Ok here we go! Today’s travel advice is about carrying money overseas and the way I’ve always done it in over 50 countries now. This can be a rather confusing topic for those who are new to travelling. Do I take a lot of cash? Should I take and use my cards? What about travelers cheques? Add to that, local situations in each country such as conflict in Egypt or the economic crisis in Greece and the confusion only builds.
When travelling you basically have three options at your disposal for foreign currency:
- Plastic (credit cards, debit cards, etc.)
- Travelers cheques
Let’s go through each of them on by one.
I want to start with this one only to say I NEVER use travelers cheques. These are a thing of the past IMO and simply not worth it. Don’t waste your time or money in buying them. First of all, they CAN BE expensive to buy and to cash in. Depending on your bank, it may cost you about 1%-3% of the amount of the cheque to buy it. So if you buy a $1000 travelers cheque, it could cost between $10-$30. Similarly, the cheques can then incur another 1-3% fee by the foreign institution accepting the cheque when you go to use it. Some banks don’t charge their customers to buy these cheques but seeing as how their acceptance around the world is declining, many banks don’t even regularly carry them anymore or accept them for that matter. So even if you manage to procure them for free, if you do find a bank or other institution overseas that does even accept them, chances are high that they will charge the 1-3% fee.
I also don’t use travelers cheques because they are inconvenient. Worldwide acceptance rates are on the decline so finding places to accept them in foreign countries can be a struggle and one which i’d rather avoid while trying to enjoy my trip. Hardly anything ruins a day faster while traveling than not being able to access your own money to pay for things overseas.
But aren’t they the safer option? Compared to cash, yes. If they are lost or stolen they can be replaced often same day and you do not lose the value on them like you would if your cash was lost or stolen. Pickpockets can be a big issue in many destination around the world, especially the very crowded ones. However if you use common sense when traveling (which you should anyways) and stay aware of your surroundings you’ll never have your money lost or stolen in the first place so this issue of safety becomes rather moot. I have been to over 50 countries now and never once lost any money or had any stolen. You’ll be fine!
Often times I carry only small amounts of cash on me at a time, it’s safer and I’d rather not end up carrying a ton of coins with me all day long. I don’t usually buy any foreign currency cash at home before leaving for trips. Instead I just get it from an ATM once I arrive in another country. The exception to this is if I am going to a third world country where ATM’s can be a little more scarce. In that case I will purchase a small amount, maybe $100 worth, before leaving home. If you want to buy foreign currency before departing just go to your bank where their selection may be limited to more of the big currency such as CAD, USD, Euro and Pounds or go to one of the currency exchange centers (such as the ones you find in the mall) where they have a lot more variety of foreign currency readily available.
Once I arrive in a foreign country I try not to withdraw cash from ATM’s at the airport. Airports tend to have some of the worst exchange rates. This is not always possible to avoid but can usually be done. The exception is if you need to obtain a visa-on-arrival at the airport you just arrived in and need to withdraw some cash to pay for it. However, with careful planning and research about visa’s in the country you will be visiting, you can prepare for this beforehand.
Outside the airport, any ATM will usually do. Just check the back of your debit card to see which network(s) it belongs to (look at the logos on the card) such as PLUS or CIRRUS. ATM’s always have signage on them indicating which networks the particular ATM works with so if your card is a PLUS card then obviously you can only use it to obtain money from an ATM that also supports PLUS. Keep in mind any foreign transaction fees or withdraw fees that your bank charges you at home every time you use your debit card as well as any fees that the ATM charges (usually in the vicinity of $2-$3 for a withdraw).
Another thing to note with cards and foreign currency is that of chip vs the stripe. In Canada at least, most cards now have the chip on them and the banking institutions (credit cards included here too) actually now use the stripe as a fraud detection method. What I mean by that is if your debit/credit card that has a chip is used by a machine that tries to read the swipe stripe on the back rather than the chip then they will suspect the activity as fraudulent. This happened to me a couple times, especially in Asia. The problem is, if you go to less-developed countries where they have not yet upgraded all of their ATM’s to chip machines, then even withdrawing from a legitimate ATM could be deemed fraudulent just because that ATM does not yet support chip and tried to read the stripe. In this case, your institution may put a block on your card.
A way to at least TRY to avoid this unnecessary blocking is by using only ATM’s at the banks themselves in the foreign country rather than the random ATM on the street or in a grocery store.
Finally, the last option of payment in foreign countries is the credit card. This is actually my most preferred way to pay when overseas. Credit cards are very widely accepted around the world (just make sure you have a Visa, MasterCard or American Express credit card as they are the most widely accepted worldwide) and they often get one of the best exchange rates of any of the above mentioned methods. Just make sure you know about the conversion fee that the card company (Ex. MasterCard) takes (1-2%) and any conversion that the bank that issued the card (Ex. RBC) may take. Also be aware of any foreign transaction fees that your institution may also charge when you use your card overseas. If your card incurs a foreign transaction fee at all, ditch the card for travelling purposes and get one of the cards that has no foreign transaction.
When i’m traveling I use my MasterCard as often as I can to take advantage of the better exchange rates and it’s just more convenient than carrying around a lot of cash with me.
Some More Tips
Here are a few more tips I have come across while travelling that will hopefully help other travelers.
- Always make sure to call your credit/debit card companies before you leave and let them know about your travel plans so you can avoid being blocked in another country. Trust me, not being able to access your money in another country is one of the worst feelings. I once had my cards blocked twice in one day in Malaysia and did not have any cash left with me s calling to the bank was next to impossible. It’s a real catch 22 situation. Hotels, airports or anywhere with a phone will charge you to make the call (even if it is to a toll free number) but I didn’t have any money to pay them because I needed to call my bank to unblock my card so I could obtain money in the first place. Not a good feeling at all.
- Also, make sure you are aware of any countries where your debit card may not even work. This is entirely dependent on your financial institution though. For example, I do my banking with Meridian Credit Union and their debit cards do not work, by default, in the following countries due to high levels of fraud and loss:
- Sri Lanka
- Dominican Republic
- If you have a MasterCard credit card and contact MasterCard to tell them of your impending travel plans, you’ll reach the automated system that says something along the lines of “our fraud detection system is now good enough that there is no need to notify us of travel plans”. Let me tell you first hand, this is NOT true and it is NOT good enough. If you are traveling to Europe or other first world, developed countries then you’ll be fine for the most part. However if you are travelling to Asia or South America for example, call them and get in touch with a customer service representative. When they tell you you don’t need to notify them, tell them you want your destinations listed on your account anyways and the restriction on the account relating to the fraud system lowered so there is less chance of being blocked. Sure you take more risk in this case but it goes back to using common sense when traveling and you’ll be fine.
- One thing relating to all of the above points is to make sure you take the phone number of your financial institution with you so you can call them in case a block is put on any of your cards or any other unfortunate situation arises