If you’re traveling long-term or full-time, you’ll want to have online savings accounts in your repertoire of investments. They offer better yields than bank accounts, they’re more secure (since debit card access is often restricted or impossible), and they are great vehicles for saving money to travel.
Here are some tips for using and managing your online savings accounts effectively as a traveler:
Having an extra layer of security during the log-in process is ideal since you can’t count on local WiFi access being secure. The harder it is for people to hack into your accounts, the better.
Online savings accounts have pared-down services (since everything is online); thus the fees should be similarly pared-down. All you should need to do with your travel savings account is move funds to and fro between your bank account – which should never carry a fee.
Check With Your Bank
Your bank might offer a high-interest online savings account, which will make it even easier to transfer funds between accounts. (But again – check for fees!)
Set up Dedicated Accounts
I have an online savings account for my taxes, one for savings, and one as a “slush fund” where I invest extra earnings from my higher-income months (to use as needed during lower-income months).
Compartmentalizing each savings goal helps you track your progress better.
Watch Your Balance
If you have a lot of money in your online savings account (and you don’t have an immediate need for it all), consider moving some of it into a longer-term investment that will get you a better return. You don’t have to go crazy and risk it all (or any of it), but if you can afford to let it sit for a while, consider bonds (if you want a guarantee) or low-risk mutual funds.
Check out this post for more on choosing the right investments.
Some more to whet your appetite:
Financial Travel Tip #28: Managing Your Travel Savings Account *including a 25% bonus for opening an ING savings account