Cash Management for Travelers

Currency Exchanges, Credit Cards, Travelers Checks, and Foreign ATMs

Cash Management for Travelers
July 9, 2014

If you are taking a trip abroad, consider your monetary needs well before departing. How much cash will you require, and what are the best options at your destination if you need more? Are your cards valid there? These are all questions to consider before you leave – not while you stand cursing at a local ATM that will not accept your card.

You have five major methods of managing your funds overseas:

  • Currency Exchange – Rates can vary greatly depending on where you exchange your funds, so shop around. It is wise to bring enough local currency with you to handle potential concerns at the airport, such as high exchange rates (a common problem at airports), inactive ATMs, or arriving after the exchange bureau has closed. $100-$200 worth of local currency is a good average for most destinations.

    Try your local bank for the currency exchange; they may be able to waive some costs. If not, you may be better off trying larger banks with a potentially higher volume of currency dealings.

  • Credit Cards – Credit card purchases often give you the best exchange rates and are accepted by many vendors. The collective foreign transaction fees are usually lower, but this varies by card and the cardholder's policies.

    Many foreign destinations have switched to chip-and-PIN technology – with chips embedded in the cards to prevent against fraud and identity theft. Automated payment systems such as ATMs and gas stations may not accept cards without that technology. In addition, your protection may not be the same overseas – it may be more difficult to dispute errors.

    Check with your cardholder about your card's acceptance and protection overseas along with the fee structure, and notify them of the dates of your foreign travel to avoid having your account frozen for suspicious activity.

  • Debit/ATM cards – Verify with your bank that your type of debit card will work with ATMs at your destination – they will need to be associated with one of the worldwide networks (Cirrus or PLUS). If so, this is one of the simplest, most convenient ways to get cash.

    It may also be the cheapest and the safest. There will be fees from both banks (assuming yours is different from the ATM holder) and probably a currency conversion fee – however, you are more likely to get the lower interbank exchange rate. Generally, it will be cheaper to use a debit card than a credit card for ATM withdrawals.

    If your card is lost or stolen, your liability will be $50 as it is with credit cards, as long as the loss is reported within two business days.

    Similar to the credit card preparation, let your bank know you will be traveling to avoid potential freezing of your account.

  • Traveler's Checks – The old standby of years past, they are a safer alternative to cash because they can be replaced if you lose them or they are stolen. You will need to take note of the serial numbers in case they need to be replaced.

    Classic traveler’s checks are not as popular anymore because of the collective fees involved in purchasing and using them, as well as typically higher rates compared to the credit and debit card path.

  • Prepaid Cards – Prepaid credit cards are available from VISA and Travelex among others – these are great for kids traveling abroad with groups as they can be monitored and reloaded by parents from home. Some are available with chip-and-PIN technology.

    To see if this is more economical for you, check the card and the collective fees associated with use – activation, reloading and inactivity fees. ATM access may bring additional charges.

It is wise to take at least two cards with you – a credit and a debit card, or two credit cards – just in case one of them does not work. If you can, bring at least one with chip-and-PIN technology. You want to avoid arriving at your vacation destination only to find that your credit card doesn’t work at all costs (pun intended).

Research your options and compare fees, and then enjoy your overseas trip without worries on accessing money. However, worries about spending too much of the money you access are on you.

If you want more credit, check out MoneyTips' list of credit card offers.

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