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Information on using money is covered in shopping, and the Buy section of destination guides. This article contains general information about obtaining money, in its various forms, for use in many destinations.
There are a number of ways to obtain and exchange money while traveling. You are always trading off expense, risk, and convenience. Unfortunately, organized and other criminals have developed numerous ways to take your money. Credit cards have legal limits on how much you are liable if used illegally. Debit and ATM cards have other risks/benefits. This article discusses how to use them, their risks, and how to obtain currency or cash.
Debit, credit, ATM and prepaid cards
Debit/ATM and credit cards can variably be used to withdraw cash from automatic teller machines (ATMs) and to make purchases at stores, restaurants, and hotels where they are accepted. Debit and ATM cards are sometimes known as "check cards" because they generate a withdrawal from an associated checking account when used.
"Chip" cards and security
Europe has long enjoyed the use of charge and debit cards with embedded security chips (as shown in the photo). Such cards should be virtually impossible to counterfeit. They are usable in merchant registers, kiosk ordering machines, fuel pumps, ATMs and other devices that can read/use the chips. "Chip" card terminals are being implemented in many other parts of the world, as well. In essence, wherever in use, "chip" cards (with readers) provide far better security for users, sellers and banks than that offered by cards using only a magnetic stripe. Note however, that the magnetic stripe is as easy to copy from these as from other cards.
In the U.S., the on-going issue (ca. Fall 2015) of "chip cards" has gained considerable momentum. Merchants there have been "encouraged" by law to also rapidly install registers, etc., that read and interact with those cards and generate signature receipt slips. Most cards also have magnetic stripes, usable in machines that can't read the chips. Machines that can read chips will refuse to use the magnetic stripe. "Chipped" credit and debit cards will initially generate a sales slip for your signature, a step that somewhat reduces the excellent level of security obtained by "pure" chip/PIN operation. The government and banking industry are already pursuing the pure chip/PIN mode for all card usage.
Now, and after "chip" cards are issued, if your card and PIN are compromised, criminal use will be limited by (1) your notice to the bank of the compromise, and (2) your prearrangement (before travel) with your bank(s) to limit total daily withdrawals or major purchases to certain amounts, in certain locations, on certain dates. That notice to your bank(s), about pending travel, and immediately after any card/PIN compromise, will be a re-occurring theme in this article.
The following sub-sections will discuss how to use all cards as securely as possible.
Acceptance of debit and credit cards at point of sale
The acceptance of debit and credit cards varies by country, with acceptance generally being more common in more developed countries, and close to non-existent in non-developed countries. Check the country guides for details on credit card acceptance.
By far, the most accepted cards worldwide are VISA and MasterCard. American Express and Diners' Club cards have global networks but acceptance varies widely depending by country and merchant. Discover, JCB, China UnionPay, NYCE, Star, MAC, and Shazam are regional, not global, and are rarely accepted outside of the region they are issued in, and, even then, acceptance is often limited to areas catering to visitors from that region. However, Discover, JCB and China UnionPay have an alliance with each other, which allows any of these cards to be accepted on any of the other networks. Sales personnel may not be familiar with this, but it will work if you can convince them to try.
Using debit/ATM and credit cards at ATMs
With the exception of a very few countries, Mastercard, VISA, and Cirrus- and Plus-networked cards are accepted at nearly all ATMs worldwide. Because an ATM's servicing bank(s) will impose one or more fees for you to accept (or decline with no issue of currency), ensure that the machine will serve you in a language you understand. You should see an opportunity to select your language before starting any action, or immediately after inserting your card.
As prompted while you use the ATM, you'll "identify" yourself to servicing bank(s) for that machine and your account by entering a Personal Identification Number (PIN). This is usually very shortly after you have inserted your card and its data has been read. Because it makes so much possible, never keep your PIN near or write it on the card it activates.
When in an unfamiliar location and you have any choice, use an ATM in a bank lobby (not just on its property) or in a highly public place, e.g., airport terminal. Cover the number keys with something as you enter the PIN, so entry can't be seen by a hidden camera. Also avoid using any ATM with several people waiting in-line but not keeping their distance from active users. All this helps to defeat scanners/cameras secretly installed by criminals (even in ATMs elsewhere on bank property, e.g., for walk-by/drive-through customers). And it reduces the risk that you might be robbed shortly after withdrawing cash.
Using a credit card to get currency is nearly always treated by your bank as a loan. This is known as a cash advance. In addition to the transaction fees charged for using your credit card (or most any card), you will likely be charged substantial daily interest on the loan until its balance is fully paid. The interest rate is almost always higher than that for purchases made using the credit card. Unlike when using your credit card for purchases, there is usually no grace period, meaning that you start incurring interest immediately once the transaction has gone through.
Some developing countries either have no ATMs, very limited ATMs, or are not connected to the international networks. They include Myanmar in Southeast Asia, as well as parts of Africa. In other countries, not every ATM accepts foreign credit or debit/ATM cards. In some countries ATMs may be common in bigger cities but virtually non-existent in more remote places and on the countryside.
- In Japan, you must look for specific places such as post offices or 7-Eleven convenience stores, as most Japanese bank ATMs don't work with international cards: the cards are incompatible in size. Some businesses that specifically cater to foreign tourists will accept Visa, Mastercard or American Express. If you are staying for a substantial time, look into the preferred JCB credit card, though getting one requires establishing an account.
- In China, UnionPay is the preferred credit card type, although it isn't too hard to find a store or ATM that accepts more global types such as Visa or Mastercard.
In any event, do the necessary research to find out about ATM availability wherever you'll travel. If ATMs appear problematic, ensure that you have other means to obtain adequate local currency during your travels, e.g., currency exchange.
Debit/ATM versus credit cards
Debit/ATM cards are linked directly to a bank account and immediately deduct the amount of the purchase or ATM withdrawal from the account. Credit cards are not linked to an account with funds in it, but instead charge against a credit line, which must be repaid at a later date.
ATM-only cards (aka ATM cards) (often without a Visa or Mastercard logo) can only withdraw cash from an ATM. They are linked to your bank account in the same way as a debit card, but with different risks. (See "Debit and ATM cards: Risks/trade-offs" below.)
When using any type of card to withdraw cash, your bank will likely charge a cash advance fee of at least 1–3 % on top of foreign exchange and other transaction fees. In addition, most credit card users will be charged other fees and (often daily) interest on your cash advance from the day you withdraw it from an ATM.
- Such costs will be unlike and separate from those for retail purchases, and the interest rate for cash advances will often be higher than for purchases. In some cases, your bank may limit credit card cash advances to an amount substantially less than your overall credit line.
- While there is usually a grace period when using your credit card for purchases, meaning that you will not be charged interest if you pay off your balance in full within that period, there is usually no grace period for cash advances.
- In using your credit card to obtain cash, you may avert interest charges by making a payment into your credit card account in-advance so it has a positive credit balance. Check with your bank to ensure it supports this.
- Your bank's liability in case of credit card/PIN loss may be limited by law, likely at worst equal to your credit limit and credit balance.
Despite the fees you or the merchant pays, when making point-of-sale purchases, your costs/fees will nearly always be better if you use a credit card than a debit card. If your card is stolen, your liability will usually be limited by law (for U.S. banks, $50 for all misuse), and you can dispute fraudulent charges on a credit card. But, a stolen debit or ATM card and PIN may be used to empty your checking account, and require many hassles to re-establish security and (perhaps) regain funds. Again, see "Risks/trade-offs" below for ways to avoid this.
As above, credit card companies will protect you if you are charged more than you agreed to pay, if you pay for something and never receive it, or if your card is cloned (duplicated) without your knowledge and then fraudulently used without being physically stolen.
Credit cards may also include other benefits such as cancellation insurance for flights (usually only in the case of serious sickness), theft or loss insurance for goods (usually only if stolen within 90 days of purchase and a proper police report is filed), collision insurance for rental cars, and emergency health insurance in certain situations while you are traveling. Your card's issuer should fully describe those benefits and their limits.
Credit cards may also provide rewards programs that give you free flights or cash back after a certain amount of spending. The cards may be linked to a frequent flyer program. If you have an American Express card, in case of a lost or stolen card, you can obtain cash advances and replacement cards easily, by visiting an American Express Office.
There are, however, a few merchants (mostly hotels and rental car firms) who abuse credit card clientèle.
- A hire car firm may attempt to rent you a vehicle with minor windscreen damage or small dents, then accuse you of causing that or more damage when or sometime after you return the vehicle. It may automatically charge claimed repairs to your card at questionable or inflated prices. This justifies action before you accept the vehicle for use, i.e., inspect the car thoroughly, inside and out, for damage or missing items, use your cell phone or separate camera to document any untoward condition seen, and have the condition noted with an agent's initials/signature on your contract or check-out sheet. Consider taking similar photos as you return the vehicle, as proof of its condition.
- With hotels, examine the details of your bill before you pay and leave. It can be very difficult to get your bank to process a charge-back if you are careless about an overcharge or hidden charges at the time of booking, e.g. resort fees.
You'll nearly always receive a better exchange rate if you have the merchant charge the amount in local currency. That way, you receive the servicing bank's exchange rate, usually substantially better than that offered by merchants.
Traveling with debit/ATM and credit cards
Your bank and experienced travelers regularly recommend that you:
- In-advance, advise your card-issuing bank(s) about any travel. They can set certain "flags" on your account to recognize genuine use away from home, and better prevent actual misuse. That way, necessary and valid transactions won't automatically alarm their fraud experts, generating unnecessary delays, even card cancellation.
- You may have to get international ATM support specifically activated for your debit or credit card.
- Make note of telephone numbers and Internet addresses (URLs) to use if your card is lost or compromised, e.g., scan them or write them down. Keep those notes where easily accessed, but not where they would be lost if any card is lost. Such numbers and addresses are often found on the back of each card.
- You should travel with one primary debit/ATM or credit card as well as a backup card from a different issuer, in case you have trouble with your primary card. When on an outing, clear your wallet/purse of additional cards – these will only cause you more headaches if your wallet/purse is lost or falls out of your control. Keep the backup card(s) in a safe location, e.g. in a safe where you are staying.
- Be sure you know the Personal Identification Number (PIN) for each of your debit and credit cards in case of an emergency. Many people find they cannot access needed cash using their card(s) because they've forgotten the PIN. However, never write down any PIN on or store it near the card it activates; you risk having your account wiped-out, with the bank questioning its liability due to your negligence.
- PIN code lengths vary from country to country, but up to six digits are usually accepted anywhere on the Plus/Cirrus networks. If you have a six-digit PIN and six digits don't work, try entering just the first four numbers of your PIN, or find another ATM. If the ATM requires 6 digits and you have only 4 digits in your PIN, try entering 00 as the last two digits.
- If your PIN is "word-based" know its numeric equivalent. Many ATMs outside the USA have no letters to correspond with the numbers (example: "CASH" = 2274 – but don't use such a PIN). Change your PIN before departure if it will make your PIN digits easier to remember, but choose it such that it makes sense only to you, not to a criminal trying to guess it.
By law in most countries, you are not responsible for any expenses made on your card that occur after you report it lost or stolen. So make sure you report any loss or suspected compromise immediately. Use of credit and debit cards is not recommended in a few countries due to high potential for fraudulent misuse, e.g. Nigeria. Your bank should be able to advise you.
Most credit cards issued in Europe, Australia or Canada feature a chip and PIN system, where credit cards all have a chip built in and you have to type your PIN code into a reader instead of signing a receipt. As above, chips have recently been mandated for U.S. card issuers by late 2015. They will initially operate without a PIN and securely generate a merchant receipt for your signature.
- In the U.S., all stores that display the VISA, MasterCard, or American Express logos must also accept the swipe-and-sign version of the credit cards; however, some may initially refuse to do so (be persistent, asking for the manager if necessary). Elsewhere however, with self-service machines such gas pumps and ticket vending machines, you may be out of luck.
- Chips on some cards (and passports) include radio frequency identification (RFID), made to be energized by a nearby (authorized) scanner. Unfortunately, many RFID chips have inadequate security, e.g. allowing almost any nearby wireless scanner to "read" data the card/chip holds. That can include personal and financial information, or enough data to gain access to it. (This has spawned a small industry in RFID-protected wallets for cards and passports.) Learn from each issuer how secure your RFID cards are, and carry and protect them accordingly.
Many Visa or Mastercard debit cards (mostly issued by banks in Asia) are not embossed (no raised letters/numbers), hence they are indicated as "For Electronic Use Only." This means that they can't be used for transactions that require physically imprinting on a merchant's charge slip and/or manual authorization. Acceptance of these "Electronic Use Only" debit cards for online purchases may not be guaranteed even with sufficient funds, and may need clarification with the issuing bank. Consult the issuing bank about how to effectively use the card if going somewhere you've not yet used it.
Holds on funds: Some hotels and car rental companies put a funds "hold" on your credit card for a considerably larger amount than the amount of your pending room or vehicle charge. A $100 car rental can render a card with a $3000 credit limit useless if the car rental agency puts a hold on an excess amount for the full $3000. Hôteliers are infamous for not bothering to remove holds after a client checks out, even if directly asked to do so; car rentals can sometimes tie up a card balance for a month or two. Keep track of these amounts, and try to make sure your credit limit is considerably in excess of the amount you intend to spend.
- Hotels that refuse cash, travelers checks or any payment medium except a credit card should be treated with caution: they may leave you open both to hidden charges and holds which tie up your available limit unnecessarily.
- "Cardlock" (pay at the pump) fuel pumps will attempt authorization for at least $75–100 even when a lesser amount of fuel is requested and won't work on a prepaid card with no PIN; these issues can be avoided by having the attendant process a transaction manually.
- Restaurants may process authorizations (not charges, but brief "holds" nonetheless) for more than the purchase price, e.g., if their operators feel entitled to a tip. All of this activity may cause valid transactions to fail, e.g., low-limit cards can have the money tied up with unjustified holds, or their staff that monitors fraud may be concerned, as such holds build up without resolution.
Debit and ATM cards: Risks/trade-offs
The risks for debit versus ATM cards are somewhat different and at times much greater for debit cards. The basic rationale is:
- If your ATM card or data is lost but its PIN is not compromised, it has no value for any finder/user as it cannot be used for purchases or ATM withdrawals.
- If your ATM card and its PIN are compromised (e.g. by a hidden card scanner and camera), total daily withdrawals are limited to an amount set by your bank or as arranged by you in-advance, e.g., for certain amounts, locations, dates or frequencies.
- If you know or suspect they've both been compromised, notifying your bank stops all further withdrawals.
- If you've not notified the bank, withdrawals can continue, but only within parameters you or your bank have set in-advance.
- If your debit card is lost, a finder can use it without a PIN to make numerous purchases as long as each is below a certain "trigger level" watched by the bank's fraud department, often USD 100. Above that amount or after you've notified your bank, any attempted use can generate a "flag" for the bank and merchant, and the purchase will be disallowed. Criminals know this and exploit any "swipe" card accordingly, e.g., using rapidly and expertly-crafted false identification and duplicate cards to quickly make many retail purchases at less than the trigger level.
Loss of any debit card and compromise of its PIN will remain a risk until reported to the servicing bank.
- The present and near-future balance of the bank/checking account to which it's linked may be exploited. If that account is linked to other wealth or personal identity data, criminals will exploit that in any way possible.
- In the past, thousands of bank and other accounts have been wiped-out within hours after unknown compromise, often by actions against "swipe" cards in places quite distant from where the card/PIN was compromised.
Accordingly, experts suggest that frequent travelers, and those who must use ATMs in less-desirable locations, consider obtaining and using an ATM card instead of a debit card, very preferably with security chip. As above, you can and need to help avoid trouble by notifying your bank about your travels in-advance, and your intent to make withdrawals only in certain amounts at certain destinations on certain dates. And if the card is lost, notify the servicing bank immediately to prevent misuse. As noted elsewhere, you should then use a different card (you've also brought with you) against a different account.
Card usage fees
Transaction fees can be charged by the merchant, the ATM-owner, the bank that issued the card, and in-effect through an unfavorable exchange rate.
- Most card issuers will charge a foreign transaction fee of up to 4% of the transaction amount every time you make a purchase or cash withdrawal in a foreign country. However, in the United States, several issuers (including Capital One, First Republic, Marshall & Isley, PNC Bank, Webster Bank, and many credit unions) offer cards with low or no foreign transaction fees. This can save you a considerable amount on any extended travel. If you don't have such a card, you might apply for it before traveling. It can take up to 3 weeks to receive your card after you request it.
- In many cases, foreign transaction fees are included in the exchange rate, or purchase or withdrawal amount. Though they are seldom itemized, they are in fact being charged. You should be aware of the "spot" or interbank rate as a basis for comparison, e.g., from  or other sites.
- The exchange rate applied to a transaction is usually the rate on the transaction posting date, which can be up to 10 days after the actual transaction date. Therefore, unless currency rates are fixed, it is impossible to know exactly what exact exchange rate will be charged until the transaction is posted to your account. This is a problem only if your home currency declines on the world market and/or destination currency rises--otherwise the change will be in your favor.
- In general, in addition to the foreign transaction fees, American Express charges an exchange rate that is 0.0% to 0.5% worse than the rate charged by VISA and MasterCard, and the latter may charge a rate that is 0.0% to 0.5% worse than the interbank rate quoted on most currency conversion websites. The exchange rate used by Visa on a particular date can be found here.
- Nonetheless, nearly always, the total cost of obtaining foreign currency by ATM will be substantially less than that charged when offering your home currency to a currency exchange service.
- If you are staying for a long time in a single country, you may save on fees by opening a local bank account and obtaining a local ATM card (as discussed for Japan above). You will usually need a local mailing address and a valid residence permit to do so.
- If you are faced with a situation where a PIN is required (such as certain unmanned train ticket kiosks in Europe), it is certainly better to use a debit/ATM card than a credit card, as PIN-based transactions with a US credit card may incur cash advance fees/loans (in addition to foreign exchange fees).
- Foreign currency transaction fees may be charged if the merchant uses a foreign bank, even if the transaction is made in your home currency. For example, when making an online purchase on a foreign airline webpage, you may be charged a foreign transaction fee even if the purchase is made in your home currency. Some airline webpages may have a "local" website for every country. This can just be a "skin" over their standard webpage, and the transaction may still be processed as a foreign transaction. If in doubt, try to use one of the cards mentioned above that have small or no foreign transaction fees.
- In lieu of a surcharge, merchants may require a minimum purchase of up to US$10 to use either a credit or debit card. This is to cover the per-transaction fees that the owner of the credit card terminal charges the merchant. These minimums are more prevalent in smaller shops; stores with branches across a wider geographical area normally do not have impose a minimum.
Dynamic currency conversion
When you are paying by credit card, some merchants will offer to convert your transaction into your home currency...aka Dynamic Currency Conversion (DCC). If this is offered, you should decline it; they will charge an exorbitant exchange rate.
- Always check your receipt, and if you see anything involving your home currency in a country that doesn't use that currency, ask the merchant to redo the transaction in the local currency. If the merchant insists that the conversion is automatic, report transaction to your credit card issuer. VISA requires the merchant to disclose the fee and must provide the consumer with a choice of getting the bill in the customer's home currency or the local currency.
- Merchants may try to convince you that paying in your home currency will avoid foreign transaction fees, but that is because the fees are priced into the currency exchange rate used.
- Some credit card terminals will show you an amount in your home currency and ask you to accept or decline the amount. Declining the home currency option will process the transaction in the local currency, which means your bank/card issuer will do the conversion for you.
- Some cash machines are also known to use dynamic currency conversion, much like credit cards at the point of sale, and should be declined. The machine will ask you if you would like the amount in your home currency or local currency; even though you will always receive the local currency. If you decline (cancel), some ATM machines are programmed to automatically cancel the transaction, which is to say that the bank is forcing you to accept dynamic currency conversion. Your best choice is to just find another ATM that doesn't use dynamic currency conversion.
It may be possible to get a VISA, Mastercard or American Express-branded prepaid card. This prepaid card works similarly to a VISA/Mastercard debit card except that it is technically not a bank account. Since it is not linked to your bank account, your maximum exposure is limited to the amount of money you have transferred to that card's balance.
Prepaid cards may or may not be capable of being topped-up, depending on the issuer's policies . If so, once the balance is completely depleted, the card can't be used anymore and should be physically destroyed. However for cards that may be topped-up, they can be done so in the issuing banks or online. You do not need to have a bank account with the bank that issued the prepaid card but having one has advantages such as more convenient options to top-up your card (e.g. online, via ATM). There is usually no minimum denominated amount for top-up. Still, you should only top-up the amount you need for a certain number of anticipated uses.
Availability of those cards within each country varies. Some countries like the US have prepaid VISA, Mastercard and American Express available at the counter of pharmacies or grocery stores; they just need pre-payment and activation at the purchase point. Others will allow you to get them from well-known foreign exchange stands (e.g. Thomas Cook, Travelex). But a few will only make these cards available directly from participating banks.
Generally, these prepaid cards can be used worldwide unless indicated otherwise (most notably, generic VISA, Mastercard and AMEX gift cards issued in the US). However online use of prepaid cards depends on the issuer.
Fees can be levied on the card purchase, on top-ups, on withdrawals, on non-use, and on closure. The exchange rates used when converting to a different currency on the card, are not the standard VISA or Mastercard rates and are determined by the issuer. These can easily be up to 10% from the "mid-rate".
Prepaid cards may or may not allow withdrawals from an ATM (depending on the issuer), and those that do may assess an additional fee on top of the usual fees imposed for withdrawals. That, because using a prepaid card is supposed to encourage electronic point-of-sale transactions.
Prepaid cards often have no PIN and therefore cannot be used for 'cardlock' pay-at-the-pump fuel purchases. They can still be processed manually by the fuel station attendant.
It will usually be cheaper to obtain and use a low foreign transaction fee debit card than a prepaid card for foreign currency transactions. The only disadvantage...you are subject to volatility in exchange rates, as your debit card only stores your local currency.
Specialist travel currency cards
Consider purchasing currency cards such as Cash Passport. These are normally branded in a MasterCard and in some cases a Visa logo, and hence can be used in anywhere where merchants accept those cards. The normal currency cards being offered are denominated in US Dollars, Euros, Pound Sterling, Canadian Dollars and Australian Dollars. You will top up in your home currency and it will be converted into the currency of the card.
Some currency cards are capable of containing multiple currencies at once. In this case, you may be able to change money between currencies offered by that card.
The rates usually fall between 1.0-2.5% of the base rate used by MasterCard or Visa, which is still better than using your everyday debit or credit card directly. In order to take advantage of the best rates, top up online and use the currency card only for transactions in the currency(ies) of the card. When using a currency card having multiple currencies, make sure that the currencies have sufficient balance to cover transactions you wish to make. If you are offered a conversion to your home currency, reject it as well.
If you have a European Euro bank account you will can obtain a V Pay Card. This can be used as a debit card in shops and restaurants in other Euro countries with no additional charge. Can also be used at European (but not worldwide) ATM machines.
A traveller's cheque is a cheque issued for a fixed amount in a specific currency that you purchase with your funds in advance. Be sure to get the cheques in the currency of the country to which you are travelling, or (if that's not possible) whichever one gives the best exchange rate there. Traveller's cheques are available only in major currencies. For example, if you are travelling to the USA, you could purchase ten US$100 traveller's cheques before you travel there, and use them when you arrive. You sign each cheque when you purchase it and again on the same cheque to redeem it.
The main advantage of traveller's cheques is complete protection against loss or theft. Once you report them as missing, the issuing company will replace them. You must also keep a record of your used cheque numbers. Most traveller's cheque issuers have arrangements to replace them around the world in a short time frame so you are not long left without cash. If you are unsure which cheques you have already cashed and which are missing, your refund may be delayed until the issuer can figure out which ones have been presented.
Traveller's cheques can be exchanged for cash at most banks. Exchange bureaus will also usually cash them, and a hotel may sometimes provide this service to its guests. American Express traveller's cheques can also be exchanged at American Express travel centres. Fees for cashing traveller's cheques vary by destination and institution. Some banks will cash some brands of cheques free. American Express will cash their cheques free at their travel centres if they are in the denominated in local currency. Often, fees apply, a sliding scale or a flat fee that may apply only above a certain threshold. If you are cashing traveller's cheques into different currency to their denomination, fees may also be built into the exchange rate.
Traveller's cheques are particularly useful in the United States and Canada, as the banks will cash cheques from major issuers (such as American Express) that are issued in the local currency without charge. As a result, almost all supermarkets, stores and tourist companies will accept them like cash. If you can purchase the cheques at a good rate they can be the best way of taking money to the US and Canada.
Traveller's cheques can also sometimes be used for purchases at point of sale, although less widely than credit cards. In general, only the largest stores and hotels will accept traveller's cheques for payment.
You will pay a fee to buy traveller's cheques. If they are denominated in a foreign currency, this fee may be built into the exchange rate.
If you are buying traveller's cheques in a foreign currency, you lock in the exchange rate on the day you purchase the cheques. Buying traveller's cheques prior to travel in small increments can sometimes have the effect of averaging out the exchange rate you obtain, and you don't have the risk involved in keeping foreign currency cash for extended periods.
If you have travel insurance, you may care to compare the benefits under your policy. Credit card companies will usually offer a 48-hour emergency replacement or cash advance service for a fee, and these fees may already be covered under your policy.
When you are visiting a developed country where your credit or debit card works, these electronic forms of payment are almost always better than traveller's cheques. You won't have to find a bank or merchant that accepts the cheques (and bankers' hours are often inconvenient), and you won't have to guess in advance how much money you will need. This avoids unnecessary fees if you guess too high and running out of money if you guess too low.
Travellers cheques in a foreign currency may allow you to lock-in an exchange rate without the risk of cash, or the fees associated with a pre-paid card. If you are travelling from Germany to the U.S. and know you are spending $1100 to stay at your New York hotel that accepts travellers cheques, you can purchase that value in advance with no risk of exchange movements at the time.
Personal cheques and bank drafts
A personal cheque issued on a current account with your bank or credit union is not likely to be widely accepted for travel. Acceptance is typically confined to the traveller’s home country in its currency and the associated account must be adequately funded; a cheque with non-sufficient funds will be rejected (often days or weeks after it's deposited) and usually incurs hefty fees. If an uncashed cheque is lost or missing, a stop-payment order may be issued at the bank; anyone who finds the cheque is unable to cash it without proof of identity as it is addressed to a specific person or company.
A bank draft or cashier's cheque is issued by a banking institution, drawn on its own funds instead of an individual client's account. The manager's/cashier's cheque is always adequately funded since the client pays for it at time of issue. In many ways, these are similar in use to postal money orders. There is a fee to issue a draft and these are payable to a specific person or company, as indicated at time of purchase. While not risk-free for the merchant (it is conceivable that a client could present a forged bank draft), these are more likely to be honoured than a personal cheque as the money has already been set aside at the issuing bank.
Cash is the most versatile method there is. Aside from some car rentals, airlines (while onboard), and a few gas stations, virtually everybody takes cash. However, as cash is not easily traceable, buying very expensive goods or services (especially one way plane tickets) in cash might raise suspicions in some places, and thus expose you and your money to time consuming and unpleasant extended scrutiny, where cash-less transactions are the norm for certain purchases.
In some countries, you may be able to get by entirely with U.S. dollars or another major currency such as Euros. However, this will often be at an additional expense as the exchange rate offered by merchants and hotels can be unfavorable. Merchants in border communities may accept currencies of neighboring countries. For example, northern border areas in the United States may accept Canadian coins on par with corresponding U.S. coins but not Canadian dollars, and, in the U.S. South, a Canadian quarter is usually worthless. Macau practically accepts Hong Kong Dollars at a 1:1 basis with the Pataca and the difference is not noticeable for smaller transactions. However exchanging Macau's money back into Hong Kong Dollars outside Macau is quite expensive if not impossible, even in Hong Kong. Another example is Malaysia and Singapore where cross-border transportation-related charges on the Malaysian side are accepted in either currency at a 1:1 basis so it is greatly disadvantageous to use Singapore Dollars instead of Malaysian ringgit when for instance purchasing train tickets or paying for tolls.
For remote travel, be sure to bring notes from your own currency only in good condition and only the most recent redesign (unless it's really new). Banks at your destination cannot easily or cheaply exchange worn-out currency for replacement as they can with their country's own currency. Worn paper currency may be devalued--if it is accepted at all. Even if in good condition, previous designs of your currency may not be accepted due to counterfeiting concerns. If possible, go to your bank early in the day, and well before the departure date, and ask for "like-new" currency. When making a bigger withdrawal advance notice is a good idea and sometimes required. Keep in mind that many countries have a threshold of how much money you can bring or take (undeclared) in the EU everything above 10 000€ has to be declared for example. In other places it may be much lower.
The biggest disadvantage to cash is the risk. If you lose it, you can't get it back, and if someone finds out you have a large wad of cash, you become a potential mark. Some defenses are discussed in the pickpockets article, but there is no complete defence — carrying cash always involves a risk. Travel insurance may cover a theft of cash to a certain value.
When you use local money, familiarize yourself with the basic note designs and their security features (watermarks, holograms, etc), and watch out for counterfeits and obsolete currencies. Make sure to look up the exchange rate before starting your trip and if possible look it up from day to day to see whether it fluctuates a lot. If you have forgotten to do so and need a rough ballpark figure, airports and bank money exchanges usually have accurate (if sometimes bad) exchange rates. Remember: the difference between buying and selling rate is their profit, so the lower it is, the better the rate. All of this does of course not apply to countries with an "official" exchange rate, that has nothing to do with the actual value of their currency or countries with runaway inflation. (Venezuela and until quite recently Zimbabwe are examples of this). Banks and money changers (operating out of an office, not flashing wads of cash from a coat pocket) are nearly always safe, but taxi drivers and petty traders may be tempted to palm off useless notes. When in doubt, reject unfamiliar notes. Also, be particularly suspicious of large notes, as they are more commonly faked.
Where to get or exchange cash
In many developed countries, the best option (given the convenience and typically good exchange rate) is to use an ATM in the destination country instead of bringing large amounts of cash to exchange. There are modest fees, some fixed per transaction, others as a percent of the amount withdrawn. The fixed fee(s) mean you should withdraw whatever substantial amount you may need for a few days in the area where that currency is used.
- Occasionally, ATMs offer more than one currency, often driven by their location and customer base. ATMs in developed countries may also offer more than one language. As noted elsewhere, make sure you choose a language in which you have good fluency as early as possible in the process of using the machine. If you are not offered one, look for an ATM that does...may be quite close by in major travel facilities such as train stations or air terminals.
- You may be charged a fee to inquire about your balance from a foreign ATM (the charges for this are levied by the issuing bank). However, sometimes your balance will be printed out for free on a cash withdrawal receipt. With the various exchange rates and fees, the amount displayed on the screen may not be accurate. As such, the best way to check your balance will be to enable secure internet banking with your local bank before you travel, which is offered for free. When viewing your account activity online, your ATM withdrawals and purchases will be converted into your home currency. Your bank may also offer their own apps for your smartphone to access your accounts on the go so check with them as well. Limit smart phone use for this carefully...the security it offers is poor compared to your properly protected computer.
If you travel very frequently, consider opening bank accounts with banks that have a worldwide presence such as HSBC and Citibank. They offer accounts denominated in major currencies. If you have a foreign currency account with such banks and withdraw from their cash machine abroad, you may face either no or reduced withdrawal/inquiry fees. Moreover, if you deposit a large amount of money with them, you can receive premium personalized assistance abroad with them by walking into their branches just as you would in a branch in your home country.
In contrast, there are typically larger fees and or poorer currency rates (noted below) associated with currency exchange. You should not exchange more than you need. Money exchanges work on the basis of selling a foreign currency at one rate and buying at another. Make sure that you know the current interbank exchange rate before you leave home. Where there is more competition, the rates are likely to be better.
The most convenient exchange locations (such as at airports, malls or major hotels) have poor rates. If possible, check the difference (or spread) between "we sell" and "we buy". When this is more than 10%, you're definitely being ripped off. The best exchanges can go as low as 2%. Also, check if there is an additional commission for each transaction and its amount. Exchange counters such as those associated with jewellery stores or pawn shops usually have fairly reasonable rates. Exchanging foreign currency directly with banks is usually possible but some banks will only entertain you if you have large amounts. In addition, some banks will require you to fill-out some paperwork and/or show a valid ID. Another disadvantage is that they mostly have limited operating hours so during weekends and holidays, you're out of luck.
In some cases it may be better to exchange your money before you leave, in others it may be better to do it in your destination. As a general rule, the lesser-known currencies in the world have less favourable exchange rates abroad. In fact, they may first be converted to a well-known currency like the USD before being converted back into the host currency also at unfavourable rates. If this is the case, convert your home currency into a major currency (usually the USD) before leaving then exchange that major currency into the host currency when you arrive.
Most major currencies are subject to counterfeiting these days. Study the notes of the currency of the foreign country to become familiar with how it is supposed to look and feel. Almost all currencies employ anti-counterfeiting technologies, including colour shifting ink, watermarks, special threads, iridescent inks, raised printing, holograms and other features. Be familiar with them so that you can quickly check them when you get a new note whether it is as change or from a money exchange. If you are unsure, don't be afraid to say that you would rather get a different note or say you would rather get two smaller notes for change. (For example, if you get a 10 in change that you don't like the look of, ask for two 5s instead). If you end up with a counterfeit, you won't get compensated after you leave by whoever gave it to you, and you may end up having to explain it to the police.
A convertible currency is a currency that can be easily converted into another country's currency; conversely, an inconvertible currency is theoretically worthless outside its country of origin. A few countries, like Cuba, still issue one convertible currency for tourists and one inconvertible currency for locals. In some countries like Tunisia and India, importing or exporting (inconvertible) dinars and rupees is technically a crime, although such regulations are rarely enforced for small amounts. Still, find out the laws beforehand and follow them.
Convertibility is set by law and not always entirely reflected in reality: some currencies like the Indian rupee are inconvertible in theory but fairly easy to trade in practice, while others like the Swazi lilangeni are fully convertible in theory but almost impossible to sell or buy in most of the world.
Despite the name, inconvertible currencies can often be purchased at a discount outside the country of origin as people holding onto them want to get rid of them. Finding somebody to buy them is more difficult. Also note that state-run shops in some countries will also insist that tourists produce certificates of exchange to prove that their money was obtained from a legitimate source like a local bank at the official (usually poor) exchange rate, and such certificates are also often required if you want to change back any unneeded money within the country.
If travelling to a country with an inconvertible currency or one that you can't, in practice, buy or sell in your home country, you should convert all your money to a major international currency before leaving the country. The following currencies listed are very actively traded on the foreign exchange market, and as such are widely available and can be exchanged at banks anywhere in the world:
- US dollar
- British pound
- Japanese yen
- Swiss franc
- Canadian dollar
- Australian dollar
- New Zealand dollar
Although not as widely traded as the eight currencies listed above, the Chinese yuan is becoming more widely available at money changers due to China's rising status as a major economic power.
In many poorer countries with inflationary, unstable, and/or inconvertible currencies, a foreign hard currency may prove more useful than the local currency. Although its value fluctuates, the "gold standard" for currencies remains the U.S. dollar. It may be accepted as payment directly by locals, though not necessarily at a good exchange rate. In fact several countries in the Caribbean, the Americas and Southeast Asia use it as their de facto – or even official – currency. The euro is also increasingly well accepted, at least in regions with many European visitors, and small countries with economically powerful neighbours may also accept regional hard currencies (such as the Thai baht in Laos and Cambodia, the Australian dollar, or sometimes the New Zealand dollar in much of Oceania). Some currencies have a fixed exchange rate relative to either Euro, Dollar or another currency. While some are "pegged" 1:1 (Panaman Balboa to the US Dollar, Falkland Pound to the British Pound) which often ends up meaning that both currencies are equally accepted, others such as e.g. the Bosnian convertible Mark are pegged in other exchange rates (in this case 1 Euro for 1.95583 Mark) and have to be exchanged more likely than not. That being said those currencies tend to be hard to exchange for anything but the currency they are pegged to and sometimes exchange is only possible in the country where said currency is legal tender. This "peg" also has a tendency to break if the government issuing this money runs out of hard euros, dollars or pounds with which to buy back local currency. In a nutshell: Balboas, Falkland Pounds or Bosnian Marks tend to be nothing more than a souvenir once you leave the area where they are official.
If neither your home or destination country uses a globally well-known currency, you should take the most often exchanged hard currency at your destination. For example, someone traveling from Singapore to Mexico should take U.S. dollars. Although this involves a double conversion, it will almost always prove to be cheaper than a single conversion (i.e. the exchange rate in Mexico for Singapore dollars is likely to be terrible).
You can also use hard currency when haggling with locals by offering hard instead of local currency. Use the conversion rate to your advantage and make an offer in hard currency. Showing a few U.S. dollars in the process might help but be sure to show only what you are willing to pay. Also, if you plan on haggling, be sure to have small notes available so you don't need much change back, especially if you just haggled a price much lower. You don't want to be giving a vendor 50 for an item worth 5; you'll be inviting the vendor to try to sell you more things or, even worse, let nearby pickpockets know how much you have.
It is wise to carry an emergency stash of hard currency separated from all your other belongings and valuables. Some businesses that deal with many foreign tourists may also accept foreign money but almost always at an inferior exchange rate to allow for the inconvenience.
Black market exchange
In some countries the official exchange rate is fixed at a completely unreasonable or unrealistic rate. In these countries the black market will provide a much more realistic evaluation of the currency's worth and is practically unavoidable. For example, in 2007, the official exchange rate was 250 Zimbabwe dollars to the US dollar, while the black market rate reached 600,000.
That said, the risks of black market exchange are legion. First and foremost, black market exchange is illegal and both buyer and seller may face severe sanctions if caught: the seller may even be (or work with) a police officer out to trap tourists. Second, the risk of fraud is high: you may get obsolete banknotes, fake banknotes, less than the promised amount or nothing at all. Consider carefully whether you need to exchange in the first place, as businesses in countries with basket-case currencies will often be more than happy to accept hard currency directly instead (although this, too, will often be illegal), and you may get all the local currency you need back as change.
Change only a bit at one place and the rest elsewhere so that if you are scammed, it will be less of a loss.
The key guideline to successful black market transactions is to receive the money before you hand yours over. Count the notes, inspect the notes carefully, compare them to any you already have, and, only then, surrender your own money to the vendor. Do not allow them to take back the money they gave you, as this is where various sleight-of-hand tricks can be pulled to replace the legitimate bundle with something entirely different.
In countries where foreign exchange rates are reasonable, it is best to avoid the black market entirely: you risk losing all your money for little gain at most.
An exception may apply in countries such as Nepal and India where doing a legal exchange at a bank can involve wasting an hour or more but most hotels will change money for you instantly and fairly safely. The rate may not be much better, but the convenience is.
You can't exchange coins once you have left a country. Exchange them before you leave, drop them in a charity box, or souvenir them. Becoming familiar with coins and currency for your destination country and not mixing coins from various countries in your purse or pocket can save you collecting too many coins before you depart. To avoid accumulating too many coins in the first place, use them as much as possible to pay (instead of notes) during cash transactions. Some countries have coins that are relatively large in value (such as 5 Swiss francs, 2 Canadian dollars, 500 Japanese yen or 5 Bosnian convertible marks), which are advisable to spend first.
In the USA, the UK, Ireland and Canada you can find in many supermarkets a Coinstar machine. This will take any small change and convert to an eCertificate for some stores or as a voucher to spend in the store you are in. There is a 10% charge on the spend-in-store voucher but this is better than carrying a lot of coins back to your home country.
Foreign currency exchange is similar to the stock market; however, large day-to-day changes in rates are uncommon. It is very important to know whether a given rate is the number of foreign units in your home currency or vice versa. Getting it backwards could be a very expensive mistake. This error is most likely to happen if both currencies are within two or three fold of each other in value.
The best way to avoid any mix-up is to find out if one unit of currency at your destination is worth more or less than your home currency. For example, the British Pound is worth more than one US dollar, while the Japanese yen is worth far less than a US dollar. Currencies worth more should have a rate greater than one--use this a multiplier. Conversely, currencies worth less should begin with a decimal (for example: 0.2345)--use this a multiplier also. If you only have the rate in the other direction, the reciprocal or inverse key on a calculator (usually 1/X) will change it back. For example, if you have the rate of 4.264 but know it's worth less than your home currency, the reciprocal key will switch it to 0.2345 again (approximately). As an error check, the two forms of the rate multiplied together should be closely equal to one (either 0.9999... or 1.0001... or similar).
Both forms of the exchange rate serve a purpose. Using the previous example, upon arrival, you'll receive 4.264 units of foreign currency for each unit of your home currency (less fees). On departure, you'll receive 0.2345 units of your home currency for each unit of left over foreign currency (again, less fees). Likewise, multiply by 0.2345 to convert foreign prices to your home currency.
At exchange counters, both a "buy" and a "sell" price for your home currency will be displayed. The closer these are to one another (called the "spread"), the better the deal if they are close to international market rates. Less commonly exchanged currencies are likely to have a large spread, making it quite expensive to buy and sell. The most popular web sites for obtaining exchange rates and automatically converting prices in foreign currency are xe.com, oanda.com, and mycurrencytransfer.com. In some locales, you may be able to easily obtain local currency but not convert what you've not used back to your home currency as you leave; you'll pay dearly for trying to convert it at home if it's even possible.
In addition to the exchange rate(s) at an exchange counter, also note all the fees charged for any transaction. Some may be fixed...others variable. As above, the net cost for currency exchange is nearly always substantially higher than obtaining currency by ATM.
Carrying money across national borders
Countries track large movements of money across national borders. Governments claim this is mainly to help prevent money laundering and cash transfers to criminal syndicates, although a more likely motive is control of tax evasion. If you transfer money between international bank accounts, or use your credit card in a foreign country, this is done automatically, but if you carry large amounts of money (typically more than $10,000 US, Euro, or similar hard currency) you will need to declare it. Don't forget monetary instruments such as traveller's checks count as well, and paying your taxes isn't exempt from these laws.
The rules about personal and business checks can be confusing. If you are carrying a cheque payable to yourself or traveling party for greater than the threshold amount, then you need to declare it. Mailing a cheque from abroad with the cheque drawn on a bank in the same country as the addressee typically doesn't need to be reported. What matters is if the funds are outside the country from the party being paid--not where you happen to be at the time. You can control your funds from abroad without reporting, but not import/export.
Some nations (mostly third world) have such a low import/export limit in the country's home currency (but not US dollars, Euros, etc.), that these limits may represent pocket change. Often, this is due to local laws not having been updated for hyperinflation. However, in such cases, the currencies are generally not convertible abroad, and/or the rules not always strictly enforced.
Some countries, such as India and North Korea, do not allow the country's home currency to be imported or exported at all. This means that you will have to bring all the money you need in US dollars (or Euros) and change it to the local currency when you arrive. Likewise, you must change all the local currency back to hard currency before you leave.
Getting money in an emergency
American Express credit card holders can get emergency cash in the form of its traveller's cheques at foreign American Express offices, and designated affiliates (often a travel agency or bank). If the location is not a bank, you will have to go to one or a foreign money exchange to cash the cheques. Be sure to bring a blank cheque from your checking account back home or at least know the routing and account number (the digits printed at the bottom of each check). There is a one percent fee for issuing the traveller's cheques, and the total sum is NOT a cash advance on your American Express card. They will cash advance your credit card without further permission from you if there's a delay in cashing the check, though. Keep tabs on your checking account, and make sure it clears in a few days. Also, there's no requirement that you're destitute, as the service is available for whatever reason.
If you have someone willing to send you money, there are several options for getting money fast in an emergency. These include the following:
- Your embassy may be able to provide a short-term emergency loan. However, this is no substitute for travel insurance. In many cases, the embassy may only offer help in obtaining a loan from a third party.
- Having someone back home directly depositing money into your bank account. You then use an ATM to make withdrawals. If you both have a PayPal account, this can be done online by computer. It will take a couple days for the money to transfer from your PayPal account to your bank account (longer over weekends and bank holidays), and don't forget to initiate this yourself on the PayPal website as soon as possible. However, if you have PayPal's debit card (MasterCard/Cirrus), the funds will normally be available immediately. (Don't do the aforementioned transfer in this case.) There are no fees for funds sent directly from bank accounts of family and friends (i.e. non-commercial transactions), but credit/debit card, and foreign exchange fees apply. Typically, these fees are similar to or somewhat less than what others charge. Although PayPal offers many foreign currencies for sending money, the funds must be in the same currency as your bank account back home. Only if you're relying on a trusted friend abroad, should the funds be sent in a foreign currency.
- Moneygram is a private money transfer company with many franchise outlet around the world. Someone can pay in money at one office giving the name of the receiver and will be given a reference number. Within an hour you can obtain the cash anywhere in the world if you have the reference number and some form of identification. Fees are higher than interbank money transfer but it has the advantage you do not need an account in the sending or receiving country. There are some dedicated Moneygram shops but in most countries agents are in small supermarkets (often catering for expatriates), newsagents/tobacconist and some banks, often in areas of high immigrant populations. In the UK the Post Office is an agent.
- Get money from a friend via wire transfer services like Western Union. (similar to MoneyGram). If you know your credit card numbers, you can use it to wire yourself some money. However, this is quite expensive, since it will be treated as a "cash advance," in addition to the hefty Western Union fee.
- Sending a few notes via an overnight courier service (this is reliable, but is sometimes not allowed in the courier company's terms of service.)
- You could sell personal possessions such as a camera or sport watch.