International Travel Finances

Below are a few finance tips to keep in mind before you book your next international trip.

1.  Pay Attention to Currencies
I've actually been pretty surprised how unaware some international travellers are of currency exchange rates. I am not expecting everyone to be a Forex (foreign exchange) trader, but just as you pay attention to weather when picking your next destination you should pay attention to currencies as well - it can have a huge impact.  Take for example Japan the Japanese Yen.  Currently $1 U.S. dollar buys 91 Japanese Yen, however, two years ago the $1 dollar bought 120 Yen.  Take a look at the five year chart. That's a big difference.  Your trip to Japan will be significantly different when your currency is much stronger.  Now, I'm not suggesting to let the tail wag the dog and not go somewhere because of the currency, but just to pay attention - perhaps you'll find a bargain.  For another example, consider Iceland, whose Krona lost more than half of its value vs. the dollar in the financial crisis.

2. Keep an Eye on Fees
Just as at home different banks and credit card companies charge different fees, the same situation applies abroad.  Do some research before you go to see how much your credit card and bank charges.  The NY Times has a good article about "hidden fees."  "Chase, Citibank, and Bank of America all charge a 3% percent fee in most instances."  Meanwhile, Capital One and Schwab's Credit Card do not add on any additional fees.  Similarly for using a foreign ATM many banks can add on a few percent currency transaction fee.  These fees change so it's best to check with your bank before travelling abroad.  Citibank charges around 3%, while HSBC is much lower and has a far greater network of ATMs.  Depending how much you travel and how much you spend at some point it might be worth adding another card.  FlyerGuide has a helpful section for comparison purposes.

3. Flight Arbitrage
Travel search engines such as Kayak are great, and they are very helpful for finding the best price.  However, on more than one occasion I have noticed that there are big gaps between the price of a flight in dollars and the foreign currency price when I convert to dollars.  For example, I recently booked a flight using Austrian airlines.  On all the American websites I checked the price was above $800.  When I went directly to Austrian figured out the flight in Euro's and then multiplied by the exchange rate ($1.36 dollars to 1 Euro) it was $720.  Of course, maybe I was shown a different flight, so I then checked a few sites looking for the exact same flight and I found the same high price.  I'm not sure how many airlines this applies to, however it's good to be aware of.  So, next time you might book a foreign air carrier flight check the prices in its currency and convert it yourself.