You may have budgeted your travelling money down to the last postcard, but how are you actually going to spend it? Card? Cash? Gold bullion? Here are some tips to help you choose a payment method that works for you.

Research and Planning

  • The best way to spend your money will largely depend on what kind of trip you will be taking. Which country will you be going to? (All right, you should know that one already.) What kind of accommodation and transport will you be using? What do you expect your daily budget to be?
  • Be especially sure to check the availability of various payment options at your destination. Will there be ATMs nearby? How likely are local retailers to accept card payments? Tourist forums and message boards often have personal anecdotes from travellers which can be very helpful in informing your decisions.
  • Some of your research will be needed before you even head to the airport: where can you find the best currency exchange near you? Does your bank offer a credit card with no foreign transaction fees?
  • All of these factors should be considered when planning how you will spend your money overseas. A two week Christmas break in Brussels will involve very different payment methods to a six-month rural backpacking trip across Thailand and Laos.

Planning Trip

Cash or Card?

  • You should always have at least some cash with you, regardless of the other options you might have available. You never know when a taxi driver or stall holder will need to be paid in cash. It is also a good idea to pay for small purchases in cash even if there is a card machine, as you don’t want to be hit with a foreign transaction fee for every coffee.
  • That being said, if you have managed to get a card with no foreign transaction fee, it might be better to use it more frequently and save your cash for when you really need it.
  • Sometimes, a retailer will offer to put a card transaction through as a “dynamic currency conversion,” meaning that you can pay using your home currency. However, the retailer is unlikely to give you a better exchange rate than your bank. If you know the rate your bank is offering, you can evaluate and see which is the best deal.

Credit Cards

  • Generally speaking, credit cards are a widely accepted form of payment. They are ideal for large purchases – tickets, hotel rooms, and so on. You may require one if you plan on renting a car or holiday home.
  • Credit cards often have relatively low fees for buying items in a foreign currency. Some types of cards waive the exchange fee altogether. Ask at your bank to see what options are available. If you can’t find a good deal, you can always look elsewhere.
  • Planning to use your credit card on a long trip? Make a plan to pay the bill while abroad. If you have to wait until you get back, you could rack up late charges (which would not be a fun coming-home present.)
  • Credit cards are not a good option for drawing cash from an ATM, as you can attract immediate interest on top of other fees.
  • Be aware that some countries only support the chip-and-pin system. If you are paying using self-service for anything, you might not be able to swipe your credit card.

Trip payment methods

Debit Cards

  • Debit cards or ATM cards are usually the best option for drawing cash. Because the exchange goes through your bank, you get the advantage of a wholesale exchange rate.
  • Using your debit card can attract both a cash withdrawal fee and a foreign ATM/usage fee. Check in advance with your bank to see how much you will be charged, and compare this with other cards on the market. (If you mention that you are shopping around to your bank, they might even get you a better deal.)
  • If you are charged per withdrawal, you will probably want to make a limited number of withdrawals, taking out a large sum each time. However, try to balance economy against safety. Walking around with your entire holiday budget on your person, in cash, is somewhat less than advisable.
  • Try to withdraw an amount that will be broken up into smaller bills – nothing with two or more zeros at the end at the end of the number. You may sometimes struggle to have large bills accepted at local retailers.
  • If you have a PIN of more than four digits, try to arrange a new four-digit one with your bank. Some ATMs, particularly in Europe, will only accept four-digit PINs.

Using debit cards on trip

Traveller’s Cheques

  • These can be exchanged for cash, and their serial numbers mean they can easily be replaced if lost. However, they are being used less and less often these days, as most of their benefits are shared by the increasingly popular pre-paid travel card. Speaking of which…

Pre-paid Travel Cards

  • There are many varieties of these available, and it should not take much searching to find one you can use. (Be careful to check for any hidden start-up fees.) For safety reasons, the card should not be linked directly to your bank account.
  • By pre-loading the card with your destination’s local currency, you can avoid worrying about the exchange rate when you use it. Having a predetermined sum can also help you stick to that holiday budget that you set so optimistically before discovering your penchant for overpriced novelty flip-flops.

Exchanging Cash

  • If you know exactly how much cash you want to exchange, it can be worth it to make the exchange before you leave. You can shop around and find the best possible rate, even tracking changes in the daily exchange rate to improve your deal.
  • By exchanging at home, you can also avoid problems such as a currency exchange refusing to accept large bills, or bills over a certain age… Or slightly ripped bills. (Which definitely did not happen to me. Nope.)
  • You could exchange your money at a bureau de change, a bank, a post office, or even a hotel. If you can possibly avoid it, do not make the exchange at the airport (or bus terminal, train station, etc.) These are some of the worst rates available.
  • (Side note – you should also avoid using any ATMs in an airport that are run by a currency exchange company. The fees can be as huge as they are unexpected.)
  • Make sure that the amount the dealer is advertising is the buying rate of your currency, not the selling rate. The selling rate is the amount they will get for it – the buying rate is what you will get for it.

Hopefully, you can adapt these tips into your own travel spending plan. A parting piece of advice: make sure you let your bank know where you’ll be going, and make sure to take their international helpline number with you. A sudden influx of foreign transactions might be flagged as fraud, which could get your card cancelled. Getting stranded in a foreign country with nothing but a handful of cash and your novelty flip-flop collection might make a good story later, but that’s about all that could be said for the experience.

Exchanging Cash on trip

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