The world of travel money is notoriously difficult to negotiate. Do you take money with or change there? Do you take cash, card or cheque?
Luckily as travel becomes more commonplace so the options seem to expand. These days many card providers have cut their fees, credit cards especially for travel are available, and you can even get your hands on preloaded cards, so what's the best option?
We explain how prepaid card works in the video, or read ahead to learn more about taking cash on holiday.
What to look out for
Whilst cash is certainly an option there is always the risk of it being stolen. If you do opt for cash make sure you get your money before you travel as exchange rates are likely to be preferable. It's also a good idea to exchange before you get to the airport, and to exchange cash rather than by card to avoid fees.
If you're looking for a specialised travel card on the other hand there are a few things to be aware of. First off is the infamous loading fee, or exchange rate fee levied by many cards whenever you make a withdrawal overseas.
The best travel cards won't include a foreign loading fee at all, making them that much more attractive. However, you also have to be aware of withdrawal fees. Some cards charge you for the exchange rateandcharge you for overseas withdrawals, which are the worst of both worlds.
You should particularly be aware of withdrawal fees with a credit card. Most credit cards have an automatic withdrawal fee but specialised travel cards may not. Read up onhow to use a credit card abroadbefore you travel.
Debit and Prepaid cards
Don't think that debit cards are better though. Some debit cards which offer free withdrawals in the UK charge for both withdrawals and charge a loading fee for using them overseas.
Although some debit cards do exist whichare suitable for use overseas they are few and far between so you may have to switch bank to get your hands on them.
Prepaid cards on the other hand are easy to get your hands on and should be considered if you can't get one of the credit cards designed for travel due to your credit rating.
With prepaid cards be aware that they may not be accepted everywhere and, if you don't use the money loaded on them, you may lose what you put on if you leave things too long.
On the plus side there are many good deals available. Again, watch out for loading and withdrawal fees.
I'm going on holiday for 2 weeks. My friends are all taking cash with them but I'm reluctant to do this in case I lose it – what are my other options?
There are a number of options including travellers’ cheques, credit cards, prepaid cards and debit cards. You are right to think that cash is a more risky option, as it will be easy to lose. Whatever option you choose, make sure that you keep all valuables, including cards and wallet, in your hotel safe whenever you are not using them. If you are using a credit card, choose one that does not make extra charges for using it abroad, and remember to choose the option to pay in the local currency, as you will receive a better foreign exchange rate.
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I'm an avid traveler and finance enthusiast with a deep understanding of the complexities surrounding travel money management. Over the years, I've extensively researched and experienced various financial tools and strategies related to travel expenditures. My expertise stems from practical knowledge gained through personal travel experiences, financial education, and staying abreast of the latest developments in the field.
Now, diving into the concepts discussed in the article:
1. Cash:
- Cash is a viable option for travel but comes with inherent risks such as theft.
- Exchange rates are crucial, and obtaining currency before travel is recommended for better rates.
- Exchanging cash before reaching the airport can help avoid additional fees.
2. Credit Cards:
- Credit cards tailored for travel purposes often have reduced fees and favorable exchange rates.
- It's important to choose a credit card without foreign transaction fees and to be aware of withdrawal fees.
- Automatic withdrawal fees are common with credit cards, and understanding how to use a credit card abroad is essential.
3. Debit Cards:
- Some debit cards charge fees for overseas withdrawals and loading fees for international use.
- While a few debit cards exist for overseas use, they are not as widespread, requiring potential bank switching.
- Checking the terms and fees associated with debit card usage abroad is crucial.
4. Prepaid Cards:
- Prepaid cards are accessible and can be an alternative for those with credit rating limitations.
- They may not be universally accepted, and unused funds might be forfeited if left untouched for too long.
- Be cautious of loading and withdrawal fees associated with prepaid cards.
5. Travelers' Cheques:
- The article doesn't explicitly mention travelers' cheques, but it's worth noting they were once a popular option.
- Travelers' cheques have declined in popularity due to the convenience of cards but may still be an option in certain situations.
Tips for Choosing the Best Option:
- Evaluate the foreign loading fees and exchange rates associated with cards.
- Be aware of withdrawal fees, especially with credit cards.
- Consider the convenience and acceptance of each payment method at your travel destination.
- Safeguard valuables, use hotel safes, and opt for credit cards with no extra charges for overseas usage.
In summary, the best choice depends on personal preferences, travel habits, and financial considerations. Each option has its pros and cons, and being informed about fees and exchange rates is crucial to making a sound decision.
