Traveling is one of the best experiences you can give yourself. However, seeing and experiencing the world does not come cheap as it involves months or even years of strategic financial planning and maybe with the help of payment methods such as credit cards to further extend the budget you have allotted for travel.
A wide range of payment methods—but which one should you bring?
Travel money comes in the form of cash, debit cards, traveler’s checks and credit cards, and each has its own pros and cons.
Cash is the most convenient payment method as you can just use your money when you’re in your home country. In another country, you’ll end up paying a smaller fee to convert your cash to the local currency. However, bringing in cash means increasing your security as thieves can simply snatch it. If you’ll need a large amount, you’ll require a money bag to store your cash, and that’s awkward to look at.
Debit cards cannot be easily snatched compared to cash and can be used in many countries if it is a part of a major network. This form allows you to withdraw cash into local currency. However, when you are using a debit card, your bank statement will show conversion and transaction fees.
Moreover, if you are keeping an eye on your budget, a debit card will be helpful. For its downsides, some ATMs might not accept your debit card, so a backup is still needed. Debit cards might not also be accepted at restaurants or shops. You also have to let your bank know if you plan to use your card abroad to avoid your card getting suspended by your bank’s anti-fraud department.
Traveler’s checks are very secure and can easily be replaced, and it can be bought in foreign currencies like the Euro, British pound, and Japanese yen. A downside of traveler’s checks is that it is no longer popularly used and can be expensive to buy.
Finally, credit cards are the easiest to carry and can be easily replaced if it is lost or stolen. Popularly used around the world are MasterCard and Visa cards, so it will be easy to pay for goods or services just about anywhere. Credit cards also let you obtain a cash advance, but fees will still apply. However, caution must be taken when paying using your credit card abroad as credit card information can easily be stolen. Interest fees will also apply on travel purchases made.
Remember these rules when using your debit or credit cards abroad
Before you whip out your wallet to pay for transactions through credit card or debit card outside of your home country, there are a few things to take into consideration:
Your card’s acceptance may vary by brand. While Visa and MasterCard are the most popular option, there’s also American Express which works well in Europe, while Discover is popularly accepted in Asia.
2. Foreign transaction fees
Debit and credit cards apply a fee of about 3% of the purchase price every time you swipe your card abroad which can add up quickly if you don’t take note on what you spend for.
3. Cash advance fees and interest
Credit cards can be used to secure cash advances, but it would incur an upfront fee and can start accruing interest almost immediately. It would be smart to bring a debit card if you plan to pay in cash.
4. Dynamic currency conversion
Some merchandisers have the option of seeing the price of purchase in U.S. dollars. However, while this option sounds good, don’t opt for it as the dollar price will include a fee and a bad exchange rate. Choose to pay in the local currency instead.
Prior to departure, don’t forget to do these things
Before embarking on your travels and swiping your credit or debit card, there are some additional tips to keep in mind:
- Check your credit and debit card agreements if a foreign transaction fee is included. If they do include it, apply for a no foreign transaction fee credit card and a debit card that does not charge a fee when making ATM withdrawals overseas.
- Give your credit card issuer a call before departing that you intend to use your card abroad and to avoid your cards getting suspended due to suspicious activity.
- Finally, carry your passport as proof of proper identification when paying with your credit card for verification purposes.
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