Foreign Perspectives

I find that very few people give any thought to how they should take their money when they go on holiday beyond saying they’d like $200 or whatever to the travel agent and thereby getting ripped off. So, to help you decide, here’s a little guide:

The first thing to do is to check what currency is used at your destination. If it’s a mainstream currency such as dollars or euros then it’s best to take the money in that form. However, if you’re going off to less mainstream countries, check which of the principal currencies is most commonly used there (if in doubt, take dollars). Sometimes you can’t get the currency used outside the country or can’t get sensible amounts of it so you need to take dollars or euros eg India used to only allow you to import £5 of their currency which wasn’t really worthwhile getting.

What about taking cash? Well, if you’re in America then it’s always worthwhile to take, say, $100 with you (nothing larger than a $20 bill) and likewise for those living in euro-land. However, if that’s not the currency of the country you’re going to, it’s going to be expensive to convert to the local currency. The other option is to buy some of the local currency before you go but beware that this is usually quite expensive and not as cheap as you would think from the advertisements eg when I bought $150 for about £100 in a shop advertising that the commission was £3.50, the actual charge was over £10 ie 10%. The other main downside of cash is that if it’s stolen, it’s gone as holiday insurance rarely covers cash to any significant amount so if you are taking it, limit the amount to $100 or so. If you buy foreign currency on a card, it counts as a cash advance with all the charges that implies.

Travellers cheques (or travelers checks) are much better than cash in that they can be replaced fairly easily if stolen (keep a note of the numbers, date bought and where you bought them). However, they are equally expensive to purchase and there is often a charge to cash them too. If you’re going to America or Canada you can use dollar cheques as though they were cash in shops (even where they say “no checks accepted”). Again, take them in the currency of the country you’re going to if it’s a mainstream one, otherwise dollars or euros. If you have any left over after your holiday, keep them rather than cash them in your bank as you can use them later (there is no expiry date) and this will save you paying the commission again. If you buy travellers cheques on a card, it counts as a cash advance with all the charges that implies. Make sure that your travellers cheques come with the Visa or Mastercard or American Express brands as others may not be accepted. You can’t use American Express travellers cheques in Cuba or Vietnam nor any issued by American banks.

Credit/Charge cards are used nearly everywhere these days. If you don’t have a card already, you should get one (Visa or Mastercard) even if you only plan to use it for emergencies. Bear in mind that not everywhere accepts them though and also that not all places take both Visa and Mastercard. If pushed, you can get cash on these cards either in an ATM or over the counter in a bank but save this for emergencies only as you’ll get charged a cash advance fee, currency conversion fee and interest. The exchange rate used is much better than you’ll get for either cash or travellers cheques so that $150 that I got would have cost me around £2.75 vs the £10 that I was charged had I used the card in a shop, around £7 had I used it to get cash (assuming I’d paid the full balance when I returned home). In those countries which don’t have ATMs, you can usually still use the card to buy things and get cash over the counter in banks. I say usually because it isn’t always the case eg in India we couldn’t use the card in shops and the banks weren’t practical either.

Credit/Charge cards come in four basic international-use versions. Visa/Mastercard are the most accepted worldwide but note that in some countries one may be more accepted than the other and in particular don’t rely on shops accepting both cards so, if you can, take both types. American Express is the next most accepted but it is widely accepted only in countries that are “American/British” influenced; the one principle advantage it has is that it can be replaced by any American Express office although note that these are not very widespread and may be difficult to get to. One thing to avoid is their Travellers Check Card: best to get one of their proper cards if you can, but only if it’s free in your country. Diners Club is very far behind Amex in acceptance worldwide and not worth paying for. You cannot use cards issued by American banks in Cuba or Vietnam which notably includes MBNA (owned by Bank of America). Discover isn’t accepted outside America. JCB acceptance is patchy: good where Japanese tourists are common, poor otherwise.

Debit cards are almost always branded Visa/Electron/Plus or Mastercard/Maestro/Cirrus and work in the corresponding systems however sometimes you may be issued with a card which can only be used in your own country: check that one of the Visa/Electron/Plus or Mastercard/Maestro/Cirrus symbols are on your card as if they aren’t you probably can’t use the card internationally. Charges are as per credit cards except that you don’t get charged interest on cash advances.

Cash cards are often limited to the country in which they are issued but if they have a Plus or Cirrus symbol on them, you can use them abroad too (this was to have changed in 2008 with the introduction of the Single European Payment Area ie all European cards should be useable in all European countries, but hasn’t [as of 2010]). Charges are usually the same as for debit cards in ATMs. The principle advantage of having a cash card is that they are a lot less attractive for thieves as they can’t be used without the PIN.

Prepaid cards are becoming increasingly popular with travel agents, mainly because they see it as a way of getting even more commission than they can on travellers cheques. Whilst buying these from a travel agent is usually just a way to pay them even more commission, there are some very good ones around which will save you a lot. See our detailed article for more on these. For example, had I got my $150 on a card, the cost would have been close to zero if I had used the pretty much perfect FairFX card.

As well as the above options you also have a choice of providers of the various methods of payment. Travellers cheques may be offered “commission free” by your bank (and the UK Post Office), although note that this is not the same as “free” eg my $150 would have cost around £7 “commission free” (vs £10 with commission).

In the UK, the Nationwide Building Society offer a totally free debit card (ie no transaction fees, no ATM fees, no currency conversion fees) [sadly withdrawn from November 2010] so my $150 would have cost nothing; their credit card is almost as good in that it’s free for purchases but is a bit expensive for cash advances. Most UK cheque accounts come with a debit card with Maestro or Visa Debit facilities. For a UK cash card you seem to be limited to Royal Bank of Scotlands Instant Savings account and the Coventry Building Society’s cash cards (both Plus system).

In America you can get quite a range of systems listed on the card eg NYCE, Star, etc. but in reality the only two that matter are Plus and Cirrus for cash, Visa and Mastercard/Maestro for debit/credit card use as none of the others are accepted internationally. The costs for international use are rarely clearly laid out on American card agreements and smaller banks may not even know how much you’ll be charged for using your card abroad.

If you use one of the banks within the Global Alliance banks (BNPParibas, Bank of Nova Scotia, Bank of America, Barclays, Deutsche Bank and Westpac) you can use machines from one of the other Global Alliance banks without transaction charges (currency conversion fees still apply).

This article is part of our series on holiday planning which covers things like how to book your holiday, how to take your holiday money, what to pack, etc.

[updated October 2010]

Just when you were thinking that the work is all over, here comes another variant of the favourites scheme.

This one seems a little simpler at first sight, if that’s any relief!

OK, the steps:

1. Signup at MyBlogLog, if you haven’t done so already. Recommended anyway as that lets you add things like the “recent readers” widget that you see on this site.
2. Join my community by clicking here, then “join community”.
3. Write a comment here to let me know you’ve done it.

I will in turn join your community ASAP. If I’ve not done that within two days, post a reminder as a comment to this post.

New entrants:

1. AnitokidJoin the Community
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3. Technix UpdateJoin the Community
4. Techno Diary

The originals:

5. Foreign PerspectivesJoin the Community
6. Julies Journal – Join the Community
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We’ve been following the progress of two of the hotels that we looked at before settling on the place we’re currently running.The first of these that we saw before we met up with the estate agents was a bit large for us in that it was a 30 bedroom place though very central in Perpigian. They were only selling the business too which put us off it as well. Still, quite a thriving place that had been running since around 1850. Just over two years ago, it sported a big sign that said it had been converted into apartments which seemed fair enough as there are loads of apartments in Perpignan and they generally seem to be doing quite well. Not so the hotel though as within the last year, that plan has been dropped and they’re now doing some serious conversion work on it for yet another purpose.

As you may know, I am a participant in the Technorati favourites exchange which was thought up by DoshDosh as a means of getting loads of into the front rank of Technorati and indeed a growing number of the participants are turning up in the top 100 favourites list on Technorati.

However, what I found most instructive was the number of ideas exchanged across the last 10 days amongst the various participants in this programme. For one thing, a considerable number of those participating fall into the “techie” or “make money online” groups of blogs worldwide and the number of lessons I’ve picked up in that time has been enormous.

Some of the first fruits of those lessons has been in the new ad format that you can see throughout the blog. I figured that if the square adsense format was used by almost all the “making money” blogs, it was bound to be a “good thing” so I’ve adopted that. Also, you’ve seen from a few days ago the little underlined popup adverts which is also used by them.

Funnily enough, although I was adding all the blogs to my favourites just to get into that top 100, I’ve found a number of the articles on the favourited blogs quite interesting. I’ve even picked up several relevant backlinks from blogs which I’d not otherwise have seen.

Now, if only I could up the traffic on Foreign Perspectives and/or get ‘yall to click on the adverts for me, I’d be able to give up the day job… Funnily enough, I’d not really have thought that possible a few weeks ago but there does seem to be a whole lot of people out there living off their blog income so apparently it is possible.

Offshore banks are banks that operate in various tax havens around the world. The most familiar in the UK are the Channel Islands and the Isle of Mann but there are many based in small islands in the Carribbean.

If you’re moving abroad, it can be useful to have an account with one of these banks both to simplify your taxes a little and for the additional services that many of them offer to the expat community. None of the legitimate centres offer tax-free interest on your accounts these days but offer you two options for the interest on your accounts: 1) a withholding tax roughly equivalent to the tax that you would normally pay in your country of residence and 2) no tax but they report your income to the authorities in your country of residence.

Although no longer taxfree, the additional services that many of these banks offer can still make them worthwhile. Even the simplest of them are much more familiar with international bank transfers than a normal high street bank could be expected to be but most go beyond that offering multi-currency accounts, debit cards in a range of currencies and often expat advisory services.

On the whole, the range of services on offer increases in proportion to the increase in the minimum income that the banks ask for. A reasonable compromise with this seems to be Abbey International which offers accounts and debit cards in pounds, euro and dollars for an opening balance of £5000.

Most people will think of Switzerland in terms of “offshore” banking, but is there anything special about it? The banks there are generally more aware of the needs of international clients but this generally comes at a price. By and large, unless you have fairly sizeable amounts of money (say 25,000‚€ upwards) to deposit or invest, they probably aren’t worth it. However, even the post office in Switzerland is geared up for international clients and in this case a relatively modest amount of money (about £3,000) will get you quite economical banking.

We’ve included a list of the main banks operating in this arena in the directory which should let you choose the perfect combination of prices and services for you.