Best way to handle finances when abroad

[samuel]

The wife & I are going to cruise in our yacht from the East coast to somewhere towards the Med leaving 01 May We will spend 20 weeks away from home . We may come home or we may leave the boat & fly home & continue into the Med for another 20 weeks next year. ( We may have a " domestic" & come home after 4 weeks !!)
What I want guidance on is how to handle the finances. I have never spent long abroad & have always taken cash with me. However, over 20 weeks we will probably need about £ 8000-00.
I have only ever had Barclays Visa card & have never used a cash machine in my life.
I understand I need a debit card for fuel & some shopping etc. If so who,s is the best for France Spain, Portugal. Does a Barclays connect card do this/
I have been advised to open an account in an Irish Bank & transfer the cash to that so I can draw Euros as & when needed. This is supposed to save on commission charges . Is this correct?
How do other people do it?

<hr width=100% size=1>Justisla

 

[Davolas]

We spent 3 months abroad in 2002, with no real problems obtaining money. France, belgium, Holland.

Nationwide credit card and internet accounts have low charges for cash withdrawal abroad, money transfer rates at commercial levels but no transaction charges.

Best to get 2 or 3 cards each plus bank account cash card so if one is lost or stops working you have other options.

Most cards can arrange full repayment each month by direct debit from your bank account to avoid interest charges.

we also made sure we had a cash float and a few travellers cheques for emergencies.

Try and use cards at cash machines and not in cafes and shops where they are likely to be cloned.

Usefull to have someone in the UK checking accounts for unexpected deductions.

My card has only been cloned once and that was in the UK I am fairly sure it was a dodgy petrol station. But took ages to sort out and get my money back.

It is worth telling the card companies you will be abroad, otherwise they can stop the cards because of unusual transactions which they think may be fraud.
I am sure there are many other options.

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[MedMan]

I have no professional background in this area so I do not profess to be an expert. My information comes almost entirely from an excellent ‘Which? Magazine’ report that I read some 4 years ago.

According to the Which? report, when you take cash out of an ATM abroad there are four factors that can affect how much is debited from your UK account for a given amount of foreign cash in your wallet:

1. The exchange rate used on the day by Visa, MasterCard, Cirrus or which ever other credit exchange company is used by your card issuer.
2. The ‘exchange rate loading’ added to the above by your card issuer.
3. The ‘handling charge’ made for using the ATM machine.
4. If you are using a Credit Card, the interest charged – both how much and from when.

It is extremely hard to find out some of this information as many banks keep it hidden away in the small print and I have not come across one yet that shows a full breakdown of the charges they have made on your statement. The most illusive is the ‘exchange rate loading’. According to Which? Magazine all banks charge it, but it is often hidden within the exchange rate quoted and not shown as a separate charge. This practice is unsatisfactory at best and downright dishonest at worst.

To give an example: Let us suppose that you and I queue up at the same ATM in France and that, within minutes of one another, we both take out 200 Euros in cash. Let us also suppose that we both use a Visa Debit Card, but issued by different banks. Will we both have the same amount deducted from our account? Almost certainly not.

The exchange rate used by Visa will be the same for both of us and it will be the ‘commercial inter-bank rate’ for the day, not the much less favourable ‘tourist rate’ quoted in the Newspapers. However, the ‘exchange rate loading’ applied by our respective banks could be very different. Most of the ‘High Street’ banks apply a loading of around 2.7% whereas more competitive banks can charge as little as 1.25%. On top of this will come the ‘ATM handling charge’, which is fairly typically 1.5% with a minimum of £1.50 but can be as much as 2%. Thus, the total charge could be as little as 2.75% or as much as 4.7%. On a typical two-week holiday this may not matter, but for those of us living abroad for much of the year it is very significant.

If we were using Credit Cards we would also have to worry about interest. Some issuers charge interest from the day you take the cash out, others from the date of your next statement. Some charge interest whether or not you pay your account in full, others only if you don’t. The best advice here is never, never take cash out with a credit card – it is much too expensive.

So what about buying goods directly with a Credit or Debit card? There is no ‘ATM handling charge’, of course, but the other three factors still apply in exactly the same way. Once again, the most illusive charge is the ‘exchange rate loading’ that, as with cash withdrawals, is often hidden within the exchange rate quoted and not shown as a separate charge.

As Banks change their ‘exchange rate loading’ on a fairly regular basis it is difficult to give specific advice about which Bank to go for. At one time Cahoot had one of the lowest rates, but they have recently put it up. You will need to do your own research on this but beware of well-meaning folk who swear blind that their bank doesn't have an ‘exchange rate loading’ - it almost certainly does!!!!

<hr width=100% size=1><A target="_blank" HREF=http://www.yachtretreat.com>http://www.yachtretreat.com</A>

 

[Brierley]

We travelled extensively throughout SE Asia for several months and found even there, that debit cards are easier and cheaper to use than credit cards. I would keep the credit cards for emergencies/large purchases only. We also carried some Travellers Cheques - they are still the ultimate back-up if you lose your wallet or get mugged.

We set up internet banking so we could check on our bank statements regularly and could also transfer money as and when necessary - we used First Direct because you can contact them by phone or email and get a fast response. Also, when you phone, you always get a real person to talk to, who can see your account details and can sort the problem, not some recorded message with "press 1 to be ignored, 2 to be cut off" etc or some overseas call centre where you can't understand a word the other person is saying!! ;-)

I'm not sure about the Irish bank account - can you open one if you don't have an Irish address? You would still have to pay to convert GBP into Euros to get it into the account in the first place, and would still have to pay ATM handling charges to get the money out in France/Spain etc plus you would have to keep tabs on that account to make sure you still had funds in it. I'm not sure the extra hassle would be worth it, though someone else may know more about it

Hope you have a great trip

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[Metabarca]

I live abroad but still maintain a UK account which I run alongside my Italian one. My UK one is with First Direct, which enables me to keep tabs via Internet, make payments and so on. I have a Visa card from them an a direct debit card which works everywhere. The important thing to look out for is that the debit card works on the Cirrus circuit - virtually all ATMs work on this circuit and I have never had problems in Italy, France, Slovenia, Croatia, SLovakia, Poland etc as a result.
Never use your Visa to withdraw cash from an ATM except in extremis - high commissions! I've never considered the cloning problem. Perhaps I've been lucky but it's never happened to me. The only very basic precaution I've taken is never letting the card out of my sight in such places as Palermo and Naples.
Hope this helps!

<hr width=100% size=1>Adriatic links here: <A target="_blank" HREF=http://www.comoy.com/saillinks.html>http://www.comoy.com/saillinks.html</A>

 

[anabel]

Just back from 2 months in New Zealand. Finances - I had 2 credit cards (both VISA)and an AIB (Irish bank) Bank Link card. This latter similar to a direct debit card. I used one of the c.c.'s for purchases & the other for withdrawing cash. Before going abroad I set up the internet banking system. This meant I could always check by bank and credit card a/c's. It also meant I could transfer cash from my current a/c to either of the credit card a/c's. I also put a few K into each of the credit cards before leaving. At no time did I allow interest to accumulate on the credit card a/c's. With the direct debit card I was able get cash from most ATM machines displaying the 'PLUS' or 'LINK' or the 'CHORUS' signs. Make sure your card has one or other of these signs on the back of it. I no longer bother taking Travellers checks when going abroad. I have never found need for them over the past 5 or 6 years. They are a somewhat dated system plus the fact you normally need identification or if you go to a bank you need to queue! Hope this info may be of some use to you. Good luck with your trip.

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[pheran]

I agree with what some other posters have said about the methods and costs of getting money OUT of the system once you are abroard but first you have to put some IN. And the cost of converting your loot to Euros can vary tremendously. The High Street banks are the biggest robbers and the specialist exchnge agencies offer far better rates, zero commission and a choice of how you want the money, cash, paid into a bank, TCs etc. Enter 'Currency exhange' and Google will give you a list. As an example, I bought forward on Euros at 1.48 when Lloyds offered me 1.38.

<hr width=100% size=1><font color=blue>A convert to steel boats and displacement cruising - the only way to go</font color=blue>

 

[gosh]

The only problem we have encountered in France is that we were most often unable to buy fuel at marinas with a credit card - cash only. We use credit cards for almost everything. And last year some outlets were refusing Irish euros!

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[jerryat]

Hi!!

Definitely go for a debit card. As has been mentioned, you will have far fewer (if any) problems with these. Having twice cruised to/in the Med and twice done the 'Milk Run' in the last six years, the ONLY time the debit card hasn't worked was, as has been noted, in the French Marina fuel berths. Purely for interest and despite contrary comments, we used a Lloydstsb card and had a maximum charge per transaction of £2.00. Usually it was around £1.50. But this is a charge made WHATEVER amount you withdraw so, use an ATM every 3-4 weeks (or less often for preference) and the total annual charges are not too bad considering the convenience and wide coverage.

One final thought. If you pay by debit card in foreign supermarkets, there is no transaction charge! You WILL need to have your passport with you though, unless you have an identity card. Few Brits do, so we made ours by colour copying the last page of our passports (the one with the photograph ugh!!) reducing this to credit card size, buying a couple of the self-sealing 'laminating' plastic envelopes (any high street stationers sell them) and sticking it together. This was accepted everywhere in Europe, Caribbean, Bermda etc etc.

Just my experience, but we will go this route again when we set off again next year!

Good sailing and have a great time!!



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[snowleopard]

i looked into this before we went away for a year. the clear favourite was Nationwide Flexaccount. you get a visa debit card which works in all cash machines worldwide (except some french banks), has no commission charges and a good rate of exchange. to make it more economical, open an internet interest-bearing account and keep most of your funds in that, then use internet cafes to transfer money as required.

after years of travellers cheques, eurocheques etc. it's so easy to walk up to a hole in the wall and get local currency in a few seconds. the only place we failed was on statia which had no cash machines on the whole island!

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[samuel]

Many thanks for all the comments
Med man's idea of several credit cards seems a good one.
Barclays want £ 30-00 to transfer between £ 1500 & £5000 into Euros
I am a bit worried by the comment that Irish euros may not be accepted everywhere
I will try doing an identity card as suggested. I do not fancy carrying a passport with me everywhere I go. Too many pickpockets.
I do have a Barclays internet account but wonder how secure it is contacting my bank in an internet cafe. How can I ensure I do not leave my password etc on the computer in the cafe when I leave?
I will have a laptop & mobile phone but Emails etc from a boat is yet another subject !!!
Anyway Thanks again Could be a subject for an article in PBO!!

<hr width=100% size=1>Justisla

 

[Birdseye]

My personal experience has been that Nationwide offers much the best exchange rates as well as accounts which can be managed on the internet. So what I do is to use a Nationwide DEBIT CARD for cash withdrawals from hole in wall machines. I use a nationwide CREDIT CARD for payments for everythign I can since that is safer than a debit card. The credit card is set up for the whole balance to be debited to my nationwide current account (they call it a flex account). the major balance of my money is in a nationwide e savings account giving about 4% interest.

I only take the above cards. A boat is not secure, and as obvious tourists you are more vulnerable to pick pockets. these seem to be a plague in parts of spain - I have caught them in my pockets twice already. so dont take a fistfull of cards. no point anyway - anywhere that takes cards takes visa in my experience.


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[MedMan]

I'm sorry to have to say this, but I think you have missed the point about ‘exchange rate loading.' It is never shown on your Bank Statement as a charge, but you pay it never-the-less. The Banks simply change the exchange rate to a less favourable one so that you end up either paying more or getting less. It is high time the Ombudsman investigated this dishonest practice and insisted that Banks own up to what they are doing so that we know what they are really charging.

A similar situation exists with Exchange Bureaux. They may advertise as 'Commission Free', but what rate of exchange are they giving? If they have loaded the rate of exchange 10% in their favour you could be getting a very poor deal indeed.

There are two factors that affect the deal you are getting: the charges and the rate of exchange. To ignore the latter is to fall into the trap that the Banks have set. The only way to make comparisons is to look at how many Euros you get for a given number of ££££ by a given method at a given time on a given day.

<hr width=100% size=1><A target="_blank" HREF=http://www.yachtretreat.com>http://www.yachtretreat.com</A>

 

[PhilF]

www.moneycorp.co.uk
buy euro's at the best rate and transfer cheaply
Philf

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[jerryat]

No, I hadn't forgotten this aspect I assure you! We checked the exchange rate we were getting very regularly to make sure we weren't being ripped off. The many yotties we were in contact with, often exchanged this sort of detail and, while of course there was a variation from time to time, overall we did pretty well.

We did do one thing that I strongly recommend. Over the few months before leaving in 1996, we visited our bank and established a terrific friendship with the manager. Being on first name terms, sending him the odd postcard from different places, and dropping in when we flew home briefly, may have helped our 'exchange rate' of course!! One thing is for sure, we never paid a penny in other charges the whole time, despite going 'way over the top' when a couple of emergencies occurred. So I think you take the (very occassional) rough with the smooth.

Personally, I think you can get so tied up in trying to scrape the last peseta (no they're gone now aren't they!) out of each transaction that you can forget to enjoy what you've gone cruising for! We've met many like that I'm afraid.

Happy sailing!

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[charles_reed]

Like lambs to slaughter

All banks are there to make money - some take more than others.

There are 3 ways they make this money:-

By short-changing you on the conversion - typically this is a minimum of 2.5% and up to 6% on credit card transactions. This is never shown and you have to compare the exchange rate you get with interbank rates on the same day.

By surcharging you - if you draw cash through a cashpoint on the Visa network (debit and credit), this puts your transaction cost up to about 8-10%. There is one notable exception the Nationwide Flex Visa debit card where they swallow the surcharge but you still have to suffer the bid-transfer cost.

By charging you commission, usually fixed rate.

There are further snags - banks between countries in the € area also charge you to draw € in another country, to encash a cheque or to pay by credit card (sometimes).

So this is what I do (but still have to pay some charges).

I have a French bank account - into which I pay in £. They convert the £ into € at the interbank rate and charge me a handling charge + commission. This works out at €24 for £1200 and €29 for £1800. This works out at between 1 - 1.3%. When in France I use the debit card for purchases and to draw cash. Outside France I use the Flex card to draw cash and persuade people to take my French cheques for other bills, they then pay the bank charge.

In your case you would probably be well advised to open an bank account, after checking their charges for converting £-€, in the country you're likely to spend the most time in. I'd definitely open a Nationwide Flex account and I'd lock away my UK credit cards whilst out of the country.

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