How to protect your travel funds

Photo: Shawn Allen

ONLINE BANKING makes accessing and managing your cash while traveling a breeze.

There are only a few countries left that don’t have an army of ATMs scattered across the main tourist zones, making it easy to head out the door with a few crisp emergency bills, your trusty ATM/check card, and some backup plastic.

But with such convenience comes risk every time you use your card or log into your account from a public internet terminal.

Online fraud and scams, or even the small chance of being robbed at your ATM or forced to make a large withdrawal, are all things to consider before leaving.

If you’ve got your hard-earned travel cash sitting in a lump sum in your checking or savings account, you’ve still got all your eggs in one easy to empty basket. You should protect yourself and your funds from an accidental or malicious travel disaster.

It’s time to diversify your funds, and make some sweet interest while you’re at it.

Enter the separate, linked account.

I use the emigrant direct American Dream Savings Account, but search around Bankrate.com and you can find several such accounts. You should be able to find one that’s free, easy to set up, and offers a very competitive interest rate.

The Emigrant Direct account is basically just an internet savings account that is only accessible online. Once you set it up you can transfer funds back and forth between your checking or savings account and your new travel account.

You can even set up automatic transfers in or out – great for budgeting while gone or enforcing a savings regimen before leaving.

And with interest rates of around 5%, chances are your travel nest egg will be earning more for you than it would be in that vulnerable checking account.

If you’re saving up for a big trip, this can translate into extra cash for your travels. Or if you’re in the middle of one, the returns can continue coming in well into your adventure.

The best strategy is to keep about two weeks’ budget in your checking account. The only catch is you have to plan ahead – it takes up to 3 days or so for the transfer to complete. But this way you keep your main travel funds, which can be substantial for a long trip, out of the reach of your ATM card or online bank account.

It’s impossible to be entirely wiped out by a con artist or thief, both in person and online.

Even if someone got hold of your ATM card and PIN number, they could only clean out what was in the checking account.

And if that same person somehow managed to access the linked account (because you accessed it in an internet cafe), they couldn’t get at the money; it only goes back and forth between accounts, not out of an ATM.

You simply add one more step between potential thieves and your money. And you earn enough to cover some of those pesky ATM withdrawal fees along the way.

Kevin Allgood and his girlfriend Valerie Marhsall are currently traveling around the world and blogging about it via Big Trip Blog. Their site also features some great vodcasts, travel tips and more.