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August 2005 From The Sovereign Society Traveling with large amounts of cash used to mean you’d either have to sweat it out with a big bankroll in your pocket or get writer’s cramp signing a bucketload of travelers’ cheques. But not any more. Now, there are great ways to travel with cash stored in a credit card-sized piece of plastic that is NOT a credit card (though it looks like one). These currency/debit cards give you the confidence of cash, the ease of a credit card and all the privacy in the world. Swiss Travel Cash: Preloaded and Ready to Go! A Swiss Travel Cash card looks like a credit card, but has no name on it, just a numerical code. The user also gets a PIN code. The user calls his or her banker, who loads the card with a maximum 10,000 euros, U.S. dollars or Swiss francs. It can then be used to withdraw cash all over the world. Even better, there are no monthly limits of withdrawal, although a limit per withdrawal may apply. And you can reload the card when you run out of cash. Now, it’s not free. When you purchase the card and load it for the first time, you pay a commission of 1%, not unlike an insurance premium in the event of loss or theft. Charges for each withdrawal are three euros or three U.S. dollars (depending on the type of currency loaded in the card) worldwide, though local ATMs may add on their own charges. And when you reload it, you pay a commission of 1% on the reloading amount. Other good points... • If you lose the card or it’s stolen, the card is replaced and your current balance is credited to your new card—worldwide and at no charge. And anyone who finds the card won’t be able to use it without knowing the PIN. • If you have gold in a Swiss bank account, it can be sold for cash to come up with the Swiss Travel Cash in a matter of hours. • You can use the card at more than 900,000 ATMs in more than 120 countries around the world.  • Your privacy is protected—purchases aren’t made in the card user’s name. For more on this card, point your web browser to https://www.travelcash.ch/. Swiss Travel Cash can also be taken out through an independent asset manager like Robert Vrijhof of Weber, Hartmann, Vrijhof & Partners. He can be reached at: whvp@active.ch.

The Sovereign Society, headquartered in Waterford, Ireland, was founded in 1998 to provide proven legal strategies for individuals to protect their wealth and privacy, lower their taxes and to help improve their personal freedom and liberty. The Society's highly qualified contacts recommend only carefully chosen banks and investment advisors as well as financial and legal professionals located in select tax and asset haven jurisdictions around the world. The Society provides advice concerning the establishement and operation of offshore bank accounts, asset protection trusts, international business corporations (IBCs), private foundations, second citizenships and foreign residency, as well as practical safeguards for financial, Internet and personal privacy. The Sovereign Society stands alone in fulfilling this singular, international offshore service role for its members. To learn more about our organization and how you too can become a member, please click here.

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An alternative to Swiss Travel Cash—one that doesn’t involve Swiss banks or asset managers—is ExactPay, an electronic debit card that provides instant access to global cash at 800,000 ATMs in 120 countries, as well as 12 million merchant locations around the globe. Unlike Swiss Travel Cash, which is pre-loaded, ExactPay draws on a bank account. All transactions are settled by direct debit to the customer’s special purpose ExactPay account at First Curaçao International Bank in the Netherlands Antilles. However, purchases are still anonymous—if you so choose, your identity is known only to the bank, and your name doesn’t need to be printed on the card (unless you want it on there). For individuals concerned with privacy, this is a plus.

Along with letting you shop ‘til you drop, ExactPay offers electronic funds transfer and payment transactions processing services. This lets you execute private and secure online electronic payments in any currency to anybody, anywhere in the world by bank guaranteed electronic check.

However, if you spend your ExactPay in a currency other than the currency in the bank account it draws on, there is an exchange fee. (The same goes for Swiss Travel Cash if you make a purchase in a currency other than the one the card is loaded in.) ExactPay is available in euros, U.S. dollars and British pounds.

ExactPay does have fees, but they’re set fees, rather than the percentage system used by Swiss Travel Cash. ExactPay charges $495 to create the debit card, $25 for each additional card, $30 a month for the primary signatory, $75 to replace a lost or stolen card, and so on. For a complete list of ExactPay fees, point your web browser to https://www.exactpay.com/main.asp?DBCode=&Frame=Info. Then, click on the link ‘Information,’ click on ‘Fees and Charges,’ choose the card program and card currency to see the associated card fees.

American Express: A Third Way

Finally, there is a third alternative—American Express has unveiled its Travelers Cheque Card, a prepaid, reloadable card. It can be used at ATMs, stores, hotels—anyplace in the world that accepts American Express cards.

The American Express Cheque Card has more limitations (in our view) than the other two mentioned here. There’s a maximum load of $2,750 for any 14-day period. And while you can order up to four cards at a time, their combined value can’t exceed $2,750. Still, the card can be loaded with dollars, euros or pounds, and the issuance fee per card is just $14.95. If this fits your budget and spending limits—and you aren’t concerned with privacy—you might want to consider it.

Just keep in mind that all three cards will charge an exchange fee if you spend them in currencies other than the one they’re loaded with (or in ExactPay’s case, the currency of the bank account). For the latest on rising credit card fees, see the table on page 10.

Sidebar

The cost of paying with plastic abroad is rising.

In April, VISA replaced its 1% fee for changing foreign currencies into U.S. dollars with a 1%“transaction fee” that applies to ALL purchases in another country, no matter if the sale was made in a local currency or U.S. dollars. Customers howled, forcing VISA to suspend the new fee pending a “review of the structure.” It’s a rare victory for consumers as credit cards jack up fees. 

MasterCard doesn’t charge a fee if foreign purchases are made in U.S. dollars—but that changes on October 1. Other banks charge more—up to 3%—for transactions made in foreign currencies. 

These extra charges may come on top of merchant fees for converting credit card purchases.

Still, forewarned is forearmed. Here’s a list of major banks and credit card companies, and what they currently charge for foreign currency transaction fees. But remember, they could change at any time. Credit card issuer Foreign currency Fee applies when transaction fee foreign purchase made in U.S. dollars

American Express 2% No

Bank of America 3% No

Capital One 1% Yes

Citi Card 3% No

HSBC 1% Yes

J.P. Morgan Chase 3% No

MBNA 3% Yes

Providian 1% Yes

Wells Fargo 3% No

Along with surcharges on credit card transactions, some banks now charge hidden fees of several percentage points on foreign currency ATM transactions. Best solution: If you travel overseas, be sure to ask what the foreign currency transaction fees and ATM surcharges are before you sign.

U.S. Reporting Obligations

For several years the U.S. IRS has closely scrutinized the use of offshore credit and debit cards that they allege are used by some for tax evasion. Persons who have done so have been prosecuted after the IRS successfully subpoenaed thousands of offshore card sales records from VISA, AmEx and MasterCard.

Here are the rules that apply to any offshore bank or other financial account held by a U.S. person, including cash or other ATM cards issued under those accounts.

• In the United States, bank or other financial institution cash transfers of $10,000 or more automatically are reported electronically to the government.
• Any cash or other negotiable securities valued at $10,000 or more carried by any person leaving or entering the U.S. must be reported at the time on forms issued by the U.S. Department of Homeland Security, Customs Bureau forms.
• You must report the existence of an offshore financial account over which you have direct or indirect control, even if it is in the name of a legal entity you control. The law says: “Each United States person who has a financial interest in, or signature authority over bank, securities, or other financial accounts in a foreign country which exceeds $10,000 in aggregate value, must report the relationship each calendar year by filing Treasury Department Form 90-22.1 before June 30 of the succeeding year.”
• If you’re a U.S. citizen or permanent resident alien and hold $10,000 or more in one or more foreign financial accounts, you must report the existence of these accounts each year on your federal income tax return, IRS Form 1040 (Schedule B). You must also file a separate information return (Form TD F 90-22.1) with the U.S. Treasury by June 30 each year.

“Willful” non-compliance may result in criminal prosecution.
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Sean Brodrick is editor of TSI and has 25 years experience as a financial analyst and journalist. Most recently, he has served as editorial director for Weiss Research—an independent financial rating firm and publisher of investment publications. Sean backs up every article he writes with in-depth fundamental research and expert technical analysis. You may contact Sean at seanbrod@bellsouth.net.

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