Excerpted and updated from “Don't Leave Home Without Making Financial Preparations,” “Trouble on the Trip and How to Cope with It,” and “Giving Credit Before Credit is Due," Spring 1995.
In the haste of preparing for a trip, it's easy to forget those finance-related steps you really should take before leaving. Here’s how you can avoid a lot of grief, save money and greatly improve your chances for a pleasant journey.
Decide on the amount of cash or credit you may need on the trip. For your own security, it’s not a good idea to take a lot of cash anywhere. If it's lost or stolen, you can't replace it. Only carry enough cash for cab rides, tips and other small expenses. Otherwise, use credit cards when you can because they are readily accepted by merchants and can easily be replaced if lost or stolen. And if you need cash fast any time of day, even in a foreign country, you can still get it from an automated teller machine (ATM) using the same cards you use back home. The following are other things to consider:
- If you plan to get cash using a credit card at an ATM, you can incur hefty fees. Using your debit card to get cash from an ATM may cost you less in fees.
- If you're traveling out of the country, when you pay for purchases you are likely to fare better on the exchange rate (how much your U.S. dollars will be worth in a foreign country) if you use a credit card or swipe a debit card (and choose the “credit” option) instead of converting your cash to local currency. If you do convert currency, the fee is usually the same whether you change $10 or $100, so convert larger rather than smaller amounts. Change money in a safe place and put it away in your wallet or purse immediately.
- In addition to your bank (debit/ATM) card, take at least two major credit cards. They should meet all your foreseeable needs. Leave unnecessary credit cards at home.
Pay bills before you leave, if possible. You don't want essential services to be cut off while you're away on a long trip. Check the due dates on all bills — especially utilities and auto insurance — to see if payments will come due in your absence. If so, be sure to make those payments before you leave or pay them online from wherever you are.
An upcoming trip is also a good reason to consider signing up for direct deposit of paychecks and government benefit checks, if you haven't already done so. With direct deposit, you don't have to worry about possible theft of the checks by mail and you know the funds will be in your account on a certain date — a comforting thought whether you're away or at home.
Stash your valuables. Consider putting jewelry and other valuable items in a safe deposit box at your financial institution.
Copy important documents and make a list of important numbers. Make two copies of your passport identification page, driver's license, vehicle registration, airline or other tickets and your itinerary. Leave one at home with a relative or friend and carry the other one with you separately from the items themselves. Do the same with your list of important numbers. It could include phone numbers for your credit card company, bank and insurance companies.
It’s probably not a good idea to include credit card numbers or your Social Security number on this list, because the information could fall into the wrong hands. Carry the list with you; don't pack it.
Understand what credit card blocking is about. It most often occurs when you rent a car or check into a hotel and present your credit card. The clerk could electronically ask the bank that issued the card to "block" (reserve) part of your line of credit to cover the expected cost before you go out and use it for your other vacation purchases. If it's a hotel, what's blocked — usually on arrival — could be the cost of your room for the length of your stay, plus incidental expenses you may incur, like meals and phone calls. In the case of cars, it could be the cost of the rental, plus gasoline. There is nothing sinister or illegal about it, as long as the amount blocked isn't out of line with what the customer is likely to pay at the end of the transaction.
If you leave on vacation with your credit card near the limit or if you are a business traveler who spends long periods on the road, you should be aware of credit blocking. This is because any additional transactions you attempt after you hit your credit limit would be rejected. To learn more about credit card blocking, visit the Federal Trade Commission's webpage.
Protect yourself from thieves and scam artists who target travelers. Here are some precautions:
- Don't flaunt your cash, charge cards, fancy clothes or expensive jewelry (or even expensive-looking jewelry). Among the people you may be impressing could be robbers. Avoid pickpockets by making sure your bag or purse is closed.
- Always take your credit and debit/ATM card receipts with you, and never give anyone your personal identification number (PIN). All contain information about your account that a thief can use to get cash or make purchases. If your cards are lost or stolen – in the U.S. or abroad — immediately report this to your bank or card issuer. In general, federal law limits your liability for unauthorized charges on a credit or debit card if your card is lost or stolen, but you must notify the bank or card issuer within certain time frames. For more information, see [2012] Debit, Credit and Prepaid Cards: There Are Differences. Industry practices may further limit your losses, so check with your card issuer.
- At hotels, one of best things you can do is keep your extra cash, jewelry, passport and other valuables in the hotel safe.
- While you may not enjoy hanging out at airports, thieves do. They know airports are full of tired, hurried, confused travelers carrying cash, credit cards and other valuables. This kind of theft usually occurs near ticket counters, X-ray machines, baggage check and claim areas, rest rooms or vending areas. The basic advice: stay alert.
Banks, card companies, express delivery services and other businesses are there to help. If the unexpected occurs, there are lots of ways to get emergency cash or arrange for payments, from practically anywhere in the world. A nearby bank can arrange for a cash advance using a major credit card. You can ask the bank to have money transferred electronically from your bank or brokerage account back home. Or see if it can safely deliver traveler’s checks and money orders or wire funds to your hotel or another location. If your problems are tied to a lost or stolen wallet, call your bank or credit card issuers immediately.