We always seem to have that same dilemma when traveling: How much do I carry in cash? Where to exchange the money? Do I pay in local currency or not? What is the best way to save when paying for the services abroad?
Actually, when traveling we have to be prepared more for spending than saving. International travel goes with that expectation of paying something for the international services that we gonna use.
If you ask me the good old way is a combination of both. But, if you’re on a budget and won’t be spending much probably the best option would be cash. In that way, you’ll just have to pay fees when you exchange your money, foreign currency to local currency. There won’t be additional fees for the transactions made with plastic cards or cash withdrawals from ATMs. The only worry when traveling with cash is safety. The money is an easier target for the thefts or if you lose your money you probably won’t ever see any of it.
With plastic cards that’s not the case. If your cards are stolen or lost you just have to call your bank, cancel them and the money will stay secured in the bank. Your payments are not safe either. When you pay in cash for the services or purchasing any kind of product if you aren’t satisfied with the service or it didn’t turn out to be as described you aren’t eligible on any disputes. That won’t be the case if paying with a credit card. You won’t have a problem because your purchases will be legally protected. Credit cards users are protected from frauds, unfair billing practices, such as overcharges or any fraudulent purchase that is made with credit cards. When that happens to you, all you have to do is call your bank and dispute it.
Credit cards are very convenient and safe. You can make payments online or by phone without never ever visiting the store or the company where you made the purchase and you can earn cash or travel rewards just by purchasing products that you actually need.
In some countries paying in cash over credit cards is preferred. Anyhow, I always carry cash when traveling abroad, at least for buying souvenirs and a reasonable amount for emergencies too. But, I must admit I usually spend more when I have cash in me than when shopping with cards. Shopping with cash is a less safe way of payment but you can have better deals sometimes on the products especially with the street vendors. On the other hand, as I already mentioned before you can’t have any kind of a dispute when paying in cash if the products are not as described or the company fails to deliver what you expected for.
When you’re exchanging your cash into a local currency be sure to ask if there will be additional fees. Sometimes the deal may seem too good to be real and most of the time the reason for that would be exactly the fees that are not included, but when the bill comes you’ll probably end up paying, much more, with the total amount being more than you’ve expected to be or hope for compared to the previous exchange rate spots.
Your bank ATMs network is your best bet for getting foreign currency abroad. Try to avoid those ATMs conveniently situated at the airports because they’ll probably charge you way more than in the cities. This goes for exchanging any money at the airport kiosk or at highly popular tourist attractions too. Just avoid exchanging money at the airports, except for emergencies, when there isn’t any other option.
Today you don’t have to pay any foreign transaction fee (or currency conversion fee, or exchange fee) when shopping with a credit card abroad if you don’t want to. When paying abroad with a credit card usually the card will charge you 1-3% of the total amount spent on that transaction. Some people won’t mind this fee, but if you are one of those persons that care about not paying for something that actually doesn’t necessarily has to nowadays there are travel credit cards that don’t charge this fee anymore and they can be rewarding as well. Meaning that for purchasing your goods, simply for eating in the restaurants or traveling when you make your payment with one of these cards you won’t pay any fee for the made transaction and you’ll get points that can reward you at the end with for example a free airplane ticket. Except for no foreign transaction fees, these travel credit cards may include complimentary room, flight upgrades, and travel insurance. With some of them, you won’t have to pay even an annual fee.
Travel credit cards, as the name implies, are especially valuable to people that like to travel and do that more often. For example, if you spend 3,000 US dollars in 3 months for purchases lets say about anything you need in your everyday life including your groceries with one of these rewarding credit cards you’ll get 50,000 miles bonus which translated in money would be 500 US dollars in travel. You are rewarded with 2 miles for every US dollar spent on any kind of purchase you make and there are credit cards that will reward you in miles when you pay for dining in restaurants or for traveling too. Many cards offer travel and cash back rewards. But, like with every credit card you should keep track of your money and payments in order to get the most of it, instead of drowning in more debts. To get the most of them, some experts advice to have two separate rewarding credit cards, one for home shopping and other for traveling.
ATM card is any card that uses a PIN (Personal Identification Number) for withdrawing money from ATMs or when making a purchase by entering the PIN code when shopping. And whenever you are asked in the shop in which currency you would like the payment to be processed you should always agree on the local currency. ATMs are great simply because at any time, day or night, you can withdraw cash, make deposits, or transfer funds between accounts, by only inserting an ATM card and entering your PIN. But, some banks or ATM owners charge a fee. Most often when the ATM isn’t from your bank. In any case, ATMs will show you on the screen the additional fees, if any, before you complete the transaction.
You can use a debit card or a credit card on the ATMs. Except when using a debit card, which also may be your ATM card, you’ll be paying with the money from your checking account while when paying with a credit card you are technically borrowing money from the bank to be repaid later. ATM cards will have the same foreign exchange fee that your credit card has except that when you take your money of an ATM that is not from your particular bank you’ll be charged on top of that additional fee. But when your bank is a partner with another bank from the destination visited you may withdraw cash with fewer fees from ATMs of that same bank.
Some banks don’t charge for foreign transaction fees or currency conversion fee to their cardholders that travel often abroad.
It’s also a good idea to check with your bank and see what kind of options they have for you when traveling outside the country. In general chip-and-PIN cards are widely accepted because of the security they provide in the transaction payments with the digit PIN number like Visa and Mastercard. If your card doesn’t have a PIN be sure to carry with you one of these cards whenever traveling internationally.
It’s crucial to call your bank before you leave and tell them where are you gonna be and for how long. If you don’t do so your card may be blocked for security reasons. Banks may suspect a fraud and that an unusual transaction is taking place when you use your credit cards abroad.
I always keep a record like a copy of all of my credit cards account details and payments and keep the emergency numbers at hand. I also make sure to store my receipts somewhere safe where there is less chance of losing them. You never know when you’re going to need them to clarify some payments with the customs or your bank when you get back home. The best advice is to store the copies of your documents in a cloud storage online or to email them to yourself. If they are stolen or lost, you can react more quickly.
It all depends on the country visited. If it is card-friendly then you should pay with a card instead of cash and in that case look for the ones that don’t charge a foreign transaction fee.