Monthly Archives: August 2012

Financial Products for Long-Term Travel

Several years ago I proposed to Mrs. Banh Mi in London. We had been staying with friends of ours and part of my proposal surprise was that we’d be spending the rest of our time in a swanky hotel (we stayed here and it was awesome, btw). It cost a fair bit of money but I figured, “Hey, you only get engaged two or three times in your life, so let’s live it up!” (KIDDING, MRS. BANH MI).

The next month I got my credit card statement and in addition to the hotel charge was a $25 “foreign transaction fee.” WHAT THE HELL? Turns out that the credit card I used to pay for the hotel charges a 3% fee for any transaction outside the United States. (Apparently it costs the bank a hefty chunk of change to send electrons across the Atlantic. For that amount, I hope they’re traveling first class on the Titanic.) I was shocked to learn that, in fact, MOST credit cards charge a fee like this. I made up my mind that I’d not get suckered like that ever again.

Foreign transaction fees on credit cards and ATM withdrawal fees can add up, especially if you’re planning on traveling for a long period of time. This is particularly the case if you’re traveling in countries that are primarily cash economies necessitating more visits to the ATM than usual. So for our trip we wanted to find a credit card that charges no foreign transaction fees and a bank that would provide unlimited reimbursement of all ATM fees.

Our credit card choice: Chase Sapphire Preferred 

This isn’t my card, FYI

The marketing folks at Chase sure know what they’re doing. Once I started to think about credit cards, I started paying attention to TV ads and the Sapphire Preferred card kept coming up again and again — particularly on travel related programs like Around the World in 80 Plates. The card charges no foreign transaction fees and it also provides a sign-up bonus of 40,000 Chase Ultimate Rewards Points, which we can transfer 1:1 for free directly to our United Airlines Mileage Plus accounts. The card gives a point for every dollar of spending and two points for every dollar of travel and dining related spending, which is quite generous compared to other rewards programs. 40k miles will cover a one way ticket from Japan to America at the end of our trip or another long haul flight at some point during our trip (potentially India to South Korea).

The card does have a $95 annual fee (waived for the first year), but the money we’ll save in fees plus the equivalent of a free plane ticket more than makes up for it. The Chase Sapphire Preferred Card also has some other perks like secondary auto insurance, some low-level travel insurance, price protection and other things, but frankly, we plan on purchasing some more inclusive travel insurance which will make the card’s coverage irrelevant. When you call the customer service number on the back of the card, you are connected immediately with a live person. The card is also a looker. Perfectly smooth with your name printed directly on the card rather than pressed in raised letters. The card number is on the back for increased security. It’s also made of metal instead of plastic giving it a substantial feel and heft that other cards don’t have. As ridiculous as it sounds, people have complimented me on the credit card, almost as if it’s a fashion accessory. Pretty cool.

 

Our banking choice: Schwab High Yield Checking

Haven’t talked to Chuck yet, but our financial adviser Nina has been really awesome

As far as my research showed, Schwab is the only bank that will provide unlimited ATM fee reimbursement. I called Bank of America to ask if they offer an account like this and the bank representative said incredulously “NO BANK does that!” Well, Schwab does, bank lady. The account has no fees, no minimums and will reimburse every ATM fee we incur no matter where we are in the world. Many travel bloggers have used this account successfully in the past, including our first rtw travel blogging heroes I Should Log Off.

Surely there must be a catch? Well…there’s a catch. You can only open this account if you ALSO open a Schwab brokerage account that is linked to your checking account. This isn’t a big deal — the brokerage account also has no fees or minimums and you never have to use it. The thing is, Schwab is really more of a financial advising firm and their banking side is secondary to their business. This has pros and cons. Schwab wants you to use the brokerage account and they make some things very easy to do with the brokerage account that they make difficult with the checking account. For example, to link an external bank account with your Schwab brokerage account is easy to do with 3 clicks on-line. To link an external account with your Schwab checking account, you have to fill out a 3 page form and mail it in. These small annoyances are more than made up for by the unbelievably outstanding customer service that Schwab provides, a direct result of the company treating us as financial advising clients rather than small-time bank customers. Upon opening the account, we received several welcome emails from the actual person  who worked with us at the branch office. She provided us with her contact information and we can call her directly with any questions (which I already have and despite currently having only one dollar in the account, we’ve been treated like serious clients). The one time I called the 800 number, I spoke with “David in Phoenix” who not only answered my questions, we also had an interesting chat about the weather (no, really!)

Insert here the official disclaimer here that I’m not a professional financial adviser. Hell, I’m not an amateur financial adviser either. All I’m saying is that these products seem pretty good and I’ve been pleased with them so far. At some point on the road months into our trip, I’ll provide an update as to how well these products are working for us.

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