Money Matters Abroad
May 24th
I can’t imagine how expat living must have been before the advent of electronic banking! If you depended on monies from the home country, you either had to bring in wads of cash and/or travelers checks, transact a cash advance against your credit card, or rely on costly money wiring services, and then convert these funds at a local bank or money exchange.. Whichever way you did it, you wound up losing a hefty percentage of your funds through an assortment of fees or a not so favorable exchange rate. Nowadays, in virtually any place on the globe, there’s usually no shortage of ATMs that are compatible with your bank’s network, making it a cinch to draw cash in the local currency, and you can manage your accounts via the Internet. The electronic age, however, does have its caveats, and it pays to be aware of them.
Preferred Currencies
The US dollar still reigns as the king worldwide, despite having lost an enormous amount of value against most other currencies. It’s easy to exchange dollars just about anywhere, but almost impossible to do so with Canadian or Australian dollars, at least not without being clobbered by an extortionate rate. Euros are also widely accepted and treated with respect, and former European colonies usually favor the currency of the old lording nation, such as English pounds. If you’re going to live abroad, the best kind of account to have outside your host country is in either US dollars or Euros. Anybody can open an account at a US or European bank just using their passport and filling out a declaration of non-residence (in the US, a W8-EN form). In most cases, your home currency will get you a favorable exchange rate upon converting to the US dollar, and also enjoy a fairer rate when you withdraw from that US account from your new country. Opening a US dollar account at a bank in your old home country (unless it is the USA!) isn’t the same thing, since it will not likely come with ATM access unless your bank has a US affiliate. Note also that US banks give you debit cards (aka check cards) with the MasterCard or Visa logo that can used the same way as credit cards, which comes in handy when renting cars abroad. For reasons unbeknownst to me, Canadian banks don’t offer check cards, and as a result, Canadian car rental agencies don’t accept check cards period. European banks often issue Maestro check cards, which is an alternate MasterCard system, or Visa Electron, a Visa alternate, which are widely accepted for debit purchases in Europe, but not so much in North America. Having a mailing address in the same country as the bank will avoid having problems making purchases online, where differing countries will typically cause your card to be rejected. Short of buying property in the US (or wherever), you can either use the address of a friend or relative who lives there, or use a re-mailing service such as UPS Mailbox. In the USA, it’s advisable that you provide your bank with a “explanation of US address” document (Example) even if they don’t request one, to avoid problems with the IRS or other agencies. This simply states that you’re a non-resident alien and the address is just for mail.
…it’s best not to use check or credit cards for purchases abroad
Debit and Credit
Your ordinary bank ATM card won’t work for pin debit transactions in shops outside the country where it was issued, though you can usually use them at any ATM that supports one of the networks listed on the back of your card, typically Plus or Cirrus. Generally speaking, however, it’s best not to use check or credit cards for purchases abroad because there’s a lot of businesses that will, without warning you, tack on a percentage to your bill, say 5%, passing their card merchant costs back to you. Also, many businesses, upon seeing that your card is American, will charge you in dollars rather than the local currency, their own bank applying an exchange rate which heavily favors them and not you. Once again, you won’t be informed of this, and thus my advice is to avoid making purchases with plastic except in the most reputable establishments, or when you have no choice (such as in a car rental situation), and always inquire about extra fees and/or which currency will be used for your foreign card.
Banking Fees
In general, MasterCard and Visa will give you the best exchange rates, be it for debit or credit transactions, but you’re probably going to be nicked for currency exchange fees, or a fee equivalent to a percentage of the transaction’s value, even if it was a withdrawal via an ATM as opposed to a purchase. Bank of America, for example, will charge you 3 percent of the US dollar value of the transaction. Add to that per transaction fees which the foreign bank will charge your bank for using their ATM, and fees will add up to hundreds of dollars a year. One way to save against the fixed per transaction fees is to withdraw the most you can each time you go to the ATM, or escape all such charges by using the local affiliates’ ATMs, or in the case of multinationals like Citibank or HSBC, their own automated tellers.
…converting all your assets to a developing country’s currency is a very bad idea
The Exchange Rate Seesaw
You have to be prepared for wide fluctuations in exchange rates these days. If your source funds are in US dollars, the chart looks like a roller coaster. For me, the Colombian peso has careened up to just over 1600 a dollar all the way down to 2500 per in just the last five years, with big spikes in between. If, for example, my apartment rent was 800,000 COP per month, it would have cost me as little as 320 dollars to as much as 500 during this time! My strategy has therefore been to buy as many pesos as I can whenever it hits 2000 per dollar, although I should warn that converting all your assets to a developing country’s currency is a very bad idea, as such fragile economies have had currency crashes and/or hyperinflation many times in their history, with banks often freezing deposits. In short, your entire fortune could be wiped-out overnight.
Where to Exchange
Never exchange money at an airport: you’ll always get the worst rate possible. Banks use a lower than market rate and also charge a service fee. Reputable commercial money exchanges in your host country will generally offer a rate close or even higher than the official rate, and usually won’t charge you a service fee, and thus are your best option for converting your cash to the local currency. While the black market money changers offer the best rates, you would be participating in a crime and there would be no guarantee that you would get authentic bills in return, if anything at all! Don’t do it!
Moving large sums of money across borders is always a risk, even if it’s legal
Other Alternatives to Cash
Even if almost all countries only require you to declare cash you bring in if it’s worth 10,000 USD or more, carrying 99 or even just 50 one hundred dollar bills on your person or in your carry-on will raise suspicions from the time you cross the security checkpoint at the airport when you board your flight, not to mention that anybody carrying such sums is an immediate target for criminals, who might be tipped-off by airline or airport personel. Instead, you can use money wiring services like Western Union or MoneyGram, which in the past meant somebody had to withdraw your cash in your home country and physically bring it to a local branch, but now you can use their web sites to take money directly out of your account and wire it to yourself at a fraction of the cost of a branch to branch transfer. However, as they tell you in the small print “Western Union also makes money when it changes your dollars into foreign currency“, meaning that the official exchange rate won’t apply. As an example, a 2000 dollar transfer through Western Union from a US bank to Colombia would incur a 14 dollar service fee but with an exchange rate that’s more than 3% lower than the official, I really don’t come out ahead on what it would cost for multiple ATM withdrawals. Alternatively, you can buy travelers’ checks in a number of currencies, such as those offered by American Express, Thomas Cook or Visa. The strong points of travelers checks are that they’re safer to transport, are generally accepted by banks worldwide, and can be bought in large denominations (For Ex: 500 Euros or USD with Amex), though you have to closely examine the real exchange rate they’ll apply as well as any service fees. Moving large sums of money across borders is always a risk, even if it’s legal. I mentioned bank to bank wires earlier, and that’s really the only practical option, though again you should keep transactions under 10,000 USD to avoid undue scrutiny.
Avoiding Losing Your Cash to Thieves
If you’re not willing to part with your cash involuntarily, you need to take the following advice seriously: Avoid money exchanges, banks, money transfer services, and ATMs that aren’t in secure areas; avoid withdrawing large sums; don’t trust the people working in banks or cash related services, because they’re likely poorly paid and might pass information on to crooks for a cut of what they’ll steal from you; use ATMs in malls, preferably enclosed with a lockable door.; don’t hide wads of money at home, deposit it at the local bank asap! If even after taking all precautions, you’re held-up, don’t resist, because in many parts of the world. criminals don’t have much to fear from the law and won’t hesitate to take your money AND your life!
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Plattsburgh: Montreal’s US airport!
May 8th
Plattsburgh is a small American city a few miles from the Canadian border that has long depended on cross-border shoppers from Montreal, the nearest metropolis. After the local air force base closed in 1995, it was converted to a commercial airport, targeting the traveling public from the neighboring country. Although nowhere as convenient as Montreal’s own international airport, trekking the 60 miles (100 km) to Plattsburgh can save you hundreds of dollars.
Flights from Canada are at a premium, while Plattsburgh (PBG) has 3 discount and 1 regular airline serving it: Allegiant, Directair, Spirit, and US Airways Express. Of course, the choice of direct destinations as well as schedules are very limited, but you can connect to other flights if you don’t mind what might be a long wait in between. Most departures out of Plattsburgh are to vacation destinations popular with Montrealers, particularly Florida. In my case, I took Spirit’s lone 1:35 am daily service which took me to its hub in Fort Lauderdale, Florida, where I spent over five hours before departing for Medellin, Colombia. Add to this the time spent waiting in Plattsburgh itself, and the whole affair was exhausting, but I did save lots of money!
A word to the wise: the terminal in Plattsburgh is tiny and has no services except for a few vending machines in the main hall and a food cart that you won’t see until you’re past the security check. Thus, if you arrive earlier than necessary, you might want to while away the hours in one of the local malls. My flight was at an ungodly hour on a Monday, so I found the cinema in the nearby Champlain Mall to be a great way to pass time in an agreeable manner!
Most Canadians will drive down and park at the airport, which costs 5 US dollars a day at the closest lot, or $3 at the lots further out. Alternatively, and this what I did, you can catch a Greyhound or Adirondack Trailways bus from downtown Montreal for just 25 Canadian dollars. These have free WI-Fi on board! Depending which flight you want to catch, you might wind-up spending more time in Plattsburgh than you planned to, and even if you cut it close, you’ll still have to pay for a cab because the bus stop is five miles from the airport. Taxis don’t have meters in Plattsburgh: they charge you by zones crossed. To go from the bus stop to the Champlain Mall is $5, from the mall to the airport is $9, and no idea what it is from the bus stop to the airport but it’s probably also $9. If you do decide to travel down by bus, just remember that the Homeland security people at the border crossing are particularly nasty (I even wrote about it), so make sure your most resilient hat is firmly on!
The Niagara Falls, New York, regional airport, could be construed as Toronto’s US airport for its proximity to the border with Ontario. Many of the same discount airlines fly to this airport, also a former air force base. Haven’t tried this option yet, but as soon as I do, I’ll let you know what transpires!
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All Travelers are Terrorists!
Apr 23rd
Frequent travelers like myself suffer the indignities of cramped airline seats, bedbug infested hotels, insanely expensive airport food, long lines and long waits, but nothing can top the humiliation endured at US border land crossings! Recently I decided to save hundreds of dollars in airfare by taking a Greyhound bus from Montreal, Canada, to catch a plane in Plattsburgh, New York .I wasn’t expecting any problems, but when we arrived at the border, everybody was ordered off the bus into the US customs & immigration office, where a surly bunch of Homeland Security officials awaited us. Welcome to the USA?
The middle aged woman who interrogated me could have been receiving fresh prisoners at a high security jail. or new recruits at a military base: she was unsmiling, unfriendly, impatient and generally unpleasant. When she wasn’t satisfied with one of my answers, she would yell back at me “I didn’t ask you that!”. She reminded me of the old man guarding the bridge in the Monty Python and the Holy Grail movie. One wrong answer and I would be thrown into the void! After a few minutes of this woman barking questions at me, I was finally waived through, but I couldn’t help but feel violated. Of course, as a visitor, your rights are suspended when at the border, and arguing with any official isn’t a good idea, so you have to maintain your composure. The person doing the interview has the absolute power to bar you from entering the United States for five years, on a mere whim, and you have no possibility of appealing his or her decision, as unjust it may seem. You’re not an American citizen, so you have no rights.
I understand that these officers have to protect their great country from miscreants who wish it harm, but as the first Americans one comes into contact with when entering the United States, should they not be a tad more welcoming? After all, tourism brings much needed funds to an economy that’s been shattered by Wall Street excesses. Millions of Canadians visit the United States and spend billions of dollars there each year, and although we’re not Americans, we’re their closest cousins, both culturally and geographically. Should we not be treated as friends? The heightened security since September 11, 2001, might not be the cause for such harsh handling of visitors, as I remember receiving the same kind of rude treatment the last time I traveled by bus at the same border crossing, almost thirty years earlier. Perhaps anyone traveling by bus is deemed scum? Actually, I think the bunker mentality is more a phenomenon encountered at major crossings, such as the aforementioned Plattsburgh area one, Niagara Falls, Buffalo and Detroit, among others. I’ve generally found officers to be more friendly at less traveled crossings, but it would be idiotic to go out of your way just to avoid a few unpleasant moments.
It would appear that border agents are trained to be intimidating and to treat everybody as suspect, to which I can only say: Homeland Security, please lighten-up: we’re nice Canadians!!!
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Canadians: Know this if you take a US plated Car into Canada
Aug 3rd
My routine when traveling back to Canada, as a Canadian living abroad, is to land at a US airport not far from the border, rent a car and cross into the home country. The advantages of doing it this way are multiple: much cheaper car rental rates, cheaper flights, debit check cards can be used, and generally friendlier border agents. It has been smooth sailing in nine years of doing it this way. However, you ask, aren’t Canadians prohibited from driving US plated vehicles into Canada?
Yes, it is true. The main difference is that the restriction applies only to Canadian residents. As a foreign resident, I have the same status as any tourist, even if my passport is Canadian. However, I must state that fact when asked where I live. I have never been asked for any proof of residency, even though I have such documentation, and I have never been asked about the car. My driver’s license is Canadian, but that would have no effect, a Canada customs information person told me, and I was never asked for that either Just saying you live outside of Canada is deemed good enough.
For Canadian residents, even if you were living abroad and are now just returning to reside in Canada, you would have to go through the arduous process of importing the vehicle and have the paperwork in hand at the border. Definitely not something you want to do in the case of a rental, and it might cost you money if it is your own car. While the rules I read are aimed at drivers of US-plated car, it is a safe bet the same law applies to vehicles with plates from other countries as well.
Although I have never had problems driving into Canada, I did run into a potential disaster returning to the United States with a Michigan plated car. I guess I caught a Homeland Security officer who was having a bad day, because as soon as I told him I was a Canadian citizen, but living in Argentina (at the time), he got rude and accused me of being an illegal immigrant in the USA. After some tirades about supposed hordes of Canadians overstaying their welcome, he asked me to produce my return flight reservation, and I stupidly could not find it in the jumble inside my suitcase. Then I remembered I had not printed-out my reservation! The border agent was now victoriously telling me he was going to bar me from entering the country. That is an automatic five-year long denial of entry, not to mention not being able to return the vehicle to the Detroit rental car agency, losing my return air fare, and having to spend a bundle to travel direct to Canada or via other countries than the US. I plead with the man, and after what seemed like an eternity, he finally he tells me: “show me the car’s rental contract”. He glances over it, and says, “Have a nice day”, and I am on my way. Personally, I think my baby blue shirt ticked him off! However the lesson learned is when returning to the United States with your US plated rented car, immediately proffer the rental contract with your passport, and have a printout of your return reservation handy in case they ask for it. I have been doing this ever since that ugly incident and I have never had any further border issues.
So, if you are worried about problems driving across the border, worry not unless you are living in Canada.
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Little Tricks Airlines Play to Steal your Money
Jul 26th
Airlines used to have to be nice to their customers, but that all changed after September 11, 2001, when they became martyrs. No other industry is as coddled by federal governments. They can pretty much do anything they want to you, and if you dare even raise your voice a notch, you could find yourself thrown to the ground and handcuffed by a bunch of burly guys! One of the prime directives of today’s airline companies is to take as much of your money as possible and above all else, never, ever issue a refund! Here are a few of their favorite tricks…
The Voucher trick:
As we mentioned before, airlines don’t like to return your money. Even if a ticket is non-refundable, there are situations where the airline is at fault and you’re owed money. If you can get them to pay that is! Their favorite trick to not return any of your money is to issue vouchers instead. Typically, these are vouchers that you can use against future flights you book with that airline, but it could also be for severely overpriced airport food. The problem with vouchers is that they’re non-transferable and have an expiration date, usually a year from the time it’s printed. If you’re not a frequent traveler or won’t be using that airline within a year, your voucher is worthless.
Getting a refund at the ticketing counter just isn’t going to happen, but if you’re persistent and extremely patient, you could eventually see your funds returned on your credit or debit card (if you used cash to buy your ticket, pray hard!) If it’s a situation where you have to cancel your trip because of a death in the family, or you’ve fallen ill, you’ll pretty much have to accept the vouchers they offer you, since this is a situation where the airline has all the discretion. However, if your flight was canceled or the fare got cheaper since you bought your ticket, most airlines will still resist ferociously before giving you anything else than vouchers, even though you’re fully entitled to a refund.
The amount of money airlines are saving this way surely amounts to millions of dollars a year!
The Baggage Trick:
First the airlines started limiting the weight of the luggage you checked, charging you exorbitant fees for every pound above the limit. Then they just started charging for any luggage you check on domestic flights, and sometimes even on international flights. Of course, they’re airlines, so all the extra fees are non-refundable. Where it crosses the line that never should be crossed is when they impose a charge you for your carry-on luggage. Who on earth is going to travel with no bag at all? Spirit airlines, for example, will hit you for 25 dollars each way for your checked bag, and 30 dollars for your carry-on (both fees are higher if you pay at the airport). Add-up all the extra fees and your real cost of flying the discount airline may actually exceed that of the full service one! Industry insiders worry that as happened with fees for checked bags, other airlines will follow Spirit’s lead and also begin charging for carry-on luggage. US senator Chuck Schumer is fighting to have carry-on fees made illegal. Several major airlines have given assurances that they don’t plan to follow suit.
Note that if you travel abroad and your itinerary includes one or more domestic connections, you’ll avoid paying the baggage fees on the local portion if you purchase the whole trajectory from one airline.
The return ticket trick:
Some airlines still force you to buy a return ticket even if you’re only going one way, simply by making the one way ticket more expensive than the return one. Since you won’t use the return portion of your ticket, it’s a seat they can sell to any latecomer, and even if nobody takes your seat, it’s still saves them fuel and frills like meals, if any. Rack-up tens of thousands of unused return tickets in a given year and it’s a pretty big amount of cash!
Personally, I can’t think of any other business where they can steal your money so consistently and with total impunity!
