“You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand.”
– Woodrow Wilson, 28th President of the United States.

Since I left for Europe on June 2, I have not paid one US cent in foreign transaction, foreign conversion, or ATM fees. Nor have I forked over a single Danish Kroner, Latvian Lat, or Euro to a foreign bank. Yet every day, I’m using a credit card or taking money out of an ATM.

With the exception of some of my hitchhiking friends who avoid paying for virtually anything by camping outside gas stations and dumpster diving, money management is a hot topic for long-term travelers.

There are a bunch of ways to earn money on the road, or at least offset costs, and this topic could warrant a whole series of blog posts. But for this post, I’d just like to share a couple options I’ve found for spending the money you currently have on travel-related costs, not foreign fees.

For obvious reasons, getting my financial house in order was a big focus in my pre-trip planning. My primary focus was making sure I had enough money to sustain my travels. My secondary focus was making sure all my allotted savings was spent on the traveling experience. Personally, I much prefer spending my hard-earned cash on delicious Polish pierogies, not on silly bank fees.

What’s the secret? I’m not gaming the system. I’m not selling my numerous head shots of Mike on the Russian black market. Nor am I propping myself up in a bluelight district for cash. I just did my homework before leaving.

As consumers in a free market economy where financial institutions are vying to hold our money or lend us more, we have options when choosing a bank account or credit card. To entice us to open savings or checking accounts, banks offer free checking, [relatively] favorable interest rates, or branch location convenience. They encourage us to open credit cards using free airline or hotel points, “lucrative” rewards programs, or waiving certain fees.

Although there are probably plenty of options that can accomplish the goal of avoiding all foreign fees while traveling abroad, here are the two secret weapons I’m using:

1. Chase Sapphire Preferred credit card.  With this gem, I’m avoiding the 1-3% in foreign transaction fees most other credit cards charge for purchases outside the US. Since it’s a Visa card, it can be used anywhere credit cards are accepted. If a place doesn’t accept credit card, I’ll just use cash. (Side Note: Europe stopped using swipe cards several years ago and adopted more secure credit cards with chips. Although places still accept them, it’s been a challenge in certain countries).

This card has some additional benefits for travelers, like a reward program that gives more points toward travel and dining purchases, and grants 40,000 in airline or hotel points upon signing up.

[I heard about this card through blogger, author, entrepreneur, and traveler Chris Guillebeau, who has perfected the art of travel hacking. He suggests more great credit cards for travelers in this year’s Frequent Flyer Challenge.]

2. Charles Schwab High Yield Investor Checking account.  Schwab offers a “high interest” checking account (0.15% at writing) with an ATM/Debit card. This ATM card is fantastic because it allows me to take out money from any foreign or domestic ATM without charging an ATM fee or a foreign conversion fee. This is huge!

First, avoiding ATM fees is a psychological win because paying $2.50 or $4 or whatever arbitrary amount a bank decides to charge kind of makes me feel like an idiot. Second, I don’t need to convince myself to take out more money just to minimize my fee per dollar amount, and then end up being stuck with a hundred Kroners I need to exchange later.

On top of an ATM fee, most banks also charge a 1-3% foreign conversion fee to convert the virtual US dollars sitting in your bank account to physical currency you can hold in your hand. This feels like a silly fee as well — a computer is converting the currency based on the current exchange rate, so I’m not sure why a fee is necessary. Plus, by taking cash from an ATM in local currency, I avoid converting physical cash at airports or banks who can charge up to 16%!

Thankfully, Schwab recognizes these fees are silly and I love them for it. When I step foot in a new country, I find the nearest ATM machine, and take out local cash without worrying how much I’m losing to bank fees.

[I heard about this account through personal finance blogger Ramit Sethi, who’s obsessed with helping people manage their finances and save money.]

I admit these are not the only options. In June, The New York Times had a small piece explaining how No-Foreign-Fee Cards Still Best for Overseas Spending and identifies some more options. Additionally, these options are probably limited to to US residents. But these are some great options that have helped me save money and let me focus on enjoying the journey.

How do you avoid unnecessary fees while traveling aboard? Any tips or suggestions are appreciated!

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