Whether to Use Cash, Credit, or Debit While Traveling

Man with wallet
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Traveling with money is a task that makes many people uneasy, especially when foreign currency is involved. Carrying cash abroad can be deemed as risky, but credit and debit cards can be notoriously finicky because of bank security and the fees that come with international credit charges can have a major effect on your funds in the long run. So, what's a poor old wandering soul to do?

These are questions to bring up with your bank, of course, but the safest method is perhaps to use them all. In other words: The "don't put all your eggs in one basket" saying applies. Using a mix of cash, credit, debit, and maybe even the odd traveler's check ensures that if the fees for one method are particularly astronomical, your bank account won't take as much of a toll. It also helps if one of your cards or a wad of cash is lost or stolen. 

Cash

Cash is convenient and relatively cheap to exchange. You can take money from your home country into a foreign bank almost anywhere in the world and they'll easily exchange it without the worry of tiny bank fees adding up, pesky ATM fees, or losing out on a bad exchange rate. Alternatively, though, carrying coins and paper money is a security risk. When stolen, it cannot be replaced. The key is to have just a small amount of backup cash stashed away in a safe money belt.

Debit Card

If properly protected, a debit card can't be stolen as easily as cash. Debit cards can be used across many countries, although you should notify your bank of international usage first. Better yet, they can be used to retrieve cash—if the occasion calls for it—at an ATM and are all-around less bulky than carrying cash on your hip.

Be aware, however, that not all ATM machines (especially in more rural places) accept foreign debit cards and certainly not every restaurant and store will, either. Shops have been known to ban foreign debit altogether, so carrying a form of backup currency is always wise. Additionally, using debit regularly could lead to an accumulation of transaction fees. At ATMs, for instance, you'll be charged for converting funds into local currency and, if outside of your network, an additional ATM fee.

You may also need to change your PIN before you go, seeing as some countries' ATM machines can't process PINs with more than four digits. Others can't process ones with zeros. Lastly, before swiping your debit card abroad, educate yourself on ATM scams and learn how to avoid them.

Credit Cards

Like debit cards, credit cards are small and packable. They're replaceable and reliable. In fact, some hotels only accept authorization via credit, so this may be an integral method for you. MasterCard and Visa are widely accepted in other countries and you can use them for ATM transactions, too.

The bad news is that unscrupulous merchants can steal your credit card information and while you can dispute fraudulent charges and eventually get them removed from your account, the process can be grueling. You may need to cancel your card mid-trip to resolve fraud issues. It would be wise to also find out what your bank charges in international transaction fees before swiping your card haphazardly.

Prepaid Travel Cards

Prepaid travel cards like Visa TravelMoney look like credit cards but function more like a modern version of travelers checks. You simply load the card with money from your bank account and use it like a debit card at ATMs or like a credit card at merchants and hotels. They're locked with a PIN number, as your other cards are, for extra security, but they can sometimes be difficult to use at ATM machines. Additionally, fees for foreign currency transactions can be extremely high—as much as 7 percent in some cases.

Traveler's Checks

Although traveler's checks are historically secure and can be replaced if lost or stolen, they're hardly used anymore. Not many merchants or banks still accept them, even if they're written in their local currency. Merchants may charge you an additional fee for paying with traveler's checks, which are expensive to purchase in the first place (on top of the standard service fee, you'll also pay for shipping if you order them online). Not only are they one of the bulkiest means of payment to carry with you, they're one of the least useful, too.

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