Show me the money: should I travel with cash, card or credit?

A common question people have when about to embark on their overseas adventure is “how do I access my money?” There are several different ways to access your money while travelling overseas – ultimately, it is up to you and the way you travel.

After eight years working in a bank and many years of travelling around the world, I always use a combination of cash, travel cards and credit cards, depending on where I am travelling to and for how long.

Here is some helpful advice to help you make the right decision.

Cash

It is important that you have a small amount of local currency (at least £50 or $100 value) with you when you arrive at your destination. While cash machines (ATMs) are almost everywhere, there can be big queues at the airport and you might need cash immediately to tip baggage handlers or drivers, pay for a taxi or transport, or to pay for your accommodation.

Cash is also helpful when you are purchasing small items throughout your trip, such as a bottle of water from the corner store, some street food from a vendor, or a souvenir from the markets.

Prepaid Travel Cards

If you are travelling for more than a week or think you will use a large amount of money (over $1,000 or £500), keep your money safe with a prepaid travel card such as the Mastercard Cash Passport or Travelex Globe Cash Passport. Prepaid travel cards are usually much cheaper than using your regular bank cards, but there are some things you should know about your prepaid travel card before you go:

Before you purchase your prepaid travel card

• Your local bank, Travelex or post office will have travel card options, so shop around for a card that suits your travel plans and budget.
• Some prepaid travel cards allow you to upload money in more than one currency (GBP, JPY, EUR, AUD, USD). This is helpful if you are travelling to more than one destination and will be using more than one currency.
• Look out for hidden fees and be aware of how it works. Questions to ask: Do I get charged an upload fee (most cards won’t)? Do I get charged a conversion fee in addition to a withdrawal fee (you shouldn’t)? Is there an upload limit per currency? Can I transfer more money to the card easily online if I need it? Can I get a second card for free to share with my partner or to have as a backup? Is it cheaper to purchase items with my prepaid travel card or to withdraw the cash for purchases? What are the fees and conversion rates for cash withdrawals versus purchases? Is there a daily withdrawal limit? Are there any restricted countries?
• What is your budget? How much of each foreign currency will you need? Load the travel card with enough money in the local currencies you will need.

Using your prepaid travel card

• Cash machines (ATMs) are everywhere in the US, Europe and Asia but try to use branded machines from major banks, such as HSBC, Barclays, BNP Paribas, Citibank, Lloyds, Deutsche Bank, Santander, ING, etc. They are more reliable and might be more able to help you if something goes wrong.
• Calculate your daily budget in the local currency. Use your prepaid travel card for large expenses such as accommodation and major transport. To avoid expensive withdrawal fees, withdraw bulk cash to last you a few days for tipping, spending money and smaller items.
• Most accommodation, restaurants and convenience stores will accept your travel card for purchases. However, it is not unusual to be asked for a signature rather than a PIN.
• There are restrictions. You may not be able to use your card in some countries, with small merchants or to hire a car. It will depend on the merchant and country.
• Some merchants will ask if you want to be charged in a different currency – say no. Always ask to be charged in the local currency to avoid an additional dynamic currency conversion fee.
• Some hotels will allow you to use your prepaid travel card to pay for accommodation before you go on your trip, in the local currency. Depending on the exchange rates at the time, this can work out to be cheaper.
• If lost or stolen, a prepaid travel card can be replaced very quickly and delivered to you within days, depending on where you are.

Bank Debit Cards

If you have a Mastercard or VISA debit card you can probably use it when you are overseas. Using your bank debit card can be cheaper than using your credit card but more expensive than a prepaid travel card if you are travelling for more than one week or plan to spend a lot of money.

If you decide to use your bank debit card, always follow these simple tips:

• Always advise your bank and credit card provider that you are travelling to avoid your card being blocked for security reasons.
• Always ask to be charged in the local currency to avoid an additional dynamic currency conversion fee.
• Have a back-up (e.g. a credit card, secondary bank debit card or travel card). If your card is stopped or stolen, it could take up to 21 days to replace it overseas.

Credit cards

A vast majority of credit cards will charge you an extra currency conversion fee for every purchase you make. But they can be incredibly useful for travel if you know these simple things:

• Never withdraw cash using a credit card. Cash withdrawals are charged a much higher fee and interest can be very expensive. It is usually cheaper to use your debit card or a travel card.
• Always advise your bank and credit card provider that you are travelling to avoid your card being blocked for security reasons.
• Always ask to be charged in the local currency to avoid an additional dynamic currency conversion fee.
• Some gold or platinum credit cards give you car hire insurance or travel insurance if you use it to purchase your flights (always read the Ts&Cs).
• Some credit cards offer reward points that can be useful for frequent fliers. Research which cards are best and how you can use them effectively.
• A credit card is useful for emergencies, such as when you miss your flight, have a medical emergency or need to go home early.
• If lost or stolen, a credit card can be replaced very quickly and delivered to you within days, depending on where you are.
• Credit cards can be used for a security deposit for hotel rooms or for car hire.
• Always keep your credit card separate to your travel card and cash (e.g. in you larger bag or your room safe) so that you can still use it in the event that your wallet or bag is stolen.
• Note that some credit card brands cannot be used in certain countries for security reasons. Check your credit card restrictions before you travel.

For more travel advice, check out my travel tips for packing, planning and budgeting.