Key banking takeaways
- Most consumers want to travel during the summer, but economic factors are constraining budgets.
- Planning an international trip well in advance can give you room for building savings and help you get better deals on travel.
- Some actions to take before traveling internationally include notifying your bank of travel plans, understanding currency conversion costs and researching bank access and fees.
Traveling trends and data for 2023
- U.S. adults are somewhat more eager to travel this year — 63 percent say they’re likely to take a summer vacation in 2023, compared to 61 percent in 2022. (Bankrate)
- The age group with the most significant year-over-year change in travel plans is millennials between the ages of 32 and 38. The Bankrate study found that 19 percent of them are planning to take an international trip in 2023, which is an increase from 11 percent in 2022.
- Although more people are planning to take international trips in 2023 than 2022, the Bankrate study shows that a higher percentage are impacted by economic factors — 58 percent said they cannot afford a vacation this year, up from 48 percent in 2022.
- In a Bankrate travel study from the end of 2022, around 1 in 5 (21 percent) of holiday travelers said they’d use rewards to cover some of their travel expenses.
- Meanwhile, a CreditCards.com poll on unused rewards in 2023 shows a similar trend, with 51 percent of those who haven’t redeemed credit card rewards in the past year saying they’re saving points or miles for a specific future redemption.
Ways to save on international travel
By doing some financial planning beforehand, you can allocate your funds wisely and enjoy your trip without breaking the bank.
“Sit down and think through what it is that you really enjoy about traveling,” says Simmons of Simmons Investment Management. “Is it exploring new locations and cultures? Then consider staying closer to home in Latin America or use an online search tool to find low-cost airfare before picking your destination.”
Make sure to do research to compare flights, accommodations and local transportation options well in advance. Giving yourself enough time to plan can help you get cheaper rates and build a travel savings fund.
When it comes to saving, it also might be worth opening up a high-yield savings account if you don’t already have one. Storing your money in an account that pays a higher yield can help you earn more in advance: The highest rates are around 20 times the national average savings rate.
Finally, you can take advantage of points and miles from credit cards and even some rewards debit cards. Those points can be used to cover or reduce a number of travel expenses, from airfare to hotels.
Banking while traveling
Managing your finances effectively while traveling abroad requires a proactive approach. You’ll need to research information about banking abroad or even opening a bank account abroad, as well as reach out to your bank to make sure no surprise fees or freezes come up.
Let the bank know you’re traveling
One of the first steps to take before leaving for another country is informing your financial institution about your travel plans. This simple act can help prevent unnecessary credit card or bank account freezes, which could otherwise occur due to out-of-the-ordinary transactions identified by the bank’s fraud detection systems. By notifying your bank of your travel destinations and dates in advance, you provide it with the necessary information to anticipate your spending patterns and avoid inconveniences.
While relying on credit and debit cards is reliable in most situations, it’s wise to plan for emergencies. As a safeguard, keep a modest amount of local currency on hand in case of card declines or situations where only cash is accepted.
Currency conversion
Traveling to other countries means you will encounter different currencies. It’s a good idea to learn about the intricacies of currency conversion beforehand to save you money and prevent confusion.
When exchanging currency, there are two important costs you should know about: Foreign transaction fees and exchange rates.
Money safety tips while traveling abroad
In addition to managing your personal banking, you’ll also want to take some precautions to keep your money and yourself secure. Here are some tips:
- Carry minimal cash: Only keep cash you need for the day on yourself and keep the rest in a secure place, such as a hotel safe.
- Use ATMs cautiously: The FBI recommends that consumers use ATMs in well-lit, indoor areas, and avoid using those in tourist-heavy areas to avoid skimming scams.
- Keep copies of important documents: Scan or take pictures of your passport, visas and other important travel documents. That way, you can more easily get them replaced in case of theft, plus you’ll be able to prove who you are to banks if you’ve been robbed.
- Invest in travel insurance: A comprehensive travel insurance plan can help cover medical emergencies, trip cancellations and lost or stolen belongings.
- Use a credit card: Credit cards generally offer better fraud protection than debit cards. If your card is compromised, you can report unauthorized charges and avoid liability for fraud. Plus, you can earn rewards on international travel.
- Have an emergency fund: Establish a separate emergency fund to ensure you have backup funds in case of unforeseen circumstances, like medical issues or rental car troubles.
By following these tips, you can make the most of your international travel experiences while keeping your personal banking secure and your finances in check. Remember to plan ahead and stay informed on your bank’s fees to ensure a worry-free trip.
Analysis
This article had a lot of good insights into current travel trends, and how to take best advantage of them. One of the more interesting insights is that people try to use rewards to cover some of their travel expenses – they’re relying on their credit card use to pay for their trip. People budget and save for years to be able to travel abroad, but in general, I find it interesting that most are pretty savvy with the rewards programs they’re part of, and that they’ll drain those programs for everything they’ve got just to afford a trip abroad. Could this gamification be applied in other facets of the travel experience?
Source
Bennett, R. (2023, June 22). Personal banking when you travel abroad. Bankrate. https://www.bankrate.com/banking/savings/personal-banking-when-you-travel-abroad/
