Day 21: Step #9, Take Your Administrative Life Virtual

How To Organize Your Credit Card Accounts In Advance Of Your Move… And Why You Might Want A PayPal Account, As Well

Dear Student,

Two other types of accounts you need to consider before making your move overseas are your credit card accounts and PayPal.

You probably already have at least one credit card, but, if you don’t have at least two, you’ll want to get another card (or two) before you move overseas…for all the reasons I mentioned in your Day 18 lesson.

As I explained in that discussion, living and moving around overseas, your debit and credit cards will likely get cut off from time to time. It is generally inconvenient and sometimes impossible to call the credit card company at the point of sale in another country to try to have your card reactivated. I was in the middle of nowhere Argentina once when my main business credit card was declined by my hotel upon check-out. The hotel didn’t take American Express. In fact, they accepted only Visa (not MasterCard either), and my Visa card had been cut off the day before, meaning I had no viable option in my wallet at the time. Fortunately, the hotel had wireless internet in the lobby (they didn’t take MasterCard, but they had wireless internet in the lobby… go figure), and I was able to call the Visa people using Skype (we’ll discuss communications later in the program) and get them to authorize the charge.

It’s rare these days to find a business that doesn’t accept both Visa and MasterCard, but it’s not uncommon at all for businesses overseas not to accept American Express. Maybe you don’t want to leave home without your American Express (or so the AmEx ads would have you believe)… but you don’t want an American Express to be the only credit card in your wallet either, certainly not once you leave U.S. shores behind. Ideally you also want at least one Visa and one MasterCard in your stable of credit cards.

Typically, local banks and credit unions offer the best credit card deals and rates. You likely receive solicitations from banks and credit unions in your area in the mail. Start paying attention.

You can also go here to find mostly national bank and credit card companies you might want to contact regarding an application.

I’m not going to try to educate you on credit card interest rates or fees in general. However, I do want to point out one credit card fee that you may not be aware of but that you’ll become very familiar with when you make your move overseas: the foreign transaction fee. Credit card companies have begun charging this every time a card is used overseas. It’s explained as a fee to cover the currency exchange, but U.S. credit card companies impose this fee even for transactions in countries that use the U.S. dollar, including, for example, Panama. And they charge it even if you accept the charge at the point of sale in U.S. dollars rather than in the local currency (many places in Europe offer this option). You’re likely to get a better exchange rate from your credit card company than from the merchant’s bank, and you’re going to be charged the foreign transaction fee anyway, so, when given the choice, I opt for the charge to be processed in the local currency.

The foreign transaction fee is typically 3%. American Express charges 2.7% on their Green and Gold cards. They don’t charge the fee on their Platinum cards. Capital One is the only credit card issuer I’m aware of that doesn’t charge a foreign transaction fee at all, though there are a variety of travel rewards cards that offer this perk (Bank of America offers one; many airlines offer mileage/frequent flyer program cards also fit the bill). A few other cards have eliminated the fee on their preferred member cards, including a Chase Sapphire card. This site has a list of 20+ cards (mostly Capital One cards) that don’t charge the fee.

Take a look here at an article that provides more information on these fees and that includes a chart of the fees charged by different cards issuers.

The point is that, depending on which credit cards and how many are in your wallet right now, you may want to rework your credit card portfolio before your big move.

Additionally, you want to make sure you have online access to all of your credit cards so you can check transactions, balances, and payment due dates easily from anywhere. You can pay your credit card bills online using the bill-pay service attached to your bank account, but most credit card sites also offer a reverse system whereby you can initiate a payment from the credit card site. I prefer to do all payments from the bank account site to keep everything in one place and easier to reference.

However, the online access to your credit cards is important to allow you to monitor transactions. I check all of our credit card accounts online at least once a week. If you see a charge that isn’t yours, you can contact the credit card company right away to raise a red flag.

In addition to getting your credit card infrastructure in order, I also suggest that you consider setting up a PayPal account if you don’t already have one. Many people use PayPal to order things online (on Ebay, for example), but I’ve found that PayPal can also be a handy and efficient option for making other kinds of payments, a great alternative to writing a check or using a credit card. If you have a friend also living overseas, for example, and you need to send him money or maybe he needs to send you money, if he has PayPal as well, you can simply transfer funds from your account to his (or vice versa). We’ve set up this system with a French PayPal account to move money more efficiently to our property manager in Paris for repairs and maintenance of our apartment there.

A PayPal account is linked to a credit card or a bank account. If it’s linked to a bank account you can transfer funds between the PayPal account and the bank account at no cost. Note that, in this case, it will take at least 24 hours for the transfer to occur and might take up to a couple of days depending on the situation. The transfer from one PayPal account to another is instantaneous.

The other advantage of a PayPal account is that you can get a debit card to access the account. This could be your second debit card if you don’t want to deal with another bank account. You could keep some emergency funds in the PayPal account, to access using your PayPal debit card in the event your bank ATM card doesn’t work for some reason.