Deciding whether to take credit cards or local currency on your vacation—and if so, how much—is a common dilemma travelers face.
Here, 10 points to consider:
1) First of all, alert your bank to your travel plans in advance so that your debit and credit card spending will not be blocked overseas. It is advisable to take both a credit card and debit card for emergencies even if you do not plan to use one of them. It's also a good idea to take more than one card in case there is a glitch and the card is not accepted at a certain vendor location or on a certain day.
2) Many vendors abroad will take credit cards, but not all, unless you’re in a country like Iceland, which is essentially cashless. However, if you’re spending very little--for tips, for instance, or a Euro or two for an espresso—credit cards are not accepted. Likewise, sometimes credit card machines or networks go down. In fact, it’s a common occurrence in some locations. For example, it is advisable to have up to €100 on you in cash when you arrive in southern Europe. You can usually get by without Great British Pounds upon arrival in the UK, and your bank probably won’t carry Thai Bahts or Vietnamese Dong anyway. Note that foreign currency (bills, not coins) can be exchanged back home for USD, but you will have to pay a fee to do so. Ask your bank to clarify. Many people prefer to use up foreign currency for their final purchases before returning home.
3) Currency exchange counters in airports and train stations tend to assess higher fees for converting currency. Local banks usually will not exchange foreign currency. Depending on your location, taxis, shuttles, and, occasionally, train and subway stations may only take cash or coins for short-ride tickets. If at all possible, when arriving in your destination, use a card for your taxi or public transportation ticket to reach your hotel, then ask for a cash machine within walking distance to pull whatever local currency you think you’ll need for the next few days. Go low, and pull more later so that you’re not left holding a lot of cash when departing.
4) ATMs are widely available for pulling local currency on an as-needed basis, but keep in mind that foreign transaction fees may apply and that there are daily limits for cash pulls (often imposed by your bank and always imposed per withdrawal/per ATM). Check with your bank beforehand about their transaction fees and be sure to read the details on the screen as you proceed through an ATM transaction. You will need a PIN for your credit card use at an ATM, so request one from your bank a few weeks in advance of your travel. The PIN may not be given to you over the phone, but mailed to you. Pulling the funds you need every few days may be a better idea than carrying wads of cash.
5) Credit cards usually come with good fraud protection, but cash advances come at a higher rate of interest. Debit cards suffer no interest charges for cash pulls, but the fraud protection cap is higher (meaning not as beneficial to you). Both will incur extra foreign transaction fees and ATM usage fees, which may vary or be eliminated in some cases, depending upon your bank. Please inquire directly with your bank for details.
6) Travelers Cheques are not advised. They are not accepted in most shops and restaurants. Instead, you may have to cash them at a local bank that will add fees if they will cash them for you at all. Even if they are technically accepted at a shop, younger clerks may have never heard of them and may refuse to take them.
7) Check to be sure which currency the country/countries you are traveling to actually use before filling your wallet with them. Hungary, the Czech Republic and the U.K., for instance, are not on the Euro. A few vendors in these countries may take Euros cash, however, giving local currency in change, and will generally post their policy if they do. Every country in Southeast Asia, South America, and Africa uses a different currency (no multi-country currency like the Euro on these continents).
8) Pre-loaded Visa cards or Cash Passports have their pros and cons. Some are not usable outside the USA. If they are, do note that fees are still assessed when using them to pull cash, fees are assessed when purchasing or topping them up, and your bank already protects you against fraud and theft on your credit and debit cards (credit cards at generally a better rate than debit cards, as per #5 above).
9) US dollars are not generally accepted in most countries like they tend to be, for instance, in Mexico, so don’t plan on seeing a vendor’s eyes light up when you flash a George Washington. Though the exchange rate has improved, the value of the dollar still comes up short against the Euro and other currencies, and the vendor will get stuck with the exchange fees on top of that loss. Note that in many airports around the world you can use USD cash, but you will receive change back in the local currency.
10) Many hotels offer in-room safes, but if you’re going to carry your cash or cards, keep them close and in front of you. A money belt under your clothes or a small cross-body purse can be a smart way to protect your resources. Wallets should never be stored in backpacks, in a purse loosely hitched onto a shoulder or slung behind you, or in back pockets.
Researching and planning ahead can help you enjoy your travel adventure without succumbing to a few novice money mistakes. In the end, you’ll be a happier traveler.
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