Money Moves Before Your Next Trip Abroad - Business Insider

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Want to have a seamless trip overseas?

Then make sure you hammer out a checklist of money moves before leaving. Preparing a budget, getting currency exchange quotes and checking on foreign ATM bank fees can leave you more time -- and money -- for swank Parisian cafes.

Tom Meyers, founder of budget travel site EuroCheapo.com, admits astonishment that people skip this step when doing their travel planning. Knowing the ins and outs of currency exchange and what you'll be charged to do it are especially important to save money when traveling abroad, he says.

"Credit and debit cards charge different rates, depending on the card," Meyers says.

Unfortunately, people get lazy, and skipping any research on currency exchange can be a costly mistake, especially when money-saving tools abound.

Here are five money moves that can help you avoid mad dashes for cash while traipsing the cobblestones of Florence, Italy.

Create a travel budget.?To estimate how much money you'll need for your trip, put together a comprehensive travel budget. First, look at big-ticket items such as hotel and airfare, says Anne Banas, executive editor of SmarterTravel.com. Then you can fill in the estimated cost of smaller items such as food, shopping and transportation.

And, remember to include a 20 percent cash cushion, she says. This will help keep costs you hadn't thought of from ruining your trip. "Unexpected expenses frequently come up," Banas says.

Know what your bank charges.?Don't forget to call your bank and credit card company to inform them you're taking a trip, Meyers says. If you don't, when foreign charges start showing up on your account, they may be seen as red flags, signaling fraud. Your account might then be frozen.

There's another reason for calling your bank. Use this time to check up on your bank's overseas fee structure, which can vary widely among institutions. Some banks charge foreign ATM withdrawal fees of $1.50 to $5, and add on a foreign transaction fee of 1 percent to 3 percent, Meyers says. Other banks only charge a flat fee.

For example, one major bank assesses a $5 fee for each ATM withdrawal outside the U.S. and a 3 percent transaction fee for foreign currency conversions.

"Know before you go," Meyers says.

Many credit cards also charge foreign transaction fees, usually around 3 percent, Meyers says. "Use cards with lower rates," he says.

Make prudent foreign currency exchange moves.?To leave more money for gelato, seek out a good foreign currency rate. You can save money by avoiding the use of currency exchange counters at overseas airports, Meyers says. If you use an airport conversion counter, you'll probably get socked with paying a commission and a high exchange rate.

Bank ATMs are usually better bets, even foreign ones, Meyers says. So, when you get to your airport, head to the closest ATM. Meyers also takes a stash of euros with him as starter cash to initially pay for taxis and small expenses before extracting cash from a bank's ATM.

To further limit fees and save money, Oregon-based travel expert Ed Perkins recommends opening a small account at a global bank with a large foreign network. For example, Bank of America is part of a Global ATM Alliance, which has reciprocal banking agreements in many countries, including the United Kingdom, France, Germany, Italy, China and Australia. The payoff: no operator fee for withdrawals at ATMs, although a 1 percent international transaction fee may apply when converting your currency.

Download smartphone apps that travel with you.?A bevy of smartphone apps can help you navigate currency conversion, budgeting and even tipping norms, Banas says. Many are free to download. For example, the Oanda app lets you easily pinpoint foreign exchange rates for any world currency and even create currency rate comparison tables. Bankrate's?currency calculator page?can help you check conversions.

Budgeting apps such as Mint and Check, formerly Pageonce, help you keep track of your money, check account balances and even track frequent flier miles while on the go.

You can sign up at many banks for free mobile bill pay. That way, you can still pay your bills while traveling, says Antwone Harris, a financial consultant at Charles Schwab in Washington, D.C. He also recommends taking a photo of your credit cards and debit cards, just in case they need to be reported as missing.

Maximize your travel rewards.?Check out your debit cards and credit card rewards before you leave. Debit card rewards have mostly faded out. Still, some big banks such as SunTrust and Bank of America offer frequent flier rewards on certain airlines, which can later be used to save money on overseas travel.

Credit card rewards programs are still generous, but vary widely. The best ones let you earn cash back as well as reward points, Banas says. "For average consumers who don't travel a lot, that's a sweet option because you can redeem points for merchandise," she says.

This story was originally published by?Bankrate.

Source: http://www.businessinsider.com/money-moves-before-your-next-trip-abroad-2013-7

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