Regardless of whether you’re traveling on business or to a vacation spot, there are some smart money moves you can make while on the go. Those moves include pre-authorized transactions, automating payments, and exchanging U.S. dollars for foreign currency. In addition, you can also avoid overdraft charges and hire an accountant.
Be Familiar With Pre-authorized Transactions
Whether you're traveling by car or plane, many businesses require you to have a pre-authorized transaction. This is done to make sure you have funds available for damages or losses. Essentially, a pre-authorization is a security deposit for the merchant. In the travel industry, tour operators, hotels, gas stations, and rental car companies commonly use them.
If the pre-authorization is for a larger amount than the customer expected, it may be declined. This can result in non-sufficient funds fees or even a negative balance on your account.
In some cases, a bank will file a chargeback for the pre-authorization. If the chargeback is successful, you may have to pay a fee. Alternatively, your card issuer can recharge the pre-authorization funds to your account, but this can take a couple of days.
You can prevent this from happening by setting up overdraft protection on your account. This will automatically move money from one account to another account, ensuring that you have funds available for these deposits.
Automate Bill Pay
When traveling for business or pleasure, time is valuable. Most travelers don’t enjoy spending time paying bills while away from home. In addition, logging into your online bank account frequently can be risky when you’re staying in hotels, Airbnbs and resorts. Using automatic payments when traveling is a great way to simplify your banking while you travel, but it can also leave you vulnerable to overdraft fees. A credit card or checking account can be used to automate payments, but another option is to have automated payments be taken off of a prepaid Visa debit card. That way, you control the amount, and your actual bank account is kept separate—and safe—from potential issues such as overdrafts.
Alert Your Financial Institution About Your Travel Plans
Nothing is more disappointing—or frightening—then having your card declined for a purchase while traveling abroad. Not only is this scenario inconvenient, it can also be embarrassing to try to explain to a merchant if there is also a language barrier. To avoid this, contact your financial institutions and let them know when and where you are traveling. Many online financial platforms have a section where you can post this notification on your dashboard. Other times you may have to call your bank or credit card issuer. If you do this before you leave, you can be more assured that your cards will be honored while you’re away from home.
Be Smart About Exchanging Currency
Getting the best exchange rate is essential when you travel is up to when and where you exchange your money. The rate you get is also dependent on the time of currency exchange rates, which fluctuate by the day and sometimes the hour. In general, the best rates are available from major banks in the U.S. and abroad.
If you live near a big city, you may be able to walk into a large bank and get foreign currency in hand. Other times, the bank will need to order the currency and you’ll need to pick it up in a week or two.
If you don’t want to bother with that, you can wait until you arrive to change your currency. Most large airports have currency exchange booths in the arrivals terminal. However, it’s recommended that you don’t use these, as the exchange rates are famously against your favor. Instead, use your credit card to get transportation into town and go to a local bank or currency exchange company in town. You’ll almost certainly get a better exchange rate this way.
Also, in some places, the exchange rates vary greatly from day to day. As you go about your sightseeing, try to pay attention to the posted exchange rates for your home currency. That way, if there’s suddenly a great rate in your favor, you can take advantage of it and exchange more of your cash into local currency.
Avoid Credit Card Use For Incidentals While Abroad
Both banks and credit card companies typically charge a foreign transaction fee whenever you make a charge while traveling abroad. These fees can range from a flat fee or a percentage of your purchase. Not only that, but banks and credit card companies aren’t known for giving great currency exchange rates. So, not only are you paying a transaction fee to use the card abroad, but you’re getting a bad rate on the exchange. Try to only use cards for major purchases, like tours and hotels. For incidentals, it’s best to use foreign currency.
Tuck Away Hidden Money
No matter where you travel in the world, whether it’s a big city in the U.S. or a tourist destination in Europe, you’re going to be subject to pickpockets and others who will try to separate you from your cash. Don’t increase your chances of getting stranded somewhere after suffering from one of these incidents. Tuck extra cash away somewhere on your person where it’s unlikely to be found. Many people put money in their shoe, but if a thief asks you to remove your shoes, your stash will be found. Instead, tuck the money inside your sock, beneath the sole of your foot. Other options include stashing some money inside the lining of your overcoat or in the hem of your dress. Hopefully, you’ll never have to rely on your hidden money to get back home, but if something does happen, you’ll be glad it’s there.
More and more people are traveling these days, after recovering from the travel restrictions during the pandemic. If you like to travel, you should certainly do so. Just keep these money tips in mind so your finances are just as healthy when you return as when you left.