I’m currently living in Hong Kong, and have been here for over a year. The transition here, financially was somewhat challenging, but being that I had spent some time looking to my financial-related options before I came, it really wasn’t that big of a deal. There are three things that really matter when you move internationally: (1) Banking Locally, (2) Getting Local Currency, and (3) Using Credit. In this article, I’ll discuss all three aspects, but really focus on Using Credit, and specifically what I’ve discovered through my use of Credit Cards here in Hong Kong, as well as throughout the rest of South East Asia.

Banking Locally - Banking is one of the basic financial tools one needs to survive. There are a ton of things that you simply can’t do easily unless you have a local bank. Some simple things as cashing a check, paying bills, and getting paid all require a bank account. However, if you’re only traveling internationally, banking really isn’t a priority. I’ll go into more detail on my personal experiences and recommendations in banking in another article, as I want to focus on Using Credit in this one.

Getting Local Currency - Most countries are cash based societies. Without the ability to get cash cheap (read: lowest fees and best rates), it will make traveling much less enjoyable, and both a headache and expensive. Country by country, and related to the current currency exchange rates, the best place to get local currency may change. The best thing to have is Information. Know what the market rate for exchange rates are, and what your bank offers before heading out to your international travels. I’ll go into details about forex and currency exchange in a later article.

Using Credit - With the world as globalized as it currently is, it is actually quite convenient to travel internationally. Most hotels, restaurants, and bars accept most forms of credit that you might have in your wallet (Visa, Mastercard, American Express). However, the cost of using the cards you have vary greatly. There are two things that you may not know about using your cards internationally: (1) There may be fees, and (2) They may be big.

You probably have heard of some websites that focus on traveling, such as Flyertalk. These are great websites, but most people don’t have the time or energy to wade through thousands of posts to find what they’re looking for. I’ll summarize what the current best practices are for Credit Cards that someone there might suggest, and give my own opinion based on personal experiences.

Simply put, most credit cards charge between 1% and 3% on all international purchases, on top of exchange rates that may not be the best market rates. This can add up to an additional 5% for all the transactions you make on a trip. The following is a list of commonly held credit cards, and the amount of fees on a trip where you spend $2000 on your credit card, and $10,000.

In addition to the fees listed in the table above, as I have mentioned, there may be an exchange rate that is not favorable to you. When traveling internationally, try to be as well informed as you can be. Know that exchange rate that you’ll be charged, the fee associated with international purchases, and compare that to the cost of paying cash. If you can find a currency exchange that is no-fee and also has a good exchange rate for cash, that may be your best option!

Action Item: Sign up for a CapitalOne card.

Ease of Action: 1 hour to setup the account online. You can find out immediately if you’ve been accepted, as well as your credit limit. It’ll take a few more weeks to receive your card. Make a note of your credit limit - if it’s less than you think you’ll spend, make sure to call them up and explain your situation (traveling abroad, expect to make a bunch of purchases). As long as you’re reasonable, they’ll more than likely bump up your credit limit to a higher amount.

Amount Saved:
On a $2000 trip - $60
On a $10,000 trip - $300
Living Internationally, spending $40,000 per year on a credit card - $1,200

Summary:
Excellent Deal!
This is probably one of the best things you can do for yourself if you plan on traveling internationally in the near future. Apply for a CapitalOne card, as it is the most widely accepted card that doesn’t have any other requirements. If you’re like me, and spend quite a bit in a variety of countries, you’ll be saving thousands of dollars a year in fees and foreign exchange charges!

Best Financial Deals will try to rate all the deals that we find on a 1-5 star system. What will affect the ratings? The amount saved will score the most, but other considerations will be how easy it is to do, as well as the reputation of the company offering the financial deal.

SCALE
Excellent Deal!
Do not hesitate, this is as good as it gets, and it’s easy to do too!

Great Deal!
Pretty good one. More than worth the effort.

Good Deal
If you have the time and don’t mind putting in the effort.

OK Deal
Only if you really have nothing better to do. May be more hassle than it’s worth.

Poor Deal
Gosh, did we really spend our time thinking about this one?

Rates on 30-year mortgages rise to 6.45 percent

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) — Rates on 30-year mortgages rose again this week, climbing to the highest level in more than nine months, reflecting more concerns about how the Federal Reserve will respond to higher inflation pressures. more…

World now has 10 million millionaires, report says
09:24 AM CDT on Wednesday, June 25, 2008

Associated Press NEW YORK – Add an extra zero to the ranks of the millionaires club. The number of people around the world with at least $1 million in assets passed 10 million for the first time last year, according to a new report. And their bank accounts are growing even faster. more…

An interesting article, but the most interesting part is this:

Cash deposits and fixed-income securities accounted for 44 percent of the assets of the world’s millionaires, up from 35 percent in 2006.

What do the world’s millionaires know that we don’t? Perhaps they’re smarter and have diversified out of securities (stocks, options), or perhaps the portion of the portfolio made up of those securities have just declined in value! At any rate, seems like the world’s rich are heavily invested in savings, fixed-income, and possibly CDs at the moment. Maybe you should be too!

Current savings rates for the most widely held financial institutions:

Action Item: Move that $5000 that you have sitting your checking account earning 0% to an HSBC Direct Online Savings account.

Ease of Action: 1 hour to setup the account online. It may take a few additional days to verify the electronic ACH before the funds can be transferred to your new account.

Amount Saved:
- Monthly - $14.58
- Annually - $175.00

Summary:
Good Deal
Easy to do, but being that savings rates throughout the country are relatively low, the $175 earned on a $5000 deposit annually may not really motivate most folks to act.  However, if you have $100,000 sitting in a 0% checking account, this balloons up to $3500 annually, so it really does matter on your on personal situation.