Sunday, February 19, 2017

Frugal Traveler: packing the right credit card


Frugal Traveler: packing the right credit card

Traveling frugally means more than just cadging free bar snacks in Bologna or hopping low-cost flights between third-tier European airports. To keep costs to a minimum, you have to plan well in advance, and that means getting your finances in order.

The first thing you’ll want to do is apply for a new credit card. See, most card issuers charge fees for overseas transactions. American Express, for example, adds 2.7 percent to every overseas transaction (up from 2 percent last summer), while Bank of America, Chase, Citibank and HSBC tack on 3 percent, according to Curtis Arnold, who runs CardRatings.com, a Web site that tracks credit card fees.

These fees not only include in-store purchases but all transactions made abroad, so even if you’re buying something on the Web from the warm confines of your home, you still get hit with a fee if the Web site processes the purchase through a foreign bank.

There are ways around this. Discover, for example, charges no fees, but is not as widely accepted abroad as Visa, MasterCard and American Express. In December, Charles Schwab Bank, a corporate sibling of the brokerage house, introduced a credit card that charges no transaction fees and puts 2 percent cash back into a brokerage account.

My old standby, however, is Capital One, which charges no fees of its own and even eats the Visa charge. Customer service can be a little awkward, and I’ve spent as much as 30 minutes on hold just to tell them I’m going abroad (necessary to keep my purchases from being flagged as potentially fraudulent), but I guess that’s the price you pay for saving money.

A credit card can only take you so far, however. Sometimes when you’re abroad, you need cash. Rural Germany, I remember from my Grand Tour last summer, was not a place for plastic; when I stayed in the inexpensive pensions of the Harz Mountains, I had to fork over hard euros. Asking if the pension took credit cards provoked a laugh, as if they were frivolous novelties.

But as they do with credit cards, banks tack on foreign-exchange fees to A.T.M. withdrawals. My home bank, Bank of America, charges $5 plus 1 percent of the withdrawal, while Citibank charges 3 percent of the withdrawal plus $1.50 at non-Citibank A.T.M.s.

Both reduce the fees somewhat if you use their own machines, or those of their partners. Bank of America, for example, partners with Deutsche Bank in Germany and BNP Paribas in France, so withdrawals are fee-free there (but not, however, at Deutsche Bank branches outside Germany).

But why pay any fees at all? To keep from handing banks money unnecessarily (isn’t the bailout enough?), I also keep a money market account at Capital One Direct Banking, which charges nothing (and earns me No Hassle rewards points). I linked this Capital One online account to transfer money regularly from my Bank of America account. The transfers can take awhile — up to a week — so I always make sure to get that under way well in advance.

(Why don’t I keep all my money in a Capital One account? After years of using Bank of America for most transactions, it would be a hassle to switch everything over.)

Having no-fee credit and A.T.M. cards is important, but in an emergency, you may need the kind of money that you can’t put on a credit card. And so now that I have a family, including a 2-month-old daughter whom I plan to travel with at times, I’ve started arranging for travel medical insurance.

In the past, I maintained travel insurance through MedjetAssist, which charges $250 a year for an individual membership, $385 for families. Medjet, however, is more about evacuation from remote or undeveloped places than paying Western European doctors. In 2001, for example, the company reported it spent roughly $100,000 to rescue two American hunters from Kyrgyzstan after a hunting accident, even hiring 500 villagers to clear an airstrip buried in three feet of snow.

Normally, I have not worried about travel medical insurance; I’m relatively young, and in relatively good health, with no medical conditions. But my wife, Jean, is a Taiwanese citizen, and foreign consulates often require her to have travel medical insurance before issuing her a tourist visa.

(She also has to present her full flight and hotel itineraries, passport photos, pay stubs, a letter of employment and three months of bank statements. It’s a lot of effort, and a great reminder of the advantages of having an American passport.)

About to head off to Europe in January and never having arranged such insurance before, I asked for advice from my colleague Michelle Higgins, who writes the Practical Traveler column. She sent me to SquareMouth.com, a Web site that lets you compare and contrast travel medical insurance from various companies based on your needs.

I settled on a plan from HTH Worldwide, a Pennsylvania-based company that insures some 650,000 people. Our HTH policy gives us all two weeks of coverage up to $50,000, with a $250 deductible, for $57.30. Not bad for a little peace of mind. If we have to use the insurance, I’ll let you know how well (or poorly) it works.

There’s only one last problem: Now that we’ve escaped all these pointless fees, there’s no one to blame but ourselves if we spend too much money.