Sunday, May 10, 2015

Travel hacking, or the art of squeezing your travel dollar further

Just because I have a tertiary degree and work in a profession that earns a high income doesn't mean I travel in a luxurious fashion. I grew up in a family that didn't have any spare cash, so our holidays were usually caravanning or house swapping, and then as a teenager into rock climbing, caving and bushwalking I relished camping in the great outdoors. Seriously, I don't think someone who enjoys bush camping can ever see the attraction in a sterile hotel room, no matter how swanky.

On the other hand, getting a person outside their comfort zone to experience a night out in the bush, can be either terrifying or life changing. I'm glad this isn't an issue for me, because it hugely broadens my options when travelling.

Accommodation is one of the largest expenses when travelling. I'd estimate that anything from 30-50% of a travel budget will be spent on somewhere to sleep each night. But if you have an attitude like mine, where a bed is a bed is a bed, then as long as it's clean and safe, it'll do. No I don't need aircon, an ensuite bathroom, a TV, internet, a pool, my own room etc etc. If the price is good I'll take those options, and just sometimes I'll have a little splurge, but I don't need those things when I travel.

Sometimes I think it's because I have created my little paradise here in Drummonds, where my needs when it comes to luxury have all been met. I have a spa in my bathroom and a great big blue ocean just across the road, so maybe I don't seek those things when I travel. But I also think it's because for me, travel is about the experiences I have outside my bedroom, not whether my bedroom that night is in a hotel, guesthouse, hostel dormitory or tent. It just doesn't matter to me. So why spend more than I need to?

Cheap and cheerful is usually fairly easy to come by in the developing world. In the west your cheap options (besides camping) are hostels, backpackers, airbnb and couch surfing, all of which you access using the internet. The opposite is true for the developing world: if it's on the internet it will be at least midrange in pricing. Good old fashioned research and walking around looking finds you the cheaper places. Using a guidebook usually limits you if you only stick to their recommendations, and you are also likely to be subject to the Lonely Planet price hike that occurs when a place gets featured in one of their publications.

Everybody travels with electronic equipment and wants to be connected 24/7. For me, that means purchasing local SIM cards with access to wireless internet, and not relying on my accommodation having WiFi. Being a voracious reader of travel blogs I see this come up again and again, where a blogger is searching left right and centre for a hotel with WiFi and ends up paying a lot more for their accommodation as a result. WiFi is becoming ubiquitous even in much of the developing world, but until it actually is, I prefer to have access already covered, and save my pennies staying somewhere cheaper. I'm also old enough to remember a time when the internet didn't exist (shock horror!!) so I know I can survive without access to regular Facebook updates!! But it is fun posting updates when you're camped on top of a mountain!

As an example, last year I spent 2 months in Java, Indonesia. I couch surfed maybe 10-11 nights, camped 2 nights, and the rest of the time stayed in guesthouses and hotels. I spent $450 on accommodation, that's an average of $7.50 a night. I also purchased a SIM and phone/internet credits for the time I was there. This cost me $32.30 for 2 months. Typical cost for accommodation that has WiFi in Indonesia is likely to be between $10-30 per night.

The next big cost when travelling overseas is foreign currency and ATM transaction fees. These really add up quickly especially when foreign ATMs have withdrawal restrictions that are only a few hundred dollars yet your bank slugs you a hefty $3-5 each time to use your card in a machine overseas. Then they charge 3-5% in foreign transaction fees. For instance, when I had my minor cash crisis in February this year in Japan, I withdrew $882 in Japanese Yen using my usual card from an Australian bank (in my case CBA). I got slogged $36.48 in fees! In Java in 2014 when I failed to top up my overseas card, I had to use my CBA card for a withdrawal. I withdrew $187 and was charged $10.61 for the privilege!

So I now have cards I use overseas. Cards that have no fees, no frequent flyer or awards points systems, but also don't cost me an arm and a leg to withdraw money.

Each country has its own banking system, so each nationality has to find their own travel hacking solutions, and for Australians it's the Citibank Visa Debit Card, and the 28 Degrees MasterCard.

The Citibank card is a Debit Card which carries the Visa brand, meaning you can use it most anywhere for purchases, using EFTPOS or an ATM. It isn't a credit card. This means you need to deposit cash into the account before you can use it. You need to allow 2 full working days between when you transfer money electronically into the account and when you expect to withdraw that money. I discovered that on that trip in Java in 2014. In general it will only take 24 hours (weekends do not count BTW and why don't computers work on weekends??) but 48 hours is a better safety net. Once that money is in the account, you can take your wee card, pop it in any ATM with a Visa sign on it, and withdraw money with absolutely no fees at all. Yes there is a small foreign transaction fee but as the foreign exchange rates offered by Visa are extremely competitive, you are not losing out on any other way of purchasing foreign cash.

You need to keep using the card to keep it active. I found this out when I rang Citibank late last year about my pending trip to Japan to discover that my card had been deactivated as I had not done any transactions on it for more than 3 months. For a card that may not be used at all for months at a time whilst back home, this is pretty important to know, or else it could be a bit of a shock to arrive in a foreign country and not be able to access your cash. Yes this happened to me in February, but not for that reason. Now I have set up a recurring payment of $1 which gets transferred electronically into my Citibank account on the last day of every month. This keeps the account active.

Now what about using a credit card overseas? Personally, I'm wary of using credit cards in the developing world, particularly after my visa card was used fraudulently in 2008. But I do use them regularly for purchasing airline tickets, for more expensive purchases like new skis or ski lessons and if I ever stayed in a posh hotel.

I own a lot of credit cards, and this year I plan to reduce them down to just those I need. First I have an AMEX card, which I managed to get fee free through an affiliation with one of the professional bodies I belong to. Old boys club privileges! This is linked to my Qantas frequent flyer account, so I get one point for each dollar I spend. Any purchase that can be made on Amex, does. Food, fuel, Bunnings, Strata contributions, all racking up those frequent flyer points.

I also own an ANZ Visa (which isn't really offering me any points benefits), and a CBA MasterCard, which comes fee free whilst I maintain my current loans with them. Once I sell Marrickville and pay off my debt I'll be rethinking my entire relationship with CBA, but back in 2008 when my Visa card got taken down by a fraudster, that MasterCard got me my flight back home. Otherwise, this card doesn't get used. It's my back up credit card in case of foul play.

New to my armoury is a 28 degrees MasterCard. I only recently heard about this card so have applied for one online and will receive mine some time next week. Provided by GE Money, it's a fee free credit card with rather high interest rates but no foreign transaction fees. It will become my preferred card on Paypal and what I'll use overseas when they won't take Amex. It charges 3% for cash advances (even if it's your money you've loaded onto the card), so don't ever be tempted to use it for anything but credit.

The absolute rule with credit cards is making them work for you. I try to wangle as many points as possible out of my cards, I compare benefits versus fees, and I always pay off the debt in full every month. Failure to do so isn't travel hacking, its just plain foolish!!

I'm only just getting into the strange world of points hacking, which, for the uninitiated, is the art of acquiring lots of frequent flyer points for almost nothing. This has been commonplace for Americans for some time due to very generous sign up offers from various credit cards. Recently this phenomenon has arrived in Australia. I might do another post on points hacking once I've done a tad more research.

So, my travel hacking tips for today:
1. don't be too precious about your accommodation, why spend half your travel money on a bed?
2. don't tie Internet access to accommodation choices, get independent access or do without.
3. don't pay exorbitant international ATM and foreign transaction fees, get the right cards before you go.

You're welcome :)


  1. Last time I travelled, I stayed at a lot of AirBnbs and saved so much money!
    Tegan xx - Permanent Procrastination

    1. Hi Tegan, I haven't done AirBnb yet, my one attempt in the past I didn't get a reply. Lots of my friends use it and also say positive things about it. Thanks for visiting.

  2. Great budget friendly tips, Naomi. We use AirBnB a lot when traveling and apart from the money saving side of it (which is great), we've found it a great way to meet locals and get to know a different side to the town we're visiting.

    Re: travel cards, we use the Comm Bank travel card which also allows you to deposit money into it and works the same as a regular debit MasterCard. What we like about it is that you can add money in various currencies, so you're not paying for expensive currency exchange fees overseas. I do wish ATM fees didn't cost so much though!

    1. Hi Radhika, thanks. another vote for AirBnb! I think AirBnb is a bit more budget friendly for couples than singles, hence why I've not used it much myself.
      I've looked at the travel cards and I'm not impressed with the exchange rates they offer, or the expensive currency exchange fees you pay when you purchase the currency onto your card before you leave. I'm also not personally a fan of purchasing a fixed amount of foreign currency unless I'm absolutely sure I'm going to spend it. The beauty of the Citibank debit card system is I don't have to plan ahead, I can have my savings earning interest elsewhere and only need to transfer money into the Citibank account when the balance drops.

    2. I also noticed the travel cards only have a fixed amount of currencies. No Indonesian Rupiahs for instance. you might be interested in this Choice article too