NerdWallet's Smart Money Podcast - What to Know About Managing Money Before Traveling or Living Abroad

Episode Date: January 13, 2025

Learn actionable strategies to tackle credit card debt and ways to manage your money while traveling or living abroad. How can you manage your money while living abroad? What are the best strategies to pay off credit card debt? Hosts Sean Pyles and Sara Rathner discuss managing finances while living outside the US and practical tips for tackling credit card debt to help you make smarter financial decisions. They begin with a discussion of credit card debt trends in the US, with tips on understanding why debt is rising, exploring repayment strategies, and avoiding common pitfalls like high interest rates and emotional overspending. Then, host Elizabeth Ayoola joins Sara to discuss some of the challenges of managing money abroad. They’re joined by NerdWallet writer Craig Joseph and producer Tess Vigeland, who share their experiences living abroad and the things they wish they’d known before moving to another country. They discuss navigating international banking fees, using tools like Wise and multi-currency accounts, and finding credit cards and banks that suit expat needs. They also cover what to keep in mind when filing taxes while living overseas, ensuring you’re prepared for IRS requirements and making the most of your money while enjoying life abroad. Our Credit Card Nerds put in the research to break down the best no balance transfer fee credit cards, including what each card offers and the fine print that accompanies each one: https://www.nerdwallet.com/article/credit-cards/best-no-balance-transfer-fee-credit-cards  Compare credit cards with NerdWallet’s free credit card comparison tool: https://www.nerdwallet.com/compare/credit-cards  In their conversation, the Nerds discuss: managing money abroad, how to transfer money abroad, avoiding international banking fees, filing taxes abroad, paying off credit card debt, debt repayment strategies, avoiding foreign transaction fees, Wise multi-currency accounts, balance transfer credit cards, international banking tips, expat financial planning, reducing debt stress, paying off high interest credit card debt, emotional side of debt, choosing the best credit card for travel, US expat finances, foreign bank accounts, transferring money internationally, managing expat taxes, multi-currency accounts, credit card debt trends, saving on bank fees, ATM reimbursement tips, tax planning for expats, how to open a bank account abroad, budgeting for living overseas, avoiding wire transfer fees, building credit abroad, expat financial mistakes, international money transfer apps, and international financial tools. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Sarah, have you ever lived in another country? I haven't, but maybe I'll retire to whatever the hot American expat destination will be in the 2050s. Well, okay, maybe hot's the wrong word, given, you know, climate change. Yeah, by then hot might mean Vancouver, British Columbia. Well, in this episode, we'll help folks understand how to manage their money while living outside the U.S. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles.

And I'm Sarah Rathner. In this episode, I'm joined by our co-host Elizabeth Iola to answer one of your money questions about managing your money while moving and living abroad. But first, we will chat about something that's a little closer to home, as in the debt that U.S. households carry. NerdWallet's annual Household Credit Card Debt Study just published, and it has some interesting findings that can help us understand the state of credit card debt in the U.S., including why folks have it, how they can pay it off, and how our emotions complicate the process. Sarah, I know you've been digging into this study. What's the top line takeaway? Debt totals are up compared to last year, but not by a lot. All told, debt in general is up just under 4%. Mortgages and auto loans are both up by more than 3%, while credit card debt

is up just 1.5%. So credit card debt is up just slightly year over year. What's driving the increase in debt right now? We know expenses like food and utilities have gotten more costly for folks. Are people using credit cards to cover necessities? They are. And that's in part because over the past five years, incomes just haven't kept up with the costs of those necessities like food, housing and transportation. And we found that nearly half of Americans who currently have revolving credit card debt say that paying for those necessities are what contributed to those balances. And let's talk about how expensive credit card debt is right now. What does the study tell us about how much people are paying in interest to carry this debt?

According to the Federal Reserve, the average credit card interest rate is just over 23% as of August 2024. And yes, that is a couple months ago, but that is the most recent data available. So for somebody carrying the average amount of credit card debt, which is about $10,500, making just the minimum payments means that that debt actually costs close to $29,000, which is nearly triple the amount owed. Ouch. And that makes it pretty easy to see how it can be hard to get out of credit card debt. And with that in mind, let's talk about a few ways to pay it off. The way I see it, there are three main routes. First, you could use a strategy to pay it off

gradually, like the debt snowball or avalanche method. Next is deploying some kind of financial product, like a balance transfer credit card. And finally, you could tap professional help like a nonprofit credit counseling agency or maybe even bankruptcy. Sarah, can you talk us through a couple of these options? Let's start with debt repayment strategies. And we've talked about them on the podcast before, but a little repetition is a good thing. So basically, you make a list prioritizing your debts, and then you make the minimum payment on every debt on your list. But then you put any extra money you have in your budget toward the debt at the top. And then you make the minimum payment on every debt on your list. But then you put any extra money you have in your budget toward the debt at the top. And once you pay that debt off, you move on to the second item on the list.

And so with Debt Avalanche, you prioritize debts from highest to lowest interest rate. And with Debt Snowball, you list your debts from smallest to largest amounts owed. But this was really interesting. The survey revealed another way that people prioritize debt repayment. What's that? By how much stress each kind of debt creates for you. So here's an example. Let's say you have a debt on two different credit cards, and each charge around 25% interest. And you also borrow to some of money from a family member interest free. So mathematically speaking,

you probably want to be more aggressive with the credit card debt. But your relative was making some pretty passive-aggressive comments over the holidays about the money you owe them. So you pay that debt down first to avoid any future awkward encounters. That is super interesting, and it speaks to something fundamental about how we manage our money, which is to say that we tend to manage our money emotionally. We humans are not always rational beings, so no matter how we pay off our debt, we need to consider the emotional side of things as well as the nuts and bolts number side. Sarah, what about other ways to pay off debt, perhaps without some side eye from people you know in real life? Well, that's where things like balance transfer credit cards can come in handy. If you qualify for them, they give you a long time, 12 months

or more depending on the card, to pay down debt at 0% interest. And NerdWallet has a free article you could read that lists the best no balance transfer fee credit cards. Our credit card nerds put in the research and broke down exactly what each card offers and the fine print along with each one. That's a good place to start if you're looking to compare your options. So we'll include a link in today's show notes. Another potential option besides balance transfer cards are personal loans. And if you qualify for an interest rate that's lower than what your credit cards are charging you, that could help save you money on interest.

And of course, if you feel like you're in over your head, it could be a good time to work with a financial professional or nonprofit credit counseling agency. They can really be a huge help. Sometimes you need that third party to come in and help you see the full view of your debt and help you make a plan going forward. A lot of times folks think that they have to manage their debt on their own because they got into it on their own. And that feeds back into a cycle of shame that is often associated with having debt. So if you need help, please tap it. I want to go back to the emotional side of debt that this report explores. Two main things stood out to me. One is that people with credit card debt reported that they

would pay it off once they earned more money. And this was true for those who were earning over $100,000 a year as well as those who earned less. Another is that for those who did carry credit card debt, 27% said that it was their number one stressor. So, a significant portion of those with this debt are feeling bad about it, but they will put off resolving it until they earn more. Now, I don't want to downplay how hard it can be to get out of debt, and smart money listeners know that we don't shame people for having debt, but putting on my CFP professional hat here, which I guess is glued to my head at this point, it strikes me that paying off this high interest credit card debt should be an urgent priority and shouldn't be put off until some nebulous future date when you are bringing in more money.

What do you think, Sarah? I think it could be hard to imagine paying off a lot of credit card debt when there are other things competing for your money every day. And this can happen to you at any income level. You have bills to pay, you have things to save up for. So your money is spoken for. And it's easier to think that once you make more money, you'll have something available to put towards your debt, but that day might not arrive for a while. Or when you do finally get a raise or a new job with higher salary, you won't actually use that extra money for debt payments, because it'll just be used for something else. Right? Like so many goals in life, maybe making a career change, starting a new exercise

regimen, having kids, there is rarely a perfect time to get started. If it's a goal, make it a priority and make it happen. In the case of paying off high interest credit card debt, paying it off can allow you to make so many other goals happen, like saving for retirement or buying a house. Well said, Sean. And the thing with credit cards is they can be a very useful tool, but they can also get you in a lot of debt. And that debt can get in the way of you achieving all the other things you want to do in your life. A lot of people are holding off on things they really want to do because of that debt. And so if this is you this year, if you are facing this debt and and there are other things you want to do, and you just feel like you can't, today is a

great day to sit down and list out your debts and really begin to plot out how you want to make a change this year. And we're rooting for you. And we have plenty of great resources on the NerdWallet website that can help you do exactly that. Exactly. Switching gears, if you've been dreaming about living in another country, we're about to give you the tools to bring your dreams to life, assuming you've maybe paid off your credit card debt first, so you can do this. And we also want to remind you, like so many things, you need to make a plan for how you're going to manage your money when you're there, because it's a little bit more complicated than you might think. And I certainly learned a lot listening to the stories that we're about to hear. Yeah. But before we get into that,

we are at one of my favorite parts of the show, the part where we ask you to take a second and think about where you need some guidance with your money. Maybe you're feeling a little lost. Everybody else around you is making these New Year's resolutions and you have no idea where to begin. And you don't know what your financial goals should be. And that's okay.

You're not alone. If you're trying to break yourself out of a bad financial habit, you just can't seem to do it. You've got money questions, we nerds are here to help. So leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. And a reminder that one of our goals

on Smart Money this year is to talk with more of you live on the podcast to help you with your money questions. So if you wanna hang out with Sarah and me for a bit and get some nerdy wisdom, let us know. One more time, leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. All right, let's get to this episode's money question segment where I'm joined by our co-host Elizabeth Iola. That's up next. Stay with us. We're back and answering your real-world questions to help you make smarter decisions about your money. This episode's question comes from a listener's text message.

Here it is. Good morning, money nerds. First, I really enjoy your podcast. My wife and I are thinking of moving to Spain for a couple of years. I will be working remote. So living there, but getting paid from a U.S. company in dollars. What's the best way to transfer money over to a Spain bank account and not get hit with big fees?

Maybe some banks both countries have in common? Apps? And any credit cards you recommend while living there? To help us answer the listener's question on this episode of the podcast, Sarah and I are having a roundtable discussion with some folks who have experience living abroad. We're joined by NerdWallet writer, Craig Joseph, and our producer, Tess Vigland. Craig typically writes about credit cards and travel, but he's here to share his experience managing his financing abroad while living in New Zealand. Tess spent three years living in Southeast Asia, very fancy. And I'm going to talk about my experience living in London and working

in the US. Welcome back to Smart Money, Craig, and welcome to this side of the mic, Tess. Oh, delighted, I'm sure. Is this thing on? You sound great. Hey, gang, glad to be back. All right. Our listener and their partner are planning to move to Spain for a few years. Can you all share a bit about your time living abroad and how you prepared for your move? Did you have a formal process in place or did it just kind of happen? Craig, let's start with you. So in my previous life as a geologist, I wrote a proposal that was funded and sent me to work

with another geologist at the University of Auckland in New Zealand. If I remember correctly, I had about three months to prepare for the trip, which included everything from figuring out how to rent an apartment from abroad to how to safely move a few hundred pounds of rocks around the globe. And as it turns out, airport security in some countries consider rocks to be a weapon and don't let you carry them on a plane, especially in the quantities I had. So that's one of the many things I wish I would have known before moving abroad. Wow. Wow. What a story.

And I learned something new. Don't carry rocks. My story is a little unique or confusing. Stay with me. I was born in London, but I moved to South Florida when I was seven. Then when I was 16, I moved back to London. But in my early 30s, I decided I wanted to move back to the US, but I needed to get myself back into the system as an adult. I came over and I opened

a bank account as well as took out a secured credit card to help build my credit. And then shortly after I got a freelance writing gig in the US and I had it paid into my US bank account. About a year or two later, I moved back to Florida. All right, Tess, how about you? What's your story? In late 2015, I decided that I had had enough of normal life. So I packed up my household, put everything in storage and got a one-way ticket to Saigon, Vietnam. Wasn't sure when I returned, maybe after a few months or so, went off with one suitcase, a backpack and a photography bag. And then, you guys, I forgot to come home for almost three years. I lived in Saigon for about four months, then moved to Bangkok, Thailand. Ended up living there for two and a half years and using it as a

hub to travel to and spend time in 20 countries throughout Asia, plus the Middle East and Australia. Okay, well, I can't say I've ever left the country and then forgotten to come home. Yes. I mean, there are times that't say I've ever left the country and then forgotten to come home. I mean, there are times that I wish I did. So to speak. That's awesome. I think that's something everybody should do in their life, I suppose. I agree. One thing our listeners concerned about is banking. How did you all manage your bank accounts abroad? Did you keep using the same bank that you had in the States? Or did you do something different to sort all that out? My story is a tale of I wish I knew then what I know now. So I'll preface this by saying I wasn't much of a personal finance nerd back then. I did keep my credit union checking account to pay for

recurring expenses at home, like my storage unit and car payment. And my plan was also to use that debit card abroad. Confirmed this would work with the credit union, but I'll sheepishly admit that I made two big mistakes. The first mistake was not asking about fees or understanding that I'd incur foreign transaction fees each time I used my debit card abroad. And the second was not having an account that reimbursed ATM fees. After a couple of weeks of paying 3% in fees each time I wanted to access my money, I looked into opening a checking account in New Zealand. But even then, I was looking at significant fees for transferring money from the U.S. to that account. So if there's any piece of advice I can give to folks moving out of the country, it's to figure out how to

avoid fees when banking abroad. Two really good points. I personally maintained my account with Bank of America while I was in London. And as mentioned, I had my freelance pay deposited into that account. So this was helpful to avoid any minimum balance and overdraft fees and also help with credit card payments. I also worked in the UK freelancing. So luckily, I used that money for daily expenses and stacked up the money I was making in the US. But with that in mind, I would say it's important to think about the type of fees that you may

be charged for not keeping a minimum balance. You want to think about overdraft fees in case your accounting goes wonky and also like mentioned foreign transaction fees as well. Yeah, I maintained the two stateside bank accounts that I already had, used those for cash withdrawals and paying credit card bills. I used Schwab and USAA because they both had no fee ATM reimbursements.

Very, very important as we've already said. I made sure that I went abroad with two bank accounts back home, each with significant funds in them, so that if for whatever reason one debit or ATM card stopped working, I had the other one available. I also alerted all of my banks and credit cards that I would be traveling abroad for an extended period of time so that they wouldn't look at what was happening and be like, that card is bouncing all over the place. I was bouncing all over the place. And you know, I've been online banking for a couple of decades now. So doing everything online was just kind of par for the course. I managed bills from back home that way. And again, the ATM was very much my friend throughout Southeast Asia and beyond. But you really need

to research what's best in the country that you're moving to or will be spending a lot of time in. And there's a ton of info on Facebook expat groups. And I imagine today places like Discord and other social media have those resources as well. Yeah, I took this question over to Spencer Tierney. He's a banking nerd who's been a guest on this podcast many times. And he emphasized looking for banks that don't charge ATM fees in other countries. NerdWallet's got a great article about that that we'll link to in the show notes. He also mentioned the existence of something I had not heard of, which is a multi-currency account. And these let you spend, receive, and hold multiple currencies at the same time. Those aren't the right thing for everyone. It kind of depends on your personal situation,

where you're living, and how you're earning money. But we also have an article about that too, that we'll share as well. And so there are resources out there. But yeah, I imagine Reddit as well could be a potentially good resource for anybody. Yeah, for sure. Switching gears, let's talk about transferring money from a US bank account to one in another country, since that's another thing our listener asked about. Is that something that you all had to manage? Do you have any tips on that? I do. And this actually gets into that topic of multi-currency accounts that you just mentioned, Sarah. Due to my lack of planning, I did have to transfer money from my account at home to New Zealand. And of course, I wasn't aware of how expensive those transactions could be. The roommate that I found in New Zealand introduced me

to an app-based service called Wise, which at the time it was called TransferWise. That allowed me to open a multi-currency deposit account so I could get paid in U.S. dollars, convert the U.S. dollars to New Zealand dollars at a mid-market exchange rate within the same account, and then spend the money with an associated debit card without having to go through the process of having to select your currency when you check out with a purchase or transaction. And that account also let me transfer money in New Zealand dollars to my roommate's deposit account to pay for rent and utilities. I think the fees were around three-tenths of a percent per transaction. So still not perfect, but far,

far less costly than my other options. Craig, I wish I had had that or known about that when I was abroad. That would have been super helpful. I actually don't remember doing any international transfers of money. I always used either an ATM from a debit card with, again, no foreign transaction fees. And I had two of those from separate banks or I used a credit card. When I did have a local bank in Bangkok, which by the way, I had to hire a fixer to help me get that account. I literally would go and take money out of ATMs on multiple trips because I had a daily maximum withdrawal. And then I would deposit that in the local bank. It really sounds like a bit of a pain, but it wasn't because the rent was pretty low. And I just kind of got used to making those cash withdrawals. I would imagine even in these six years since I came back stateside that maybe there are easier

ways today, as Craig has just outlined. That also depends on the country that you're in. Speaking of which, I did do transfers between my US and UK account. And what I used was a website called the Currency Fair. It sends money essentially between the UK and the US or between the US and the UK. And it does for other countries as well. Those are not the only two countries. What shocked me about using this is that the fees were relatively low, just a few dollars. So at first I was like, is this too good to be true? So more specifically back then they had a standard fee of $4 and that was back in 2019. That worked out cheaper for me than it would doing a wire

transfer or even using Western Union for transfer money. I also did a little digging on the listener's question about banks that the US and Spain have in common. The Euro American Financial Advisors website points out that there are several international banks that work in this situation, including Deutsche Bank, HSBC, and BBVA. Santander is another global bank with a presence in both countries. So you could go that route. Yeah, always worth a phone call to their customer service just to explain your situation and see if they have something that would match. Worst case, they tell you no and you seek out some other options. So definitely use this time before you move to Spain to do that research. Another thing to look into that our listener asked about, credit cards.

Which ones might be best for living abroad? And if you don't have a credit card at the moment, I would tell this listener or anybody who's listening to this in the same situation, apply for a card while you still have a U.S. address if you're not going to be maintaining one after you move, because that's often a requirement to be able to apply and be potentially eligible for a U.S.-based credit card. And also, once you get approved, opt into paperless statements so you don't have to maintain a U.S. address to get mail from the credit card issuer. Craig, you're a bit of a credit cards nerd, which is an understatement. What advice do you have? So if you're abroad for any period of time, to me, it's all about redundancy and getting ahead of problems before

they arise. So having multiple cards issued by different banks can be a benefit in case one card becomes temporarily unusable, such as due to a fraud alert. And even better if those different cards operate on independent transaction networks, for example, Visa and MasterCard. That way you still have options if there's an issue with one of the payment networks or if a vendor only accepts one of the other for a transaction. You only want to take cards abroad that don't pass on foreign transaction fees. And even better if you take cards that earn rewards in categories where you know your spending will be concentrated, such as restaurants or grocery stores. And since you're traveling,

a card that offers consumer protections like trip delay or lost baggage insurance could also be valuable. It's pretty easy to find credit cards these days without foreign transaction fees. And I would echo that it is an absolute must. I also, like Craig, made sure I had a lot of financial redundancies

in case I lost a wallet or something like that. So I had multiple credit cards from different banks. I think I took five or six with me abroad and I would leave some behind in my Bangkok apartment when I traveled so that there would be backups at home, not with me. And then I traveled with two or three in my wallet just in case one didn't work at whatever restaurant or store or street food vendor. Just kidding. The street food vendors in Southeast Asia generally didn't take credit cards. And one other note, it's really important that you get a VPN when you're traveling if you want to be doing online banking because banks will often flag a call from abroad as potential fraud. So you want to be able to use a VPN that connects you

into a server in the US so that you can then do online banking with your bank. I had this happen multiple times where they would shut down my account because they thought it was some scamster abroad. So definitely pay attention to that as well. If you need help comparing different credit cards, NerdWallet has a free credit card comparison tool that we'll link to in today's show notes. Or you can also search online for NerdWallet Compare Credit Cards. So our listener is planning to work while living abroad too, which makes me think of everyone's favorite topic, taxes. I know. Yuck. Particularly filing them while you live abroad. Double uh. Craig and Tess, what was the experience like for you? And any words of wisdom for our listeners who will have to do the same thing? Yeah, I did live abroad in New Zealand through tax season in the US. And at that time,

my taxes were pretty straightforward. And I normally would have done them myself, but I hired a CPA who was a buddy of mine to do them that year since I didn't want to make any mistakes while I was out of the country. And I set up for any correspondence from the IRS to go through him. That way nothing would be missed while I was abroad and not actively checking my mail.

Yeah, I lived through three tax seasons abroad and my best advice is basically the same. Get a tax accountant back home, have them do it for you. One thing that my tax accountant flagged while I was abroad was that the IRS requires that you disclose any foreign bank accounts. As I already mentioned, while I was living in Bangkok, I did have a local account at a bank there

so that I could pay rent through them. And that information did go on my tax returns for those three years. Well, with that all being said, listener, muchas gracias for your question and I wish you the best of luck as you move to Spain. I hope you have a wonderful time there. It is a beautiful place and we are all very jealous.

So enjoy. I second that. I am jealous. Spain is beautiful. Thank you to Tess and Craig for joining us today. Happy to be here. Happy travels. Yeah. Glad to join y'all again. All right. And that's all we have for this episode. Remember, listener,

that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also pop us an email at podcast at nerdwallet.com. And visit nerdwallet.com slash podcast for more information on this episode. Remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes

and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.