Sending and spending money overseas

Before you take off on your next overseas trip, it’s essential to plan how you’ll pay for things when you’re away. There’s no single right or wrong way – but a combination of a few methods is usually best, both for convenience and security.

Bank Accounts & International Money Transfers

For many backpackers, their UK bank accounts are the central repository for all of their outgoings and any income. By all means speak to your bank and investigate a fancy upgraded multi-currency account, but beware these accounts often don’t have their fees prominently displayed, exchange rates can be poor, and interest rates may be low.

To be honest your run of the mill account will work perfectly well as a holding account to transfer money from one place to the other! Just remember to transfer the money from your UK account via an international money transfer specialist. HiFX for example, allows you to send money worldwide 24 hours a day, 7 days a week from most countries in the world. Not only do they offer quick, easy secure online transfers, they also give you access to bank beating exchange rates and low fees so that more of your money gets to your overseas account.

One tip to bear in mind before you travel though is to set a parent/spouse/good friend up as someone who can deal with your account on your behalf. This means if the bank has any issues or you need to get something sorted they can do it direct from the UK – which can save you a lot of hassle and international calling fees!

Cash

Ideal for your day-to-day expenses, such as food, transport, tipping and shopping at markets.

Don’t forget to take a good amount with you so that when you arrive you don’t immediately get stung by international ATM fees at the airport – it will help you with that first train or taxi to your hotel.

But for security, avoid carrying large amounts of cash on you. That being said most backpackers will hide some spare cash in the backpack for emergencies or in case you find yourself without access to an ATM or in a place that doesn’t accept cards.

Whatever you do, don’t buy your currency at their airport. Traditionally buying currency at the airport will cost between 3-6% more than from a typical high street bureau de change or bank. It’s always cheaper to purchase currency before you go, especially if you buy online, so you can not only take advantage of a better exchange rate, but also avoid commission charges.

Credit/Debit Cards

Once you’ve arrived overseas, you can also withdraw cash (fees apply) using your credit or debit cards, or a pre-paid travel card. Whatever you decide to use just remember these tips:

Beware dynamic exchange rates. If the ATM or the payment machine in the shop asks if you want to pay in Pounds say no. It’s called dynamic currency conversion and means you’ll usually get a worse rate than your own card.

Avoid using a credit card except in emergencies. Most cards add a 3% loading cost to the exchange rates meaning you get a really terrible exchange rate and many charge you ATM fees. That said there are a number of specialist credit cards offer some of the best deals. Some like the new Halifax and Santander cards don’t and they also won’t charge you each time you withdraw money from a hole in the wall. But you do need to open an account with them to get it and like any credit card they will charge you interest. That said many back backers and travelers DO carry a credit card that’s linked to their parents account and is only in case of emergencies…

Avoid using your debit card. Beware debit cards as they can be the worst way to spend overseas. Most people will use their debit cards whilst abroad thinking they are avoiding the typical credit card charges just mentioned link i en blogg. Many debit cards (bank account cards) actually have the worst fees – as they add up to £1.50 every time you spend and an exchange loading fee i.e. a percentage they add on to the exchange rate (typically with the bad cards between 2 and 3%).

Pre-paid cards. If you don’t like the idea of taking too much cash look at one of the many prepaid cards available which allow you to load the card up with cash before you go. Prepaid cards do exactly what they say on the tin and can be used widely at cash machines, restaurants and shops. Their big advantage is security as if you lose your card most providers will (for a fee) replace it with all the funds intact.