Travel

Travel money and how people are carrying it these days

Jun 05, 2017

Dollars, cents, pounds, pennies, euros, pesos, rupees…one thing that’s common everywhere you travel is the importance of thinking about the money you’re going to need on your travels.Once you’ve planned your trip, you will need to figure out the most suitable means to pay for adventures when you travel. It is vital that you try to get the most of your money when travelling overseas.

If you can’t decide whether to bring along a debit card, credit card, cash, a sheaf of travellers cheques, or a combination, consider the pros and cons of the many different ways to pay for your travel expenses.

Cash

When you should use it

For the first 24 hours of your trip, carrying local currency will help make payments easier till you can find an ATM nearby.

cash-for-travel-passport

Pros

It’s often a good idea to get some foreign currency before you leave home so that you have cash on hand to handle your immediate expenses – like buying a meal at the airport or taking a cab to your hotel.
When travelling to other countries, based on the exchange rate, you’ll probably pay less to exchange cash for the local currency than you would pay using another form of payment.

Cons

Cash is a security risk; it can be stolen easily and cannot be replaced.
It’s bulky and awkward to carry. You’ll need to wear a money belt or pouch.
If you’re traveling abroad, you’ll need to visit banks to exchange your cash for the local currency, and you may not get a great conversion rate, and you may also need to pay additional fees.

Credit cards

When you should use it

A credit card is best used to make large purchases, such as paying for hotel bills, car rentals and restaurant meals.

credit-card-travel

Pros

Credit cards are easy to carry.
You can replace your credit card if it is lost or stolen.
Credit card purchases are exchanged at the interbank exchange rate, usually the best rate you can get for currency exchange.
Currency conversion fees for purchases made overseas, if charged, are generally less than exchange done at a bureau.
You can reserve your hotel and rental car on your credit card and your reservation will be guaranteed, even if you arrive late.
MasterCard and Visa are accepted at many places around the world.
You can get cash advances from ATM machines, for a fee.

Cons

You can go over budget because it is a bill that comes in after your travels.
Your credit card information can be stolen by dishonest vendors, leading to a potential cancellation of your card altogether for resolving fraud issues.
Some places are cash-only businesses that may not accept credit cards, and if you need to access money as a cash advance, you will incur a fee.
If you don’t find out what your bank charges in service fees for overseas transactions, you may be in for a nasty shock when you return and see your credit card bill.
As with any credit card transaction, you’ll pay interest on your travel purchases unless you pay your balance in full each month.

Debit cards

When you should use it

Debit cards are better than credit cards for getting cash in local currency at ATMs, as there’s no interest to be paid on these withdrawals.

debit-card-atm

Pros

As long as your debit card is part of a major network, you can use it in most countries around the world.
You can visit an ATM and use your debit card to automatically draw local currency. Conversion and transaction fees will appear on your bank statement.
Using a debit card can help you stay within your budget because the card takes money from your bank account.
Debit cards are small and easy to carry safely.

Cons

Your debit card may not work in all ATM machines at your destination.
Just like with credit cards, some cash-only businesses will need you to withdraw money to pay for your purchases. Though there is no interest rate on these withdrawals, occasionally a high currency conversion rate could affect you.
In rural areas, finding an ATM that is part of your network might be difficult. You will need to plan ahead and withdraw enough cash to meet your needs until you are back in a city or town.
Using an ATM isn’t free unless you use your own bank’s machines. If you go outside of your bank’s network, you’ll be charged a fee to use a non-system ATM. When you use your debit card in a foreign bank’s ATM, you will be charged separate fees for using the machine and for converting your funds into local currency.
Many countries are rife with ATM scams, so your bank account and other details may not be safe.
You don’t have an option for cash advances in case of emergencies, so if your budget has taken a hit, you might be stranded with no money, unless you get money transferred to you.

Travellers cheques and prepaid travel cards

When you should use it

They are a secure alternative to cash, and are a great way to have emergency money on hand.

travel-money-card

Pros

They are secure alternatives for those without credit cards and those not wanting to carry cash; they can be replaced if lost or stolen (usually within 24 hours) and cheques require a countersignature for use.
Travel cards are convenient to carry.
Each travel card has a PIN for extra security.

Cons

Travellers cheques can be expensive to buy. You’re normally assessed a service charge, and you’ll also pay a shipping charge if you order them online.
Travellers cheques can be uncomfortable to carry in a money pouch or belt.
If you’re traveling abroad, you will need to go to a bank or your issuing company’s office to exchange travellers cheques for foreign currency. You will need to plan your itinerary around banking hours.
As they are becoming obsolete around the world, not all merchants or banks will accept travellers cheques, even those in their local currency. Merchants may charge you a fee if you want to pay with them.
In case of travel cards, you’ll pay high fees to activate and load your card.
Fees for foreign currency transactions are extremely high for travel cards. Under some conditions, the fees can be as much as 7% of your total transaction.
Travel cards can be difficult to use abroad, especially at foreign banks’ ATM machines.

So what do you choose to use?

Many travellers choose a combination of two or three travel money options. Before you decide which one will work best for you, call your bank and ask about transaction fees and currency conversion charges. If your bank’s fees are high, consider getting a new credit or debit card for your trip, there are many low fee, low rate options. Happy travelling!