If you’ve scrimped and saved for months to fund your new life as a digital nomad, you want to make sure your money goes as far as possible. Fortunately, there are a few deliberate decisions you can make with your digital nomad finances to make that happen.
Choosing the right credit card and bank account will help you stretch every dollar (or pound, or euro). Similarly, knowing where and how to exchange money for the best rate will help you get the most bang for every buck. Here are the key things to consider:
Get the right bank account
The bank you use at home may not be the best bank to use while you’re traveling or living overseas. Before you leave, find a bank account that has most or all of the following:
- No ATM fees: No matter where you go, you’ll need cash. You can easily get cash from an ATM, but you’ll want to limit ATM fees. Keep in mind that while most banks don’t charge you to withdraw money from their own ATMs, they often charge you to use other ATMs, which is what you’ll be doing when you’re overseas. In addition, foreign banks may charge you an additional fee to use their ATMs. Look for a bank that has partner banks in the country where you’re going, or choose a bank that will refund all of your ATM fees.
- No account minimum: If you’re a solo entrepreneur and you’re traveling, your income and expenses can fluctuate a lot. Make sure your account doesn’t require a minimum balance that you can’t meet.
- No monthly account fees: Some banks charge you a monthly fee if you don’t meet certain requirements beyond the minimum mentioned above. For example, you may need to set up direct deposit of a paycheck or perform a certain number of monthly transactions in order to waive the monthly fee. Double check your bank’s policy and consider switching if you might be charged fees.
- Online access/app: Before you leave, set up online banking on all your devices. Make sure you can deposit a check and pay bills remotely before you leave. Many unexpected circumstances are sure to arise as you travel, so test out the services before you leave. If anything goes wrong you’ll be less stressed and it will be easier to contact your bank when you’re still at home than when you’re in a foreign country.
Popular bank accounts for digital nomads:
Your local credit union might be tough when it comes to finding all of the above (though it’s not impossible!). The banks listed below operate on a larger level, therefore making them more suitable to travelers:
Get the right credit card
When it comes to travel, some credit cards are better than others. Here are some things to consider when you choose a card:
- No foreign transaction fees: This is non-negotiable! You do not want to get dinged every single time you use your card.
- Reward points: Most cards offer reward points, so think about how you will spend the rewards. Do you want to use the points to book plane flights? Hotels? Simply get cash back? Different cards will give you more points towards different reward categories, so research each card to see what fits your needs best.
- Annual fee: Cards with an annual fee usually have a better sign-up bonus. If you only plan to travel and use the card for a year, it might be worth getting a card with an annual fee, because the fee is almost always waived in the first year. You can cancel the card after a year to avoid paying fees, try to negotiate with the credit card company to reduce or eliminate your annual fee, or pay it. If you are earning a lot more in rewards than the cost of the annual fee, then it might be worth paying.
- Is it widely accepted? For example, American Express is widely accepted in the U.S., but in many other countries only Visa and Mastercard are used. Do research or play it safe by using a Visa or Mastercard.
Popular credit cards for digital nomads:
Pro tip: Remember to call your credit card company and your bank before you start traveling. They look out for your best interests and might freeze your accounts if they see suspicious spending in Vietnam and you haven’t told them that you are visiting Vietnam for three weeks.
Exchange money at the right places
There are tons of options for exchanging money, but some of them will offer you a better exchange rate than others. Here are the best ways to get a great exchange rate:
- Use your credit card, and pay in local currency. Sometimes you have the option to pay using your home currency, but the rate is almost always better if you use the local currency.
- Use an ATM at a bank (assuming your bank does not charge ATM fees).
If you want to get the best exchange rate, then avoid exchanging money anywhere that seems too convenient. You will pay for this convenience with a less favorable exchange rate. For example, you’ll often lose money when you exchange cash at the airport, at hotels, or at travel exchange counters. The exchange rate will be lower than your credit card or a bank ATM offers, plus you’ll often be hit with additional fees. These places are great for exchanging money in an emergency, but to get the most bang for your buck, plan ahead by contacting your bank to see if they can do the exchange for you, and use your credit card or a regular ATM while traveling.
Avoid budget-busting bank fees
You’ve saved to make this happen. This is how to make that money go even further as you take your life and business on the road — something that, despite its unique challenges — is entirely worth the preparation.