Planning to travel overseas soon? You've got to do some homework to do if you want to handle your money the Clark Smart way while you're abroad. But don't worry, here's an easy primer to get you started…
BEFORE YOU GO
SHOULD YOU EXCHANGE MONEY AT HOME?
My rule is never buy foreign currency before you get to your destination. The fees are too high when you buy here. You will get much a better deal on exchange once you land in your destination.
TELL YOUR BANK YOU'LL BE TRAVELING
Before you leave the United States, call your credit card companies and ATM companies and let them know where you'll be traveling. If you don't alert the issuers, you may find your cards shut down. That's because the legit transactions you do overseas could be flagged as phony charges from international crime rings who duplicate cards and use them all over the world!
If you prefer not to call, go to your issuer's website and see if there's a form you can fill out a form to alert them about your foreign travel.
MAKE SURE YOUR CARD HAS "CHIP & PIN"
The United States is the only developed nation that has not adopted the chip and PIN standard in our credit and debit cards. We're still using magnetic strip technology from the 1960s; that's what allows those crime rings I just mentioned to so easily breach our systems.
Fortunately, that's about to change. By 2015, chip and PIN should be the norm in the U.S., which is great news for travelers who are used to having their magnetic strip cards turned down.
If you've not yet seen the chip I'm talking about, it's a little silver shiny thing about a third of an inch square. When you use a card with chip and PIN, you’re required to punch in a secret code at checkout, rather than signing for a transaction. That chip means that even if a crook can capture your card info, they can't duplicate the card.
As an interim step, some banks are issuing chip and signature cards that require you to sign for transactions. I've found these are hit and miss overseas; get the real chip and PIN version if you can.
WHILE YOU'RE THERE
USE A CREDIT CARD WITH NO FOREIGN CURRENCY FEES
Most credit card issuers charge 3 percent if you use their card outside the United States. Capital One, however, has no fees at all on their credit cards when used internationally. Ditto with Bluebird. Many smaller issuers and credit unions will not charge rip-off fees. Use those cards if you can. In addition, USAA has no foreign transaction fee, though there is a 1 percent MasterCard/Visa fee associated with their cards.
KNOW HOW TO DODGE THE ATM FEES
Using ATMs abroad is the most effective way to get money when traveling. But some banks will charge a foreign currency rip-off fee that usually starts at $9 or $10 per transaction! That's outrageous.
If you're with a big bank, check to see if they're part of any alliance where you can use ATMs fee free in other countries. Simply tell them what country you're going to and they can tell you if there's a fee-free alliance partner bank there.
You can also get fee-free ATM transactions abroad with most Capital One cards. Charles Schwab also typically absorbs ATM fees for many of its customers, if you bank with this discount stockbroker like I do.
PROTECT YOUR MONEY AND PASSPORT
Money belts are highly advisable in many international cities. Pick-pocketing can happen anywhere.
I also suggest you make photocopies of your passport before you go. Only the ID pages need to be copied, along with any current visa stamps. Check out the State Department's Traveler's Checklist for more info.
Leave some copies at home and take others with you to leave in your hotel room. Be sure to carry your original passport on your person at all times. Replacing a lost or stolen passport when you have a copy of it is so much easier than if you have no copies whatsoever to show.
HOT TIP: Take a clear photo of your passport with your phone camera "just in case."