There is no simple answer to cash, credit or debit for smart travel money. It often depends on where you are. Let me begin by discussing what I found most useful as a Canadian on our world tour in 2022. (Updated November 2024)
My biggest tip is to be very careful when using an ATM. It's best to look for one that the various banks recognize, or you'll be charged a 3 to 5-dollar charge. I avoid ATM's at all costs after getting clobbered in Peru.
Although we have a charge yearly for a US dollar and US credit card with RBC, we decided last year that it is well worth the money as long as we travel to the US a few times a year. We had excellent foreign exchange rates and no additional charges to transfer money from our Canadian account into our US. Then, we use the US credit card, which doesn't incur extra costs. We pay the credit card using our US account. We have since cancelled our US credit card and removed a card in Canada that does not have an added transaction fee.
We discovered, however, that if we try to withdraw cash with a debit card, we do end up paying a minimum of a three-dollar charge. We used to be able to draw money out of the US on our Canadian debit card without charges, but that is no longer the case.
Travelling and having the local currency is a good idea, but we never get cash in Canada. We always wait until we arrive in the country and then use our debit card to take out money from an ATM in a bank. My partner doesn't like to carry around much cash, but to make the charge worthwhile, I want to get out the equivalent of $300 and $500, depending on our length of stay and the country, which we split between us to look after.
Caveat emptor – Personal Experiences
The other nasty thing I've discovered with ATMs lately is that they offer you their deal at the exchange rate. They make it look like there's no option. Believe it or not, it is at 12%. Look for the “no thanks” button. You'll still have to pay the three-five-dollar charge, but you won't get caught on the other exchange rate.
If you pay for a purchase with a credit card overseas, you can often pay in local currency. Do not do this. The exchange rates will be terrible.
Even in the strangest places, you can tap your credit card. There are always some exceptions, so it's a good idea to always have a little cash on you. Ask if they take credit cards, but you must be specific. When we were in Portugal, they said yes, but it turned out that they only took the debit card.
In India, we needed to use cash almost all the time. We had to go to four ATMs before we found one that worked. The ATMs worked fine in Thailand, and we got some cash that came in handy.
We never needed cash in the US, Australia, New Zealand, or Switzerland. As for the rest of Europe, I always like to have a few euros on hand, but I don't think we need them often.
A general rule is to use your credit card while travelling but get a card with no foreign transaction fees. Once you arrive at your destination, use your debit card to withdraw a calculated sum of cash.
Online Money Transfers and International Banking use Wise (formerly TransferWise)
I have used Wise to transfer money internationally for six years. It is how we paid for our driver in India.
Day 61 to 64 – The Amazing Ashok’s Taxi Tours
What is the best option for intelligent travel money?
Here's a comparison chart outlining the pros and cons of using cash, debit cards, and credit cards while travelling:
| Cash | Debit Cards | Credit Cards | |
|---|---|---|---|
| Convenience | Limited acceptance, need for physical currency, the potential market for change | Widely accepted, easy access to funds through ATMs | Widely accepted, easy access to funds through ATMs |
| Security | No risk of electronic fraud, but there is risk of loss or theft | Moderate security with PIN authentication | High security with EMV chip and PIN authentication and purchase protection |
| Transaction Fees | No foreign transaction fees, but they may involve currency exchange fees | Foreign ATM fees and potential currency conversion fees | Foreign transaction fees (unless you get a card without these charges) and possible currency conversion fees |
| Budgeting | Visual tracking of spending may be cumbersome for more considerable expenses. | Real-time expense tracking with mobile banking apps | Real-time expense tracking with mobile banking apps |
| Emergency | Useful for emergencies, especially where cards aren't accepted | Quick access to funds if in your bank for emergencies or unexpected expenses | Quick access to large amounts of funds for emergencies or unexpected expenses |
| Rewards/Benefits | No rewards or benefits | Limited rewards or benefits compared to credit cards | Various tips, travel insurance, purchase protection, concierge services |
| Exchange Rates | You may need to exchange currency at potentially unfavourable rates | Competitive exchange rates at ATMs or banks | Competitive exchange rates for international transactions |
| Tracking Records | Limited transaction records, no digital trail | Comprehensive transaction records | Comprehensive transaction records |
Remember that each payment method's suitability can vary depending on your destination, spending habits, and personal preferences. It's essential to weigh these factors carefully and choose the best option for your travel needs and financial goals.
Cash – The Universal Tender
- Small Purchases and Tipping: Imagine wandering through the bustling streets of Bangkok, Thailand, where the aroma of exotic street food fills the air. You spot a food cart selling mouthwatering Pad Thai, and the vendor happily hands you a plate. In this situation, paying with cash saves time and adds to the experience's authenticity.
- Avoiding Foreign Transaction Fees: Let's say you're exploring the historic city of Rome, Italy, and decide to visit the iconic Colosseum. You find a small local shop selling souvenirs and beautiful handcrafted leather goods. By using cash, you avoid foreign transaction fees that might be charged if you pay with a credit card.
- Personal Connection and Cultural Exchange: Picture yourself in the vibrant markets of Marrakech, Morocco. You discover a charming rug vendor with a colourful array of traditional Berber carpets. Engaging in a lively bargaining session with the vendor, all while using cash, becomes a memorable cultural exchange.
- Caveat: Having your cash stolen without any recourse.
Debit Cards – A Direct Link to Your Money
- Keeping Track of Expenses: During a thrilling trip to Tokyo, Japan, you indulge in the country's famous sushi and street food delights. With your debit card linked to a mobile banking app, you can monitor your spending in real time
, helping you stay within your budget. - Contactless Payments: While strolling through the innovative city of Stockholm, Sweden, you visit a futuristic café serving aromatic Swedish coffee. The convenience of using your debit card for a quick contactless payment makes the experience even more delightful.
- ATM Safety Tips: As you explore the historic streets of Athens, Greece, you need cash to purchase a unique piece of local art. Using ATMs within well-known banks or tourist areas ensures a safer transaction.
- Caveat: It is often considered like a credit card for fees.
Credit Cards – A Safe Smart Travel Money With Benefits
- Travel Insurance Coverage: Imagine a dreamy vacation in the Maldives, where you book a luxurious overwater villa. Your credit card provides comprehensive travel insurance, offering peace of mind knowing you're covered in any unforeseen disruptions. Unfortunately, this is only for a certain age.
- Reward Redemption Strategies: While wandering through the vibrant city of New York, USA, you decide to treat yourself to a Broadway show. By strategically redeeming your credit card rewards, you score significant ticket discounts, making the experience even more enjoyable.
- Credit Card Concierge Services: You wish to dine at a renowned Michelin-starred restaurant during a chic trip to Paris, France. Your credit card's concierge service helps secure a reservation at the exclusive eatery, elevating your culinary adventure.
- Caveat: Transaction fees can add up if you don't have the right credit card.
Digital Wallets – The Future of Smart Travel Money Expenses
I acquired a Wise Debit Card to use while travelling. I have both a physical card and one in my digital wallet. If I will be in a specific country for a while and get a reasonable exchange rate, I prefer to preload it with the currencies I need. This can be done at any point in my travels.
Currency Conversion in Real-Time: I use my Canadian balance for small transactions and let the system sort it out.
Now, let's compare the costs of each payment method in different scenarios. Below is a chart summarizing the differences from my own experience:
| Payment Method | Example Scenario | Cost Considerations |
|---|---|---|
| Cash | Getting laundry done in a small shop in Santiago, Chile | That is all they take, but no other fees. Often, since store owners have to pay bank fees, you won't be charged extra or may get a discount. |
| Debit Card | Sushi in Tokyo, Japan | Possible foreign transaction fees, real-time expense tracking |
| Credit Card | Broadway shows in New York, USA | Possible foreign transaction fees, travel insurance coverage |
| Digital Wallet | Chinatown restaurant in Bangkok | Real-time currency conversion, multilingual support |
What is the best way to withdraw money overseas?
ATM Fees: Navigating the Costs of Cash Withdrawals Abroad
When travelling internationally, accessing cash from ATMs is common for many travellers. However, knowing the potential ATM fees can add to your overall expenses is essential. ATM fees can vary significantly depending on the country you're visiting, the type of card you're using, and the ATM provider. Here, we'll explore the various ATM fees and strategies to minimize their impact on your travel budget.
Types of ATM Fees:
- Foreign ATM Fee: Your bank charges a fee for using an ATM outside your home country. The fee can be a flat amount or a percentage of the withdrawal, and it covers the costs of processing international transactions.
- ATM Operator Fee: In addition to the foreign ATM fee, the ATM operator may charge its fee for using their machine. This fee can vary widely between ATMs and can be exceptionally high at ATMs located in tourist-heavy areas or airports.
- Dynamic Currency Conversion (DCC) Fee: If you're withdrawing cash from an ATM that offers dynamic currency conversion, you might be allowed to convert the transaction amount into your home currency. However, this option often results in unfavourable exchange rates and additional fees.
Strategies to Minimize ATM Fees
- Use In-Network ATMs: Check if your bank has partner banks or alliances in the country you're visiting. Using in-network ATMs can help you avoid or reduce foreign ATM fees. Additionally, some banks offer fee reimbursement programs for certain account types.
- Withdraw Larger Amounts: Minimize the number of ATM transactions by withdrawing more significant amounts of cash each time. While this strategy can help you save on multiple foreign ATM fees, be mindful of carrying large sums for security reasons.
- Notify Your Bank: Before starting your trip, inform your bank about your travel plans. Let them know the countries and dates you'll visit to avoid any potential card blocks due to suspicious activity.
- Avoid Airport ATMs: Airports often have higher ATM fees due to convenient locations and tourist traffic. Instead, try to find ATMs in local neighbourhoods or near your accommodations.
- Use Credit Card Cash Advances Sparingly, if at All: Use them sparingly if your credit card offers cash advances. Credit card cash advances usually have higher fees and interest rates than debit card cash withdrawals. It is an immediate loan! A couple of times, the only way to get cash was through a credit card, so I kept a card with no outstanding balance. Then, I immediately used my banking app and transferred the money from my bank account to my credit card.
- Opt for Local Currency Conversion: When withdrawing cash from an ATM abroad, always choose to be charged in the local currency. Avoiding dynamic currency conversion can save you money on unfavourable exchange rates and additional DCC fees.
- Consider Prepaid Travel Cards: Prepaid travel cards can be a viable option for some travellers, as they allow you to load specific currencies and may offer lower or fixed ATM withdrawal fees.
By being aware of these potential fees and implementing these strategies, you can minimize the impact of ATM fees on your travel budget and make the most of your international adventures without breaking the bank and, as always, checking with your specific bank or card provider for the most accurate and up-to-date information on ATM fees before your journey is essential.
- Foreign ATM Fee: Your bank charges this fee for using an ATM outside your home country. It can be a flat fee, such as $2 to $5 per transaction, or a percentage of the withdrawal amount, usually around 1% to 3% of the total.
- ATM Operator Fee: Besides the foreign ATM fee, the ATM operator (the bank or company that owns the ATM) may charge a fee for using its machine. This fee can vary widely and may range from $1 to $5 or more per transaction.
- Dynamic Currency Conversion (DCC) Fee: Some ATMs and merchants offer dynamic currency conversion, which allows you to see the transaction amount in your home currency. If you choose this option, you may be charged an additional fee, and the exchange rate may be less favourable than your bank's.
- Balance Inquiry Fee: Some ATMs charge a fee for checking your account balance without making a withdrawal. This fee is typically lower than the withdrawal fee, but it's essential to be aware of it.
It's important to note that ATM fees can add up quickly, especially if you make multiple withdrawals during your trip. As a result, it's advisable to plan and withdraw more significant amounts of cash at once to minimize the number of transactions and associated fees. Additionally, consider using ATMs that belong to your bank's global network or partner banks to reduce or eliminate foreign ATM fees. This doesn't always work. In NYC, there was a branch of our bank but no reciprocal arrangement.
Since fees and policies can change over time, I recommend checking with your specific bank or credit card provider for the most up-to-date information on ATM fees before your trip. Some financial institutions may also offer fee waivers or reimbursement programs for certain account types, so it's worth exploring these options to save on ATM fees during your travels.
