Using Money Abroad: Credit Cards vs Cash
One of the biggest concerns for first-time international travelers is how to handle money abroad. Will you be able to use your credit card? Do you need cash? How do you even get foreign currency?
Don’t worry. I had the same questions when I went on my first international trip all those years ago. We’ll get you caught up in no time.
In much of the world, credit cards are widely accepted. However, cash is still preferred in some areas, and possibly your only option in more remote areas that don’t have internet connections. That could be anywhere from rural Central America to a US national park.
In this article we’ll talk about all of it: credit cards vs cash, do you even need cash, how to get foreign currency for your trip, common fees to watch out for, and tips to keep your money safe while you travel.
You’ll feel much more comfortable with the idea of money abroad by the time we’re done.
Let’s talk about it!
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Money Abroad: Credit Cards vs Cash
There’s no one right way to pay for expenses abroad. It’s really a personal preference. If you use credit cards at home, use credit cards abroad. If you prefer cash, use cash abroad. Both are fine.
However, both have their downsides, too.
Some credit cards charge foreign transaction fees for purchases made in countries other than your home country. Those add up quick and can be a significant expense.
To use cash abroad, you need to be familiar enough with the foreign currency to both recognize if the price is fair and to be able to confirm you’re getting correct change.
That’s easier to do when the exchange rate is close to 1:1, but not so much when it’s more like 1 US Dollar = 157 Japanese Yen. There are apps to help with the conversion, but it can be stressful in the moment if you’re in a long line with impatient customers behind you.
I will always personally prefer credit cards, but there are some areas that require cash only. You’ll probably end up with a mix of both, like I do on every trip.
Let’s talk about both so you can decide which is best for you.
Do You Really Need Cash?
As a millennial, I’m highly biased towards credit cards. I try not to carry cash whenever possible. Coins are just annoying. Cash is slow and a hassle. It’s so much faster and easier to just tap your credit card and move on.
Plus, if you have the right credit cards, you earn rewards for every dollar spent, partially funding your future vacations with your current vacations. It doesn’t get better than that!
But there are situations where cash is good to have on hand.
- Tipping guides or waiters
- Coins for public restrooms in Europe
- Emergencies
It’s wise to always have enough cash to cover the cost of a taxi or your meal. I’ve been stuck at restaurants, waiting for their credit card machines to come back online after a tech glitch because we didn’t have enough cash on us to cover the meal. If we’d had cash, we could have paid and left.
That happened at home in the US, by the way, but it can happen anywhere.
On our first trip to Europe we discovered (the hard way) that public restrooms are few and far between – and aren’t free! They require a 1 euro coin to access them. Most aren’t attended either, so you need exact change, which means carrying coins around. Ugh.
In some areas, cash is still preferred over credit cards. In Hawaii, for example, we used credit cards without issue everywhere except for taxis. Most of the taxis we took greatly preferred cash. They have credit card readers; they’re just not fans of having to use them.
If you’re visiting a rural area, or sometimes even markets in urban areas, cash may be the only option because they don’t have the internet connection to run credit cards.
Going on a Caribbean cruise? You don’t need much cash, and you probably don’t need anything besides US dollars. Depends on if you book shore excursions through the cruise line or on your own.
We didn’t take any foreign currency on our cruise to Mexico, Belize, and Honduras and had no problems. You can bring cash to tip staff on the ship or guides on excursions, but you could also usually prepay tips at the time of booking.
How Much Cash Should You Bring?
How much cash you need is highly subjective based on where you’re going and what you’re doing. It’s usually wise to have some cash on you, regardless.
I typically take out a minimum of $200 in cash for every trip abroad. I don’t always need that much, and, sometimes, I need more. It’s just a rule of thumb to get started.
That often covers tour guide tips, a dinner or tour or two, and all my ice cream/snack breaks.
Keep in Mind: I get $200 in whatever currency I’m exchanging for, meaning I’ll get 200 euros which is actually about 208 US dollars at the time I’m writing this. How far that $200 will stretch depends on the cost of living in the country you’re visiting. Switzerland is notoriously expensive. Southeast Asia is much more affordable.
Banks will use the daily exchange rate when calculating your currency conversion.
Currency exchangers, often called Bureau of Change or something similar and found at airports and train stations, will often add their own fee on top of the exchange rate.
That’s why I always prefer to get currency directly from a reputable bank.
How to Get Cash for Your International Trip
Getting foreign currency for your trip is as simple as walking into your bank at home and asking for it.
This is standard practice at bigger national banks, but your local credit union might not offer this service. You’ll have to check. Fees will vary by bank, and it usually takes several days to arrive.
Alternatively, you can take your debit card abroad and use it to withdraw money from a reputable bank’s ATM in your destination. You’ll get hit with fees, so get all the cash you need in one transaction.
I don’t recommend using public ATMs or the currency exchangers at airports or train stations. They always have additional fees, usually hidden in their less-than-optimal conversion rates, but you’re not a bank so it’s hard to check.
There are pros and cons to both options for getting foreign currency, but I’ve done both and each works just fine.
What to Do If Your Card Gets Stolen While Abroad
This is a common fear for nervous travelers, but I want to point out that you are no more likely to get your card stolen abroad than you are at home. Use the same common sense you would at home, and you’ll be fine.
That being said, doesn’t matter if you’re abroad or at home, sometimes your card or card number gets stolen even if you didn’t do anything wrong. You’re not liable for fraud, though, so don’t worry. You’ll likely get your money back quickly if you report it quickly.
It’s easier, but still a hassle, to deal with a stolen credit card than a stolen debit card. I’ve dealt with both, and my bank handled both quickly and professionally.
In both scenarios, you report fraud to your bank, they freeze the card, open a fraud case, and either credit your money back (for debit cards) or wipe the fraudulent charges (credit card).
But, the crediting your money or wiping the charges is usually not instantaneous.
That’s why credit cards are usually better to have stolen than debit cards. Losing space on a credit card isn’t as financially crippling as losing your actual money from your bank account.
Regardless of where you are, if you lose a card, report it immediately to your bank.
Yes, you might have to call the international number. That’s absolutely worth it to get your card frozen so whoever stole it can’t drain your account or max out your credit.
Most banks have a way for you to freeze the card yourself from their apps. That might be faster, if you can get around the two-factor authentication in a foreign country.
If you can’t get emails or texts, you probably can’t get into your bank’s app or website while you’re abroad. In that case, calling their international line is your best option.
Next, after you’ve reported the fraud and a case has been opened, they’ll cancel the card and send you a new one to your address on file (at home). This is why you want to have a backup card with you on vacation, just in case.
If you don’t have a backup card, your bank may be able and willing to overnight you a new card to wherever you are in the world. You’ll have to sort that out with them, but most are willing to do that for a fee.
Lastly, you need to update any autopay bills that would have gone on the stolen card. You don’t want your utilities or streaming services or recurring Amazon diaper shipment to bounce because they tried to charge the now-canceled card.
5 Quick Reminders for Using Money Abroad
- Split up your cash. Don’t keep it all on one person or in one place, like your wallet. Leave some in a safe place at your lodging, some in your wallet for ease of access, and some in a money belt hidden under your clothes.
- Bring a backup card, just in case. You might want to use just 1 card for all your purchases, but it’s smart to have a backup card with you, just in case the first gets lost or stolen. Just don’t keep them together so they don’t get lost together.
- Leave your regular wallet or purse at home. You don’t need your loyalty cards or your business credit card while you’re abroad on vacation. Swap a purse for a wristlet that’s harder to pickpocket.
- Most debit cards have foreign transaction fees when used abroad. Use a no-fee credit card instead.
- Don’t use a credit card to get cash out at a bank. That’s called a cash advance and is subject to high fees and interest rates.
Happy travels!
About the Author: Rachel Means
With six-figure student loan debt and only 10 PTO days per year, Rachel started traveling the world. A decade later, she’s paid off her loans, changed careers, and been to 42 US states and 17 countries. She’s an expert at planning and budgeting for travel and loves to help others do it, too! Read her full story here.
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