Money, Cards, ATMs and Cash For Travels

Revised and up-dated, replacing the post of May 04 2011.

One of the most frequent questions asked on travel forums is "how much foreign currency should I obtain before I leave home" and "how much should I purchase in Traveller's Cheques". My answers are "as little as possible" and "nothing". Instead, join the 21st Century and use ATMs (Automatic Teller Machines) wherever possible.

Most of my trips involve several countries and many different currencies. For example, my 2011 seven-week trip used in sequence the Malaysian Ringgit, Indian Rupee, Malaysian Ringgit, £, €, Swiss Franc, €, Croatian Kuna, BiH Marka, Russian Rouble, £, Malaysian Ringgit and finally home again, with much of the pre-purchasing using US$. My 2016 rtw trip used in sequence the Malaysian Ringgit, Indian Rupee, €, Albanian Lek, £, Norwegian krone, Swedish krona, Danish krone, €, Cuban peso, $Canadian and $US. Fun :)

Pre-trip planning

My primary card overseas is a debit card suitable for use in overseas ATMs. I choose to use a debit card because credit cards can add significant fees and use poor exchange rates.

Possibly the most important pre-trip requirement is to find a bank which provides a suitable debit card. That will vary by country. As an Australian I found our local major banks added excessive fees when using foreign ATMs on my overseas trips. They also added a hidden fee by using exchange rates 2% or more worse than the actual rate. I searched until I found a bank offering a fee-free account, including no fees using foreign ATMs. Their effective fee is the difference between the real exchange rate and the bank's rate. With this bank that is usually about 1% (I use www.xe.com for comparisons). I load the account before trips with sufficient cash plus a safety reserve and adjust when I get home.

Another advantage of a debit card is security. If it is stolen or misused the amount risked is limited by the cash balance.

I very rarely use overpriced currency exchangers before departing unless I have a need for a specific non-local currency on arrival. For example, I had to pay cash for my apartment in Buenos Aires in US$; I could not get that out of the local ATM and bought it before departure instead. Similarly, when I visited Myanmar in 2012 the government exchange agency in Yangon Airport demanded pristine $US, excluding some serial numbers. I had to arrange that in advance before I left Australia. Expect a cost in excess of 5% using foreign currency dealers.

I do a lot of on-line pre-purchasing of hotel rooms and other services. I don't usually book every night of a trip, but at least the first night after travel. I do not want to be hunting for a place to sleep as I get out of the airport or station jet-lagged or travel-weary. Often the cheapest rate requires full payment but cannot be cancelled. That has the added advantage of locking in the exchange rate of that day if you think it may drop in the future (see my later comment on forex). Some sites convert to my currency for the purchase at their own exchange rate, which can be surprisingly good, so the debit arrives my bank in AU$ with no fees.

If I use my credit card for pre-purchases I also need to carry the card on the trip because some airlines and hotels require the booking card for verification at check-in. Use of the credit card may give me free travel insurance in certain circumstances. Its other use is as my emergency backup if my debit cards are lost, stolen or not accepted.

Heading Out

I always carry a minimum of three cards for redundancy. If you carry only one card, loss or theft or cancellation could be a disaster. It doesn't need to be stolen to have a drama. On our first trip the bank officer handling our account left to have a baby and neglected to arrange automatic monthly credit card payment from our primary account. It maxed out; we discovered that courtesy of a cranky non-English-speaking (and why should she?) French supermarket check-out girl in front of a long and increasingly grumpy queue. The back-up card saved the day – and the rest of that month and my sanity.

The three cards are on different accounts; if one is cancelled the others are still OK. My primary is a debit Mastercard, with a Visa credit card and Visa debit card as backups.

Another reason for backup cards is variability of ATMs. In some countries not every ATM will work with every card, even if the appropriate symbol appears. I once tried all of my cards at six different bank ATMs in Rio before I found one that worked. I had similar difficulties in Buenos Aires and China. But I always eventually found one which worked.

While travelling I keep only my ready-use local cash and primary debit card in my ordinary wallet in my front trousers pocket. For vital documents and my emergency stash I use a Go “secret wallet” which hangs off my belt inside my trousers. I store the essentials in that: my passport, the credit card, backup debit card, spare passport photos and cash in the form of approximately €200 or US$200 in modest bills depending on the region.

Cash on Arrival

I assess my likely need for cash when I arrive in the country and head straight for an ATM at the airport, rail station or nearest border town (if driving) which will accept my debit Mastercard or backup Visa debit card.

Many overseas ATMs charge a fee for service on top of any fee your own bank charges. If there is more than one ATM available check whether a fee applies; if so check the other ATMs for better value if possible. Major local bank ATMs are more likely to be fee-free - but not always.

I only withdraw sufficient in local currency for three or four days, replenishing as necessary, and try to budget so that I arrive at the border on departure with just enough to buy coffee or a meal or duty-free goods on the air side of the security barrier. If I'm driving I usually turn any remaining cash into fuel at the last gas station before the border.

Sometimes it may be necessary to allow for a lack of ATMs if heading into rural districts but I can only recall a couple of times I needed to do that. For the rare times times when there is no ATM I have my "secret" reserve for emergencies of €200 or US$200. One of those two currencies is usually accepted as an alternative, although sometimes the locals use very flexible exchange rates.

Where possible I pay for hotels and other major costs with the debit card. That minimises the amount of local cash I need to carry and has the dual benefit of reducing my security risks and limiting the amount of cash I may need to re-convert as I cross a border to another new currency. However, local cash is always going to get the best price when in markets or for other general purchases.

Heading Home

Unused foreign cash is not always a problem but sometimes it can be costly. Minor border crossings where the locals frequently cross over can have excellent cheap currency exchanges; I have used those in Eastern Europe successfully. But others do not. We lost over 10% converting Swiss Francs to Euros in a French bank near the border. Banks back in Australia charge like wounded bulls for turning foreign notes back into Aussie dollars and will not even look at foreign coins. Back in '03 we didn't know that; we came home with about £40 in coins, which is easy to do with £1 and £2 coins, worth about AU$100 at that time. The bank would not accept them. We spent them on our return to the UK in '06. Today they would be worth $70.

A word of caution.

Trying to predict future exchange rates can be risky. After seeing the Aussie dollar range from as low as US$0.55 to US$1.10 (it is now approximately US$0.80) since 2003 when I went on my first rtw trip I decided I am a wanderer, not a forex trader. Be careful of cards advertised for travellers which lock in an exchange rate when you deposit cash to them. Those rates can move in both directions.

Finally, always remember to get your card out of the machine when you finish. I lost a card that way in Argentina. I take extra care these days to look for the final "are you finished" request, not always in English, if the machine is the type that swallows my card.

Cheers, Alan, Australia