Being cash-strapped while travelling abroad is what nightmares are made of. Yet we often find ourselves caught up in this situation – thanks to the cash-in-hand cap most foreign countries have in place. That set aside, you have exchange commissions and related charges constantly draining your cash reserves. Unfortunately, these expenses are inevitable and most of us are ready to spend on them because it’s a done deal.
So, how does one survive on such meagre resources while travelling abroad? Our answer: with the right insight, planning and by avoiding these 8 common mistakes.
1. Money Transfer Via Banks
While banks are considered one of the safest and most convenient ways to transfer money abroad, they can be tricky. It’s best to keep an eye out for conversion and interest rates. Banks tend to charge a significant percentage of the actual amount to be transferred as commission. Plus, they are slower than most other modes of money exchange. This turns out to be an expensive affair, especially when the exchange is of a high amount.
2. Hidden Charges On Credit/Debit Cards
Banks often add extra charges when you use your credit or debit card in another country. Even though you think it’s a safe option to carry plastic money while travelling abroad, make sure you are aware of the charges before you go ahead and swipe your card. Make sure that you check with your bank what their process is, and what charges you are likely to cough up. This is especially true of a credit card. If money is withdrawn using a credit card, it can attract an outrageous transaction charge and an exorbitant rate of interest. While making payments through a debit or credit card, there are usually three types of charges involved. These include the fee for converting currency, the fee for foreign transactions and the fee for cash withdrawals.
Therefore, this mode too should serve as the last resort, if at all. VISA or MasterCard are two prominent companies that are actively involved in processing online transactions made through plastic money. Both the cards are almost similar to one another and the difference lies only in the kind of perks they offer. While choosing a card for an international trip, you will have to ascertain which factor matters the most to you and choose a card that best satisfies it.
- According to MoneySavingExpert.com, MasterCard has offered better exchange rates than VISA in the past, although the differences were minute.
- Payment through VISA cards can attract discounts and special services on a large number of properties all over the world. MasterCard, on the other hand, has slightly less coverage.
- MasterCard offers the opportunity of refunding excess amount up to a limit in case the price of a specific product purchased through it is reduced within 60 days.
- VISA card provides the benefit of receiving a claim on luggage lost during a flight for which payment was made through this card.
However, both provide protection against unauthenticated access and extended warranties for damage of products purchased through these cards. Note that you will have to pay an additional amount while making international transactions depending on the currencies involved. For example, for every Dollar, you will approximately get only €0.8 since the dollar is a weaker currency. Thus, you will have to remit $100 for paying 800 Euros. In fact, depending on the tariff charges, you may even have to pay more than $100, say 2% more by way of fee for getting the currency converted.
3. Not Checking Mobile Tariff
If you do not get an international tariff plan in place before stepping out for your trip, you are bound to have a harrowing time. Follow these steps to avoid unnecessary charges on your mobile phone:
- Check whether your current network provider is capable of providing services abroad.
- Ascertain the roaming rates that might apply and the different packages that are offered.
- Make sure that the network plan has been activated.
- Track regularly how much data is being used on the trip in order to keep a check on the limit.
4. Exchanging Money At The Airport
Airport exchange bureaus make for a bad decision if you want to get your money exchanged. These ‘no commission’ agencies typically have their commission adjusted in the exchange rates offered by them. Hence, always cross check the rates of these bureaus with real-time FX rates.
5. Buying Excess Insurance
Remember, travel insurance is different from regular insurance in the sense that it directs you to pay a certain amount of the insurance policy only when you actually need to make the claim, thereby reducing the premium value. Now, to eliminate or even reduce the payment of the inflated excess cover, you will have to incur extra charges. According to Expedia.co.uk., it is always better to go for a standalone policy in case of car hire as opposed to buying excess insurance at the rental desk.
6. Falling For Dynamic Currency Conversion
Sometimes, when making purchases abroad, the merchant offers to convert the transaction amount from the domestic currency to the foreign currency. It’s best not to accept these ‘lucrative’ offers, in order to avoid paying any unwanted hidden charges. Most buyers accept them with an intention to save credit card charges but actually end up paying a fee almost double the normal charges. Also, the conversion rate offered might be different than the prevailing rate, thus ultimately placing you in a position of loss.
7. Not Checking Rate On International Money Cards
International money cards or travel cards have been specifically devised to make outbound travel a hassle-free affair. However, these prepaid cards come with their own set of charges you may not be aware of. Some extra charges you pay for money cards are:
- Getting a card issued in the first place. If you travel frequently, hold on to the older one.
- Transferring money into the card as well as withdrawing money.
- Not being active for a considerable period of time.
The exchange rates are already fed into these cards and one cannot take advantage of the positive fluctuations that might arise later on. It is always better to compare international money cards offered by different financial companies to get the best rates. Many cards follow the process of a flat rate per conversion, say $10 as the service fee. In such cases, it’s best to avoid making multiple transactions if you love your wallet.
8. Sending Money Abroad For Less
Many currency exchange companies advertise their money transfer process as the easiest and cheapest. They lure every customer, who is looking for inexpensive ways to transfer money overseas, into using their services. Many people fall for the ruse, but you actually pay all the charges in the exchange rate itself. The latent charges that are not visible drain your money away.
Thus, if you do not want to drown in a pool of expenses while travelling abroad, steer clear of these mistakes. Try a money transfer service like InstaReM that ensure fast, fuss-free and cost-effective money transfers anywhere around the globe.