How to deal with cash and handle your money when abroad is still a big concern for many first time travellers. These expert money tips will help give you all the answers you need so you can sit back and enjoy your gap year.
How do you get access to your cash? How do you keep it safe? Which currency is best to use? These are all common questions from almost every backpacker about to set off on their own round the world trip. Well don’t worry, everyone who has ever gone backpacking has been in that same boat once, money is just one of those logistical problems you will have to sort out before you go as well as when you are actually travelling, but with a bit of help and a small dose of common sense it isn’t as daunting as many people think.
Don’t forget to tell your bank where you are going.
It is surprising how many people still forget to do this. Banks often have an overzealous fraud team who will block your card (and your access to your own money) if they even suspect that there is what they deem suspicious activity on your card. In many ways it is a good thing that they are so vigilant, but in practical terms it can be a real pain in the backside when you are stuck somewhere without access to your cash.
That is why it is really important to tell your bank (preferably in person and in writing) that you will be using your card in various countries.
This isn’t always foolproof as frankly banks are often so large and borderline incompetent that the left hand doesn’t know what the right is doing and there is a small chance they’ll block it anyway. It has happened to me countless times. Luckily it is relatively easy to sort out and it is still important to at least try.
Carry all the important phone numbers you will need to contact your bank in an emergency.
This leads onto the second tip, which is make sure you know how to contact your bank if they do block your card, your card is lost or stolen or any other problem crops up. Write down the international numbers for your bank, your banks fraud department and so on, and keep those numbers safe somewhere. Personally I prefer the back page of my notepad but an email to yourself can be just as good. (Don’t just have them on your phone in case that gets lost or stolen at the same time).
It should go without saying that you shouldn’t put any personal details with these numbers.
Always use local currency.
Seriously, the amount of emails and questions I get still asking is it better to use US dollars or Euros in any given foreign country is shocking. The answer is unless you are in the US or Europe, neither!!
It is of course a good idea to keep a small stash of your own currency as a backup and some countries will require payment for visas and so on in US dollars, so do your research and carry those currencies if necessary, but in general local currency is what you will need. Whatever currency the country you are going to uses, that is what you should use.
Have multiple sources of cash.
Ever heard the saying don’t put all your eggs in one basket? Well this is the kind of situation it was invented for! It’s always a good idea to have a number of different ways to access your money. If you have a big lump sum of savings to fund your gap year, then split that up into two or even three separate debit accounts with separate cards that you can use in the ATM systems of the countries you are travelling to. That way if something happens to one card, you have another one until you can get it sorted. A credit card is also a good idea for emergencies such as a quick exit strategy to get you back home if need be.
Always have a back up emergency fund.
When you are travelling the world you will have a certain budget with which to do so, and hopefully you will have allocated it accordingly month by month, but it is a good idea to keep a portion of that aside for emergencies. This can be simply running out of money a month or two earlier than expected, coming across an unexpected destination or experience you can’t miss but didn’t budget for, needing an emergency flight home, whatever. You will need some way of covering those expenses. Your emergency fund is your buffer zone for these eventualities. A credit card can be good for an absolute last resort emergency, but is no replacement for a back up fund. (You don’t have to get into debt with a back up fund!)
Seriously. You’d have to go pretty far to be in a place that doesn’t have them, and you can access the majority of them with most major debit cards such as Lloyds or Barclays within global alliance deals. Yes there is a fee to access them and withdraw cash, but provided you are smart and withdraw tactically (ie once a month) and have a bank account with a reasonable rate then you can keep those costs manageable. It is certainly preferable and much more convenient to travel anywhere and just use an ATM than it is to use any of the other methods like the now pretty much defunct travellers cheques or pre paid cards (which often have hidden fees of their own!)
Shop around for the best debit card deals.
Most banks charge you for using your card and accessing your cash abroad, whether you are making a purchase or withdrawing money, but there are some that are better than others. So if your normal debit account isn’t great, open up a second one that is and use that for most foreign withdrawals. These change all the time so it always pays to shop around.
Pre paid cards aren’t always the best option.
Pre paid cards are essentially the modern version of a travellers cheque. If you’re planning a gap year and head to any gap year provider on the internet or the high street then you are bound to see these advertised as if they are sent from an all knowing deity and delivered to you on a silk cushion by kittens riding a Pegasus.
The truth is they aren’t always that great.
They can be a good option to use as a back up and they do have some advantages over debit cards, namely that it isn’t linked to your account, only has what you put on it and can be easily replaced if lost or stolen. However what many people don’t realise is that they do have hidden charges if you want to withdraw money abroad or get your money back, (sometimes these charges are less than normal debit cards but not always, I have seensome instances where it was cheaper to use your own debit card in an ATM, so shop around), and the worst thing is not everywhere will accept them! They are becoming more popular but at the moment I would only ever use these as a back up, if I bothered to use them at all.
It isn’t always best to change all your money before you leave.
It is common knowledge that changing money at airports is the single most stupid thing you can do with your money because of the punitive costs associated with it. They essentially rely on lazy tourists throwing caution to the wind and make huge profits off them. But the thing is the high street bureau de change rates often aren’t that much better. Remember whatever your transaction, they all make a profit off each one and you will never get a rate close to what the exchange rate actually is.
The problem is you do actually need some money for when you arrive. So the best solution is to change just enough to last you a couple of days, and then find a money changer when you arrive in your new destination. I have almost always got much better deals that way.
Make sure you have small denominations when you first arrive to a new country.
If you buy your currency at home before you leave, always make sure that you have enough small denomination notes when you arrive in your destination country to get a bus, a taxi and a drink or two. There’s nothing worse than arriving late at night and needing a taxi with the local equivalent of a few £100 GBP notes that no one can change! And believe me many people do!
Separate your money.
Whether you withdraw a week or a months worth of money, you really don’t want to be carrying a huge lump sum all in one place, and you definitely don’t want to be flashing it about! So it’s a good safety tip to hide a portion of it away in your pack and keep it secure (inside an old sock, a shirt pocket or hidden pouch, or all three), have a portion in your main wallet or purse and then another portion that you keep in your pocket for daily use. It’s also a good idea to keep your daily use money as a small amount of small bills, that way if you want to buy a trinket, a drink or pay for a small item, you aren’t showing that you have a ton of cash when you pull it out to pay for something.
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