Ways To Carry Your Money While On Vacation Abroad

One of the many issues a holiday abroad brings up is how to carry around all that money you’d need to pay for everything. Most travel safety advisories strongly recommend against carrying all your money in cash. This means that the only options the average traveller is left with are: traveller’s cheques, ATM, credit card. Each method has its own advantages and disadvantages, which have to be weighed carefully before you decide how to bring along your funds.

The traditional traveller’s cheques

Traveller’s cheques are the traditional way of carrying money when you’re abroad. They’re easy to obtain, allow you to carry large sums of money with reasonably low risk, and can be reconverted back to your home currency when you return. There are also dual-signature traveller’s cheques, which are handy for those travelling with a companion, as either partner can spend or cash the cheques.

The first drawback of travellers cheques is the commission, which is charged for both purchase and sale. Banks, credit unions, and many automobile associations offer travellers cheques at the average purchase commission of about 1%, but some charge more. Members of the automobile associations are usually exempt from the purchase commission, but if you’re not one, it pays to shop around before

obtaining your travellers cheques.

There is also another commission, or processing fee, when the traveller’s cheque is cashed. This processing fee can vary depending on where you cash the cheque, but generally runs in the region of 2%. This fee becomes significant if you are cashing a large amount, and as the cheque is still subject to the exchange rate and all its fluctuations, it really pays to check around for a bank or exchange bureau offering reasonable rates.

The other disadvantage of traveller’s cheques is that despite all the advertising about being ‘safer than cash’, they are not. That claim is based on the insurer refunding you your money if the cheques are lost or stolen, but if you don’t have the receipt or transaction record, or can otherwise be proved negligent, the issuer is not obligated to refund the money. For this reason, it is important to remember is to take along your purchase record or receipt, as you may need it to cash the cheques. For safety, keep the receipt in a separate place from the traveller’s cheques themselves, record the check numbers in case of theft and make a duplicate for safekeeping. Also, keep a transaction record. Both of these would help your case tremendously if you happen to lose your cheques, or they are stolen.

The denominations of the cheques can also be problematic. If using them in place of cash, at least a few of them should be in small denominations, as some shopkeepers are reluctant to handle large cheques for small purchases. Many people prefer to obtain and cash traveller’s cheques in large denominations, to minimize the hassle of changing small cheques. The problem with this approach is that you then walk out of the bank carrying a large sum of money in your all-too-accessible pocket, which is an excellent way of making a pickpocket or thief happy. A balance between the two extremes has to be struck.

Despite all the troubles, traveller's cheques are still useful to take with you on holiday, as there are situations when they’ll come in handy:

Incidentally, there are also new-fangled prepaid travel debit cards, which are like the debit cards for travellers cheques, but these currently offer high currency-exchange rates and some people object to the additional charges attached to them, so think twice before obtaining one. They are currently only available in the United States.


The New Way: ATM's & credit cards

Today, most travellers prefer ATMs to traveller’s cheques, and it has become the NEW, easiest, cheapest way to get cash overseas. It  is also much more convenient: practically every major city and most smaller towns will have ATM terminals, which are usually open until about midnight and almost always have an English language option. You can even locate ATMs around the world by checking the bank’s website on the Internet. Another advantage of ATMs is that they generally give good exchange rates, as the exchange is made at the inter-bank wholesale rate. Most banks charge about 2% commission for this service, except for Citibank which charges no commission for account-holders.

The only major drawback of depending on your ATM card for cash is that in more rural areas or less developed countries, there may not be enough or any terminals, forcing you to carry cash or traveller’s cheques as backup.

Before deciding to go on holiday with only your ATM card however, there are a number of points you should check. First, the ATM card should be compatible with the networks available: the Plus, Cirrus, Visa, Mastercard and Eurocard ATM networks cover Europe and most of the world, but you should check with your bank that your ATM card can work on their machines.

You should also check that the PIN number is accepted: Mastercard and Cirrus for example recommend a 4-digit PIN for the European network, while the Visa/Plus network accepts 4 — 6-digit PINs. Again, check with your bank before you go. Also, a recent (and unwelcome) introduction is the ‘conversion fee’ which some banks add on top of the flat transaction fees charged for ATM withdrawals away from home. As before, check with your bank before deciding on using the ATM card.

As an additional security, you should also bring along a credit card. Though only really useful in major cities, credit cards have two big advantages. The line of credit is a great benefit if you happen to have lost, or spent, all your cash reserves, or need to make a big purchase. Most cards also offer a cash advance feature, which is handy if you need more cash in a hurry. The most preferred cards are Mastercard or Visa, with the latter being more widely accepted.

The drawback of credit cards is that you’ll still end up paying the credit card bills at the end of the holiday. It is also costly: most US and Canadian credit companies are tacking on a surcharge of 2% to 5% for international transactions and the cash advances always come with commission. There may also be additional charges tacked on the foreign-currency transactions, so be sure to check with your credit card company each time before going on holiday, as their policies can change at short notice. Despite the drawbacks however, having one or more credit cards can act as a blessed safeguard against anything untoward happening while you’re on holiday.

If you do decide to carry cards (whether ATM or credit), be cautious: credit card theft and forgery is one of the most common holiday complaints, and there are reports of assailants forcing tourists to withdraw their money from ATMs before releasing them. Most safety advisories will warn you not to carry your ATM card(s) together with your credit card(s) while abroad.

Also, you should contact the credit card company and bank to inform that you will be travelling overseas, and may be making foreign charges to your credit card or ATM. Some credit card companies ‘block’ cards that start suddenly start showing unexpected foreign charges. Their caution  is understandable, but it can be a bit irritating if you’re the one making the charges because you lost your cash, you ATM card was stolen and you need that credit card to pay for your hotel room on a cold, rainy night.


 

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First published 5 March 2005. This article is free for personal and commercial reproduction, with the following terms and conditions.