When Dave and I travel, one of the biggest headaches we face is getting money out of the ATM. Sounds like a first world problem (and I’m sure it is) but one time we withdrew money from our Australian bank account from an American ATM on a regular Australian debit card it cost us $23.70 in bank fees.
Yep, that’s right, $23.70.
That is a lot of money when you’re trying to travel on a budget. In fact, that is almost a quarter of our daily budget.
Using money overseas
It has taken us a long time to sort out the best way to use our money overseas. One useful option is offshore banking.
Because what complicates things is that we have a PayPal account, an Australian bank account and a British bank account.
This means that we are forever converting currencies into US dollars whenever we think we are possibly getting the best rate. It can turn into a headache.
Add to this the fact that in three weeks time we will no longer be in the US and will be using a different currency. But offshore banking helps with this.
No, it’s not a James Bond cloak-and-dagger scheme. It is perfectly legal and can help you a lot in the long run.
An offshore bank is located just outside of your home country where there is often a lower tax rate and financial advantages including easy access to deposits, protection against financial instability and low or no tax.
Think back to 9/11. The stock markets crashed and the dollar fell. If you were an American travelling the world at this time, this could’ve had a negative effect on your travel savings. But if you had an offshore bank account, your funds would’ve been protected and you wouldn’t have had to worry.
The great thing about an offshore bank account is that it allows you to have funds in other currencies meaning you can protect yourself if the value of your country’s currency drops.
Offshore banks will most likely issue you with ATM cards which means you can easily access your money in the currency you need without any additional fees (unless the bank you’re withdrawing from charges fees – they have no power over that).
Say goodbye to more $23.70 bank charges!
Protecting your money
Currency around the world fluctuates every day.
Just look at the US. If the country eventually decides to default on its debt obligations, this could cause the dollar to crash once again – causing a lot of strife for you if you’re an American travelling.
So think of the options to protect yourself in the chance of a worst case scenario… an offshore bank account may be the way to go.