Sunday, September 20, 2009

Advice for handling money when doing fieldwork abroad

I encountered a number of difficulties related to money during my first field season. I've traveled abroad before, but have never had to personally handle that much money in foreign currency. I hope that my mistakes can help prevent some of my readers from doing the same. Please add your tips, too!

Cash in USD
Traveling with thousands of dollars in cash is not a very safe way to go, but it often makes sense to bring a few hundred dollars in cash to get you through the first few days (though you might need an ATM card if you arrive on a weekend or holiday when the foreign exchanges are closed). Cash also might make sense if you have to pay large fees as soon as you arrive at the airport, especially if they are denominated in USD.

-In my experience, you get a better exchange rate for cash than for ATM withdrawals, and definitely better than traveler's checks.
-Who doesn't take cold, hard, USD?

-If it's lost or stolen, it's gone for good.

-In my experience, $100 and $50 bills get the best exchange rates.
-Be sure that your bills are NEW. Make sure they don't just look new. I had crisp notes from 1996 and every ForEx offered to change them at terrible rates simply because they were pre-2000. Ask the bank to give you the absolute newest bills they have.
-When you withdraw cash from your bank at home, do it at a teller so that you can get large bills and ask for notes that were printed within the last 2 or 3 years.
-If you don't follow the advice above and end up with older notes, you may be able to change your older bills into newer bills at a bank (for a fee) and then take them to a ForEx and get the better rate on the new bills. I did this and it was totally worth it.

Travelers' Checks
I haven't used travelers' checks since about 2004, so I honestly can't give much advice. Find out what recent travelers to your destination say. Many places don't want to change them, or give terrible rates if they do.

-If you lose them, all is not lost. You can recover your money.

-The number of places where you can turn travelers' checks into cash may be limited, especially in remote areas (though you shouldn't count on changing anything in remote areas).
-The exchange rate will probably be worse than cash.

If you are planning to use ATMs as your primary or sole source of funds while you are abroad, I highly recommend that you bring TWO DIFFERENT CARDS for TWO DIFFERENT ACCOUNTS. This is crucial if you are a victim of fraud (see below for elaboration).

You should notify both of your banks that you will be traveling so that your account is not immediately flagged for suspicious activity on your first withdrawal. You really don't want your primary source of cash shut down if you can prevent it.

-You don't have to carry as much cash with you while you travel.
-If it's stolen you should have little (if any) liability for fraudulent use.

-The exchange rate tends to be worse than cash, especially once you consider additional fees that most banks charge.
-ATM fraud is becoming very sophisticated and they may be able to steal your pin and use your card without a camera taping you or your card ever leaving your possession. Be aware.

-Know your PINs before you go. This is super important. Duh.
-Know your daily withdrawal limit. This is important if you need to get out large amounts of cash in a short period of time. You'll have to plan accordingly because it may mean spending more time in a city to get enough money before you head for a remote area. You may want to check with your bank that the limit will be the equivalent in foreign currency (and not a lower limit for some reason).
-Know what your bank charges for foreign transaction fees and other ATM fees. These can add up.
-It may be useful to have one VISA and one Mastercard account. VISA has been more widely accepted in the places I've traveled, though I've always been able to find a Mastercard ATM eventually. Find out the specifics for your destination.

Credit cards (especially in case all else fails)
I think it is a good idea to bring a credit card even if you don't think you'll use it. Be sure to notify them that you're traveling abroad, too. Credit cards are good for cash withdrawals in a pinch if your main source of cash is lost, stolen, or compromised.

-Probably cheaper than getting money wired to you if you're in a bind.

-Few places in developing countries will take credit cards. The places that do likely cater to upmarket tourists.
-The places that will take credit cards may charge an additional fee (for me they added 5% to the amount they billed to my credit card).
-Your bank will most likely charge you foreign transaction fees (but check out Capital One).
-If you do a cash advance, you'll probably start accruing interest immediately rather than getting a grace period like you do with normal charges. This sucks, but is still probably cheaper than wiring money.

Dealing with Fraud
I was a victim of ATM fraud in spite of taking normal precautions to safeguard my card and pin. My card information and pin were lifted from a hacked ATM and used to make over $2000 of withdrawals from another country (not the one I was traveling in). My card never left my possession, and no one was looking over my shoulder. I had to borrow money from several people, sent a $40 fax, and lost my bank account.

My advisor Leo ended up with fraudulent charges on his credit card on another continent and spent hours with a borrowed phone and a taxi driver going all over to city to find an ATM to make an emergency withdrawal from his account before they completely shut it down due to the fraud.

My point is that ATM fraud is widespread, it could happen to you, and it sucks. You really, really don't want it. But if it does happen, here are some things I have learned.

-Even if you have to borrow money or a phone to do it, call your bank yourself to report the fraud. Do it yourself even if it costs you $40. (Unless you have a co-signer on the account who can do it). Don't ask someone else from home to call in as you, even if that would be 1000 times easier.
-If there is someone who will be at home while you're abroad who you can add to the account as a co-signer, this may make it easier to report fraud if you are telecommunicably challenged when you realize your account was compromised.
-If one of your accounts is compromised, be prepared to fall back on your other ATM card or your credit card. Don't count on getting a replacement card until you get home.

Miscellaneous money advice:
Receipt Books
The best suggestion I got before my first scouting trip was to buy a receipt book (something simple like this). If you've got an advance on a grant and need to keep track of all kinds of expenses in a place where receipts aren't common, this is a godsend. The accounting people will accept these receipts as much more legit than scribbles on ripped sheets of paper. This is also highly recommended for keeping track of what you have paid field assistants.

Date book
I bought a daily planner for keeping track of my expenses. On the lines for each day where you normally write assignments or appointments, I wrote items and how much they cost. If I withdrew or exchanged money, I wrote that at the top of the day. I also noted if I didn't have a receipt (NR) or if I had a partial receipt (PR). I marked personal expenses with an asterisk. This simple record keeping made the process of reporting my expenses much easier.

Plan Ahead and Avoid Transaction Fees
Finally, I'd like to point out that Capital One offers ATM cards and credit cards with 0% foreign transaction fees. You can open a High-Yield Money Market account with just $1 and get a fee-free ATM card with a $500 daily limit. If you get a Capital One credit card, you have the option to personalize with your own photo. It was really easy and I put a photo from my field site on it.

If you're thinking about getting a new account or two for handling your money while you're abroad, open it now, even if you aren't leaving for months. You don't want to be worrying whether or not you'll have your pin in time when you're trying to pack. Better do it now rather than later.

Whew. This was a looong post. Please add your suggestions and comments!

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