Managing Finances Securely While Traveling
You need money to travel, and you’ve got to actively manage it while you’re on the road. How do minimize security concerns while paying for expenses? Where do you keep your cash? What would you do if you needed money in an emergency situation? How do you manage online finances securely? And how do you put it all together?
With a background in financial planning and a current full-time travel lifestyle, I’m a stickler for managing finances – and doing it wisely and securely. So read on for some tips on how to manage your own finances securely while you travel.
Cash is both a safe bet and a risky proposition when traveling. It is accepted universally (aside from making online purchases or placing reservations which require credit cards), and it’s an excellent bargaining chip with local vendors.
However, cash—if stolen or lost—is not traceable, so once it’s gone, it’s gone. To counter this security risk, it’s best to carry cash in different places on your person (or in your baggage, or both).
Anil Polat is a fellow full-time traveler, who – as a former security consultant - pays special attention to security on the road, cyber and otherwise. “When carrying cash I distribute my money, some in my pockets, perhaps a bit in my socks, and some back in my bag or hidden in the hostel or hotel room. (Stinky places tend to work best - dirty socks in a hostel won't generally attract attention.)”
On his recommendation, I tend to spread my own cash around; I keep some in an unlikely place in my bag, and some more in a small secret pouch underneath my clothing.
Vendors often pay extra fees if you use a credit or debit card. So when you’re out shopping (for souvenirs, for example), ask if they will give you a discount for paying with cash. You can even try this at home, and even at stores that you wouldn’t be inclined to bargain at. I especially like doing this with auto mechanics.
Your debit card is generally a ticket to accessing cash while you travel, and a tool to pay for things by electronic funds transfer (direct debit). But depending upon the bank account you have, fees for direct debits and ATM withdrawals can be prohibitive. Not only that, but if your card (and PIN) falls into the wrong hands, your accounts could be cleared out without recourse.
However with a few preventative measures, your debit card (and finances) can be kept safe. First of all, always protect your PIN when you punch it in at an ATM or make purchases. Don’t get caught up on feeling sheepish covering your PIN up at the checkout; all it takes is one person with bad intentions to look over your shoulder.
Secondly, don’t keep all your money in the bank account attached to your debit card. Should things go horribly wrong and your account gets cleared out, you want to have some money, somewhere. I maintain only the minimum balance required in order to avoid monthly banking fees, and the rest of my “cash” is invested in a high-interest account. When I need money, I transfer it over to my bank account to pay bills or have it available for withdrawals.
While doing my online banking, I also regularly check the transactions on my bank account to ensure there hasn’t been any suspicious activity. If there is a discrepancy (for example if somebody is siphoning money from my account), I can catch it right away and alert my bank. And of course, I have my bank account number and contact information in a safe place just in case I need to make that phone call.
An advantage to some debit cards (especially if you are young or have bad credit) is that some accounts offer a Visa or Mastercard affiliation. Although it’s not a credit card, your “Visa debit card” (for example) can be used like a credit card to book reservations over the phone or make purchases online.
Debit Card Fees
Beware of the fees for using your debit card. Foreign ATMs will often carry their own fees, in addition to the one charged by your bank for using the cross-institutional system. Making purchases with your debit card can be just as lethal for fees. Read the terms and conditions for your bank account before counting on using your debit card abroad
I like to use my credit card(s) for everything I can, since they offer a great record of my purchases. I avoid costly ATM fees and the hassle of carrying and exchanging cash, and I earn frequent flyer miles in spades.
I haven’t really found myself traveling through places where credit card security is an unusually high threat, but Anil suggests otherwise: “Credit card numbers are too easily stolen, particularly in countries that don't restrict full credit card numbers from receipts.” Admittedly in many developing countries, credit cards aren’t as widely accepted (nor is the use thereof as secure), and in those places, I usually stick to cash.
Before you travel, be sure to alert your credit card company of your itinerary. If you don’t, you might find that your purchases are declined; fraud mechanisms can be triggered with off-shore purchases unless there is a note on your file indicating that charges from a foreign country are to be expected.
Lastly, ensure your credit card number and the contact information for your credit card company is kept somewhere safe. Should the card be stolen or lost, you’ll need this to alert the credit company and ensure you’re not on the hook for whatever erroneous purchases are made with the card.
Prepaid Travel Cards
There are a number of financial travel products you can get such as pre-paid travel currency cards and Visa TravelMoney cards. There are pros and cons to using these financial vehicles, so you must decide for yourself if they are worthwhile. Check out this article on managing your money abroad for more information.
Sometimes bad things happen. Anil has a strategy when he travels through countries where he may be at higher risk of being mugged or pick-pocketed: “In certain parts of the world I might consider a decoy wallet, one with a little bit of cash and some inactivated credit cards in case I'm forced to give something up.”
Managing Finances Online
When you pay your credit card bill or check on your banking transactions, you’ve got to get online to do it. If you have a laptop, you’ll want to ensure you are protecting your passwords and other information on your laptop from security threats while you’re online. If you use an internet café abroad, make sure you take precautions such as signing out of secure websites, deleting the web browsing history, and closing the browser before leaving the computer.
Anil recommends two-factor authentication for navigating secure sites, which is discussed in Protecting your Laptop and Sensitive Information Abroad, and is one of the most secure ways of accessing sensitive information online to pay bills and manage finances.
Although Anil eschews the use of public computers whenever possible, sometimes it’s inevitable. In these instances, he utilizes some additional precautions: “If I'm on a VPN or other connection where I have to click ‘Yes’ from my browser to get online, I avoid checking my accounts (since the data passes through a go-between before reaching the Internet).”
And if you’re technically inclined, Anil recommends installing a portable version of Linux or Firefox (such as Xubuntu, which is a free download) on a USB drive. “Stick the USB drive in the untrusted computer and it will boot up using the USB Linux. There you can browse on a secure system on the same hardware.”
Anil goes the full distance in protecting his finances from fraudulent activity. “I let the bank know ahead of time that I'll only be spending ‘X’ amount on bills and only from certain companies. If they see any other transactions I make a note for them to hold the account and notify me. Most banks (ING for one) are good about this.”
Managing your finances securely while traveling can seem daunting at first, but once you establish some ground rules and precautionary ways of operating, it will become second nature. Many of these tips can even be applied at home; too often we worry about bad things happening to us on the road that are just as (if not more) likely to happen in our own backyards. The traveling road is not a dangerous one; but pushing ourselves out of our comfort zones requires us to be especially alert to our surroundings—and our finances—while we travel.