Money

The best method of paying your way depends entirely on where you are going. The cost of money can vary wildly but even a few percent difference between methods of payment on an expensive extended trip can add up to thousands of dollars.

There are exceptions the everything we say below as we found when dealing with 50 countries and 50 banking systems.

Generally, paying with a credit cards offers the best value since most credit cards convert currencies at international market rates and get their squeeze from the vendor fees. Unfortunately on a budget tour, especially outside Europe, the acceptance of credit cards is spotty at best. Still, the purchases that can be made with credit card tend to be bigger ticket items like airline tickets so the few percent savings can be substantial, making it well worth the while to carry one (or two) with. If they don’t carry a fee and if you pay them off monthly, cash back travel cards can stretch the budget a bit.

The global spread of ATM’s makes debit cards the most useful single way of getting along. Of course in some countries ATM’s can be thin on the ground and in rural areas can be non-existent, and those that exist are prone to breakdowns and running out of cash, especially on the weekends when they go a couple days without being stocked.

ATM fees vary widely and there is no common format for what they charge so research carefully. There can be a bank fee, currency conversion fee, a foreign atm fee, fees for exceeding more than a few withdrawals per month, or often a combination of two or more fees. Sometimes the fees are based on the amount withdrawn, sometimes they are flat fee plus. Generally speaking fewer, larger transactions are more economical. It is well worth opening a new account with a bank with a more favorable fee structure. The total squeeze can be as low as 1-2% but is more likely in the 2-3% range meaning it could be well worth your while to open a new account at a bank with a more favorable fee structure.

With all plastic, double check the countries in which you can use your card can be used. Don’t make any assumptions. We were able to use our cards in some of the most under-developed countries in the world only to get nixed in a European destination like Croatia.

For US travelers make sure you have a chipped card. The US is finally adopting chipped cards but we are still way behind the rest of the world. Cards that rely solely on a mag swipe strip can be difficult or impossible to use in a growing number of countries.

Also, check how easy it is to set a foreign travel advisory with you card issuer. Without a foreign travel advisory on file with the bank you are susceptible to being shut down by fraud prevention algorithms at any time, usually the least convenient. Most will only allow you to set one for a month or two; a bank that allows you to set them online is better than one that requires a phone call.

Exchanging dollars and euros for local currencies has its own set of ups and downs. In some countries currency can only be exchanged at big banks that charge flat exchange fees on top of a percentage squeeze so that on small amounts can take you for ten or fifteen percent or more. Where currencies are freely traded and there are a lot of exchanges you can get very good rates, even better that using an ATM, but watch out for counterfeits and creative math is calculating and counting out currency.

Every country has its own quirks like banking controls or local practices that make generalizations impossible. Look for the latest online as these things change frequently. When we left we took USD for Myanmar because international sanctions meant that foreign bank cards couldn’t be used in local ATM’s. By the time we got there eight months later sanctions had been lifted and we barely touched the cash. When we got to Argentina we found to our dismay that many ATM’s would only dispense a maximum of 1,000 pesos ($70) per transaction and that each transaction carried a 90 peso (9% of the total!!) transaction fee.

Of course the real problem with carrying cash it raises security anxiety as top whether it is safer to carry it on you or leave in the room. Best compromise is to carry an emergency reserve, the size of which depends on where you are traveling, but rely for the most part on ATM’s for cash.

A couple final notes on cash. US dollars are by far the most easily exchanged with euros being second. With some one-off exceptions like at frontiers, or using SA rand in Namibia, exchanging anything else is expensive or impossible. Best to use up whatever currency you have before crossing borders. We usually used remaining change to buy a meal or purchase something like toiletries that we had a daily need for.