Money Around the World is a continuing series where I take a look at how different parts of the world handle money and what we can learn from it. Part 1 looked at credit card use in Asia and part 2 looked at Europe’s credit card habits.

South America is an emerging nation where a lot of growth is occurring. Just like a teenager, quick-growing continents can also go trough growing pains and this is what South America has to deal with in today’s economy.

Today, I’ll take a look at how 71 countries in South America use credit cards. As more and more people come into money, we’ll see if South American nations are being smart with their new credit or if abuse and debt is running rampant.

As usual, I’ll include some American credit card facts so you can have a benchmark to compare.

America

Population: 304 million

• There were 173 million credit cardholders in 2006, expected to rise to 181 million in 2010 (creditcards.com)
• There are a total of 1.5 billion credit cards in the U.S. (creditcards.com)
• At the end of 2008, Americans’ credit card debt reached $972.73 billion (Nilson Report, April 2009)
• The lowest credit card delinquency rate was 0.66% in North Dakota, while the highest was 1.98% in Nevada (Newton Daily News)
• The average American credit card debt was $5,612 in the third quarter of 2009 (Newton Daily News)

Verdict: Addicted to credit and debt. A dangerous combination.

Brazil

Population: 192 million

• 124 million credit cards – or 65% of the nation (creditcards.com)
• Credit card use up 327% in 8 years (creditcards.com)
• “Sao Paulo and Rio de Janeiro are 50% of the credit cards market while the South region represents only 8%” (encylopedia.com)
• In 2008, the value of credit card transactions reached USD$110 billion (creditcards.com)
• Brazil produces more cyber-criminals than any other nation (BBC.com)

Verdict: The leader in South American credit card use can’t handle the explosion of credit card users.

Colombia

Population: 44.5 million

• 6.3 million credit cards in 2008 – or 14% of the nation (creditcards.com)
• Credit card use has doubled in just 5 years (euromonitor.com)
• Credit card debt reached $4 billion in late 2007 (bnamericas.com)
• Visa is the most widely used card (lonelyplanet.com)

Verdict: Trying to hold down debt as credit card popularity soars.

Chile

Population: 16.7 million

• 23.2 million credit cards in late 2008 (creditcards.com)
• Chileans spent USD$1.64 billion in just the 1st quarter of 2009 (creditcards.com)
• Some businesses charge up to 6% to use a credit card (lonelyplanet.com)
• 29% of financial transactions were from credit/debit cards in 2009, up from 19% in 2003 (bnamericas.com)

Verdict: Businesses must stop fighting credit cards and let their customers spend away.

Argentina

Population: 40 billion

• 22.3 million credit cards in late 2008 – up from 17 million in 2007 (creditcards.com)
• From 2003 to 2007, credit card use grew 116% (creditcards.com)
• More credit cards are being offered to lower income applicants (euromonitor.com)
• Credit card advertising has skyrocketed (euromonitor.com)
• 10-20% charges are normal with credit cards (creditcards.com)

Verdict: Getting used to the fact that credit cards are becoming a part of daily life.

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If you enjoyed this post, check out the other Money Around the World posts:

Part 1: Credit card use in Asia

Part 2: Credit card use in Europe

Next week we’ll travel east and see how Africa is handling credit cards.

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Here are some recent blog carnivals I’ve participated in.

Carnival of Personal Finance: Parts-of-speech abuse edition at Mighty Bargain Hunter

The Last Carnival of Personal Finance for 2009 at Gather Little By Little

Carnival of Money Stories – New Year’s 2010 Edition at The Consumer Boomer

Carnival of Personal Finance #239 – Hot Money Trends of 2010 Edition at Darwin’s Finance

175th Edition of the Festival of Stocks at Inelegant Investor

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Photo: thejournery1972

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Planning to go abroad can be a stressful process. From insurance to Visas to money, there are a lot of areas to cover before departure. One of the most important areas to cover before leaving for a vacation or move abroad is your financial accounts – bank, credit cards, investing accounts.

It’s vital to simplify these accounts before departure so you can enjoy your time instead of wondering about that extra $43 sitting in an unused checking account somewhere. I’ve spent just two-weeks abroad and I’ve spent up to three and a half months, so I’ve seen the best and worst ways to prepare your accounts before departure.

This will be the first of a mini two-part series in preparing financial records before a trip. Today, I’ll show you how to go about preparing financially for a vacation, a month in time or less.

Vacation
Avoiding stress when abroad is the easiest way to maximize your enjoyment. I’ve seen people absolutely hate their trips abroad because they didn’t prepare beforehand and were stressed and worried the entire time. Many people spend years of their lives preparing for vacations abroad so do yourself a favor and spend some time prepping your financial life. Being stress-free is especially important when vacationing and site-seeing because the small amount of time you do have is so limited. Here are steps to make sure your financial life is set before heading off on the trip of a lifetime.

• Debit Card
  Make sure you have a debit card attached to your bank account at home. This will be the easiest and cheapest way for you to access your money abroad. Before you leave, deposit more than enough money into your checking account for you to access during your trip. This will allow you to avoid one of the worst fees, the overdraft, which can often be $35 or more.

  Do some research to make sure the country you are visiting uses ATMs. If they do, you should be able to access them with your debit card. Some countries use VISA or Mastercard so make sure you know which one the country you’re visiting prefers. This will save you on unnecessary fees every time you go to the ATM. You’ll be charged a small fee for currency exchange, but with the best debit cards you can avoid most of the fees. Some people will vouch for avoiding ATMs and instead exchanging a large amount of money pre-departure. I believe the ease of the ATM and not having to carry thousands of dollars in cash on you is worth the small fee.

  The language barrier can be an issue with ATMs in foreign countries. The bigger cities will often have an English button, but my local ATM (small, rural setting) is only in Japanese. If you don’t know the language, carry a small dictionary or translation book with you. These will list words like “withdraw” or “deposit” that you will need to know.
  
  ***My debit card for international travel suggestion: Schwab Bank High Yield Investor Checking – voted Best Checking Account by Kiplinger in December of ’08. Has some of the lowest foreign   transaction fees and actually pays interest.

• Credit Cards
  Some people never travel internationally with credit cards because they don’t want to tempt themselves with access to large amounts of money. I would never travel without one, two, or even three. Here’s why. You may have enough money in your checking account to cover any large expenses – car accident, friend thrown in jail, accidentally knock over an original Dali – but the minute you liquefy this account you’re in trouble. You’ll have to figure out how to get money wired to you by a friend or parent, and in a foreign country you are not familiar with, this can be a very difficult task.

  For this reason, when I travel I only keep credit cards on me in case of large emergencies. They give me access to a large amount of money in case a once-in-a-lifetime incident occurs. I will still have access to my planned cash, through my debit card, and I can continue on the trip and worry about the incident when I return home.

  On a more positive note, there are some awesome credit cards out there for international travel. Since you will be spending more than usual, it’s a good idea to use a card with some good rewards. However, pay attention to the foreign transaction fees. Some cards will charge up to 3% per transaction and this can cost you hundreds of dollars over just a couple of weeks if you’re not careful. Jim at Bargaineering has a great post that highlights the foreign transaction rates of different credit cards. You can read it here.

  I mentioned that I would travel with up to three credit cards. You have to prepare for everything when you’re abroad and occasionally a card will get denied for no apparent reason. Don’t rely on just one card to get you through your three weeks in Moscow, plan ahead and have options in case your card is denied.

  The convenience of credit cards abroad cannot be beat. If you find a card with 0% fees and you’re responsible with your credit cards, than you can be safe using that to fund your entire trip.

  ***My credit card for international travel suggestion: Schwab Bank Invest First Visa Credit Card – 0% foreign transaction fee, 2% back on purchases

• Link an Account to a Parent
  The best part about traveling abroad is the unexpectedness of different situations. Occasionally, these situations can be a burden on your wallet and you’ll find yourself with little or no cash after a night out on the town, or a shopping binge. This should be a last resort, but link your checking account to one of your parents savings accounts back home. In case of an emergency – like you having no money or way to get to the airport in three days – you can have them easily transfer money into your account. This is cheaper and easier than a wire transfer. Just find a local internet cafe and send them a quick e-mail requesting funds to get you home. They won’t be happy about this, but they’ll be glad you’re not stranded on the streets of Thailand having to wash dishes to make money.
  

• Inform Your Bank Before You Leave
  Take fifteen minutes and call your bank and credit card companies before you leave informing them of your trip plans. If you don’t, the minute they see a charge for even $6 in Paris, they’ll shut down your account because they’ll think your card is stolen. Be courteous and give them a call; they’ll ask you when your planning on being away and then they’ll say have a great trip. That’s it.

• Exchange 2 Days Worth of Money
  This will allow you time to settle into the new country without having to worry about finding an ATM. Before you leave, find one of the bigger banks in your area and exchange money with them. They’ll have access to foreign currency and will offer you the best rate. Do not exchange money at the airport! It’s incredibly convenient, but their rates are horrible and you’ll lose a lot of money.

Congratulations, your bank accounts and credit cards are in order and you’re ready for the time of your life! Enjoy your trip, buy your mom something nice, and come back with some great stories!

Remember, on Friday I’ll show you the steps to preparing financial accounts for moving abroad.

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