Practical Money: Travel Tips To Save Money
How to potentially save hundreds of dollars while traveling.
Introduction
Tis the season for many people to make travel plans. Traveling is the one area where we like to splurge, and we try to plan a few trips a year with at least one trip (usually in the summer) being international. In this issue, I share some top-secret strategies we use to stretch our travel budget further without breaking the bank.
A quick reminder that this is not financial advice, just myself sharing my strategies, investments, stocks, index fund strategies, what I'm buying, and where I plan to take those investments. Everyone’s financial goals are different. No financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not intended to be a substitute for advice from a professional financial advisor or qualified expert.
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Checking miles and credit card perks first
When planning a trip, the first thing I do is check all our airline miles. Who knows, there might be a free flight hidden in there somewhere, or even a free trip one way so I only have to pay for the return. Some cards offer perks like rental car insurance and travel insurance, which is great if you enjoy paying zero dollars for things.
If I fly with my regular airline (United), I use my United card because of the extra benefits. If I use another airline, then I’ll usually use my Fidelity Visa Signature Card which includes travel accident insurance, lost luggage reimbursement, travel and emergency assistance services, and other stuff I hope I never need.
Getting cash for overseas travel
You can save on currency exchange fees by visiting your bank or credit union. Most major U.S. banks offer a wide range of foreign currencies without extra charges beyond the standard exchange rate.
You can usually get foreign currency in cash at your local branch, or order it online or by phone for home delivery. Some currencies may be available for same-day exchange, while others may require a few days' notice, depending on your bank and the specific currency you need.
I also try to avoid exchanging currency at airport kiosks because it often means getting a much worse rate than at your bank. For instance, if your bank offers £72 for $100, the airport may only give £67, effectively costing you £5.
When I get cash overseas, I use my debit card for my Charles Schwab Investor Checking account which has no foreign transaction fees for spending or ATM withdrawals. It also offers unlimited ATM fee rebates on cash withdrawals worldwide, so it’s an account I highly recommend for people who travel overseas a lot. Before using foreign ATMs, check with your bank about daily withdrawal limits and fees for using out-of-network ATMs abroad. If your limit is low, you can ask your bank to raise it temporarily for your trip.
Some international ATMs may have lower withdrawal limits than your bank. Even with a $500 daily limit at home, a foreign ATM might only allow $300 so it’s best to plan your cash needs accordingly.
Use A Credit Card With No Foreign Transaction Fees
While traveling, we try to use our credit cards for everything and preserve our cash. However, we make sure to only use cards with no foreign transaction fees. Those sneaky fees, often up to 3%, can mean an extra $150 on $5,000 of spending.
I wrote about the credit cards we used earlier this year, which you can read here. These cards return anywhere from 2-5%. Of those, the Capital One Savor Rewards, the Fidelity Rewards Visa Signature Credit Card, and the SoFi Credit Card don’t have any foreign transaction fees. We use the Capital One Savor card for dining while traveling (which returns 4% cash back on dining), our Fidelity card for all other charges that use Apple Pay (since we don’t carry the physical card around), and finally SoFi for all other charges where a card is required.
Before your trip, check your bank's or credit card's website or call them directly to see if your card charges these fees. If they do, it might be worth applying for a credit card that doesn't charge foreign transaction fees, especially if it offers good travel rewards.
Pay in the Local Currency to Avoid Currency Conversion Fees
When that sly merchant asks if you want to pay in dollars, just say no. I always choose the local currency to avoid extra fees and unfavorable exchange rates.
Merchants may present paying in dollars as convenient, but it usually means you'll be charged an additional currency conversion fee and get a worse rate than your credit card company would offer. Selecting the local currency is usually the smarter choice to save money on every transaction.
Book directly at the hotel or airline
I typically look for hotel and airport deals on travel aggregator sites like Expedia, Orbitz, Hotels.com, etc. However, when booking the room or flight, I go directly to hotel/airline website and compare prices. If the prices are similar, I book directly at the hotel or airline. You get extra perks if you book using the hotel/airline credit card, and also making any changes to your trip can be less of a hassle. Also if you aren’t already, if the hotel/airline has a loyalty program, I usually sign up and note that in a Google Sheet for future reference.
Take Advantage Of Hotel-Affiliated Credit Cards
Another highly effective way to save money on hotels is by using hotel-affiliated credit cards, which can offer significant savings. You'll not only earn points for free stays and perks with your everyday spending but also enjoy additional benefits like exclusive discounts and elite status upgrades.
When we traveled to Puerto Rico this past spring, we stayed at a Marriott. We signed up for the Marriott Bonvoy Boundless credit card, which included a $300 eGiftCard for becoming a card member. That not only more than covered the $95 annual fee, it also saved us hundreds of dollars at the hotel. The card also offered $75,000 bonus points when you spend $3,000 on purchases in the first 3 months. The hotel alone was more than that, so we paid for it using the card, plus other charges at the hotel and we received the bonus points. I put a Google calendar entry for later this year to cancel the card.
Conclusion
A little planning ahead can save a lot of money for your trips. The longer ahead you plan, the more time it gives you to sign up and receive hotel and airline-affiliated credit cards.
That's it for this week! As always, no financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not intended to be a substitute for advice from a professional financial advisor or qualified expert. If you haven’t already, please subscribe to this newsletter below and never miss an update: