry it’s all pretty straightforward. With a bit of planning, preparation and a cool head, you will be absolutely fine.
Before you go.
Inform your bank of where you are going and when.
The last thing you want to happen on the road is for the bank to freeze your cards and leave you stranded, and believe me it can happen. The best way to guard against this is to inform your bank beforehand exactly where you will be and when.
Do this in person at least once before you go, and in writing too if possible. Do this again just before you leave. That should be all it takes.
I do emphasize ‘should’ be.
Unfortunately banks aren’t well known for being well organised and useful at the best of times. You can give every branch in the country a detailed daily itinerary and have a signed and framed certificate stating they are aware of your travel plans, and odds are someone in the fraud department will still cock up and flag your card when you use it abroad.
If your card does get blocked, then don’t worry. Make sure first of all you have a little cash on you to pay for a phone call or a taxi if need be, then just find somewhere you can ring your bank from. Most internet cafes will have an IDD service, or you can use the phone at your hostel, guesthouse or hotel. This is why it is important not to wait until you run out of cash to use your card.
Then simply ring your banks fraud department and inform them of the situation, (refrain from swearing at them or crying down the phone, it will just cost you more money!) Be direct, give them your details, tell them you left instructions that you would be using your card abroad and you want it unblocked, then they will unblock it. Simple as that.
I know it is an absolute pain in the backside, but on the flip side of it I suppose it is good that they are keeping an eye out.
Have copies of all the numbers you will need.
Have copies of all your banks international phone numbers in case you need to contact them in an emergency. Trust me you really don’t want to find out your card has been blocked or you have lost a card and need to cancel it, and then have to figure out which number to ring.
It doesn’t really matter how you do it, either written down on some paper (only bank phone numbers, not your actual details) or in an email to yourself, but make sure you have access to all the numbers you will need.
Remember, the contact numbers are usually on the card themselves but this won’t help you if the cards are lost or stolen. I personally just keep a piece of paper with important phone numbers with my other important documents, it takes minutes to do and you can forget about it until you need it.
Have more than one source of money.
This is essential. Of course you will have cash on you to use on a day to day basis, and your main source of savings in a current account which you will use to draw on the majority of the time, but it is also a really good idea to set up a second current account before you leave and put an emergency fund in that too. Perhaps even split your savings up into both accounts and use both as your main source of money. That way if you lose a card or one account gets compromised, you aren’t in the lurch while you get it sorted.
On top of this it is also a pretty good idea to have a credit card or two that you can keep hidden away for emergency use or expensive items.
This way you will have multiple sources of – and access to – money when on the road. Cash, at least one current account, and a credit card for emergencies.
Make sure your internet banking is secure.
Internet banking is a great way to keep an eye on your savings when travelling, and is becoming increasingly the norm. However it is really important you are vigilant with your details to ensure your account isn’t compromised.
Don’t access your accounts in an internet cafe or anywhere that has a public computer such as a hostel common room. There is a chance that it may be compromised with spyware, where criminals can essentially record all your keystrokes and just swipe your details.
Most people now travel with at the very least a smartphone or a tablet. If you want to travel with tech like this, then that is fine. Just be sure that if you are using the free public wifi that is available almost everywhere now, that you remember that it is public wifi, with emphasis on the public, and all your antivirus software and firewalls are up to date and secure. This will just help prevent anyone from hacking your account.
How to use and access your money.
It is pretty much common knowledge against all but the most stubborn of package tourists on a pensioners trip to Benidorm that the travellers cheque has gone the way of the dodo. Don’t use them. Hardly anywhere accepts them any more and if they do you will probably pay a premium fee for changing them! They just aren’t worth the hassle or bother.
Cash is king! And local currency is queen.
Carrying and using cash is absolutely the best way to travel. Have at least enough local currency on you when you arrive in your destination to last you for the first week or so, and just replenish it when you start to run low.
It is often best to exchange some currency before you leave, as long as you shop around. That way you just have some on you when you arrive to pay for a taxi and a meal. Basically make sure you aren’t stuck. That is the only reason though, as exchange rates can often be as good as or even better abroad, as long as you stay away from the airport and the dodgy side street vendors.
Regardless of where you change it, always be aware of what the actual exchange rate is and shop around.
US dollars, British Pounds and Euro’s are often the best and easiest currencies to change abroad. That is why it is a good idea – if you come from those countries of course – to have a note or two of your own currency hidden as an emergency stash.
There isn’t anything wrong with keeping some of your own currency – say a £20 GBP note or $50 USD – as an emergency stash. In fact this is quite a good idea. You can always get these changed at local currency vendors when you are on the ground if you get stuck. But in general you should always use the currency of whatever country you are in.
Remember though, any of your own currency you carry is for an emergency. There’s no point carrying crisp US dollars or UK pounds with you and expecting a local vendor in India or Mali to accept them. It won’t happen.
When you start to run low on cash, just use an ATM to withdraw more. It really is that simple. Depending on how long you are travelling for will of course dictate how much you withdraw and have on you at any given time, say two weeks worth or a months worth of cash, but it is always a good idea to separate your sources of money.
Keep enough cash that you will need for the day in an easily accessible pocket (so you aren’t pulling out huge wads of cash every time you buy a mango juice or get a tuk tuk), keep a reasonable amount in your wallet or purse, then keep a stash hidden somewhere (like your pack, a waterproof sealable bag hidden in a sock in your laundry bag, a secret pocket, a hotel safe or anywhere you feel comfortable hiding it).
Debit cards and current accounts.
ATM’s are everywhere! They really are. So assuming you have a current account with a bank card, travelling abroad really need not be that much different than going about your daily business at home.
Ten years ago or more they were limited to larger cities in many countries, and even then only in some countries. The more rural or ‘of the beaten track’ you got, the harder it was to find one. This is still the case to some extent in some countries, but on the whole now you will have to go really off track to struggle to find one. Even Myanmar (Burma) has had a recent influx of ATMs!
With the exception of some remote islands and other remote rural areas where you may just need to plan ahead and take enough out to cover your time there, it is generally no trouble finding an ATM that will serve your needs.
Which ATM you use however will depend on which major global company your bank is linked to. In the UK Lloyds bank and Barclays have a pretty extensive network, but whichever bank you use (providing it is a major one) you should have no problem finding an ATM that will work for you in hundreds of countries all over the world.
Using debit cards to access your current account will get you access to your money and let you keep track of your spending quite easily, but there are fees to consider.
Most cards sting you with load fees or charges when you use them abroad.
I personally hate these fees with a passion, and I think banks have got serious gall to charge you to access your money regardless of where you are, but it is what it is. Pretty much every UK bank charges a fee now (and the few that have debit cards that don’t, don’t really have accounts worth having).
The best thing to do is just to be aware of this when you withdraw money and budget a tiny bit extra for it. To be honest as annoying as any type of fee is, these are no worse than the fees you will pay for using any other method of getting cash, as long as you are smart with it, and can be worth paying an extra few pound or so for the absolute convenience of using an ATM when you need to. The trick is to not just withdraw enough to last you a couple of days and then keep making frequent visits to the ATM, this will cost you a fortune. If you are travelling for say six months or more, withdraw enough to last you a month at a time for example. This will help you minimise any fees and keep the costs down, and if you budget a percentage extra for this, then you won’t get a shock when you look at your statement!
You all know what a credit card is and how they are used. Suffice it to say these are best kept for emergencies. It is always a good idea to have two, one with your wallet or purse, and another one hidden away.
They can come in handy for making reservations or larger purchases such as flights for example, just make sure that if you will be away when the bill will come, you have a means of paying it to avoid any late charges. You don’t want to come back from your gap year with a ton of credit card debt.
If you do use your credit card abroad, always ensure that it – and the card reader – are in your sight at all times, and it is your card you are given back. Credit card scams can be very quick if you are not vigilant.
It is always best to have some cash, as well as a mixture of debit and credit cards on you with back ups in case your main card goes missing or is compromised.
Pre paid cards.
These are essentially cards that you – in principle – use exactly the same way as a debit card, to withdraw money from an ATM. The difference is they are topped up before you go and can be topped up at anytime on your trip either online, over the phone or by a very understanding relative.
There are a huge range of pre paid cards out there, available from banks, travel agents, post offices, you name it, and all have a wide variety of positives and negatives.
They are great for sticking to your budget and some even have great benefits such as locked in exchange rates, emergency cash and card replacement services, dependent on which one you get.
However, many also charge fees for their use which can sometimes make them no cheaper than using a debit card, and often come with a lot of small print. Check very carefully the rates they charge, whether you can get any leftover currency back (not all of them let you) and any other conditions which may or may not make them a good idea.
The biggest problem I have seen with these pre paid cards is that they don’t actually always work in as many places as the seller will tell you they do. Not every business or ATM in every country will accept all of them. So just be careful and double check everything if you are thinking of using one of these.
Wiring money or using a mobile service.
As a last resort, you always have these services to fall back on in an emergency. Provided you have an understanding family member of course. There are a huge variety of options here, from having money wired to you via companies like Western Union, but you will have to pick the funds up at a designated station and you will pay quite a premium for the service, or simpler services such as mobile banking apps, which of course you will still have to access via an ATM.
Whichever option you choose, whichever way you find that is best for you to manage your money on your trip, it is important to remember that it really isn’t as difficult or daunting as people think it is.
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