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Recently my wife and I traveled to Italy and before we left we got about 85% of our money in travelers checks and the other 15% we carried on in cash. When we arrived there, no one would take our travelers checks and many places did not accept credit cards. Eventually, we found some currency exchange places that would take the travelers checks and give us Euro's, but at a 7-15% fee, which was not really a very fun surprise.

While I was under the impression that it is safer to use travelers checks, it seems that they were not really accepted (the usual explanation being fraud). So the question is, is it best to just exchange your currency at home and carry all of it with you when you travel or are there other alternatives to carrying cash that are safer and cost effective?

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The answer depends on what country you're travelling to, what kinds of things you'll be buying, how long you're travelling for, etc. –  Joel Spolsky Jun 22 '11 at 2:26
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Traveler's check are from another era. They are now mostly obsolete; replaced by the ATM. –  Jacco Jun 29 '11 at 15:12
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@Andrew Grimm, thats what I was told, several times. So far, I've not found a country where it was more convienient or cheaper to use travelcheckes; Not in East- or West African countries, not in South Africa. Not In South East Asia, not in Russia or the states hugging it's southern border, not in China nor Mongolia. Not in the countries on the west of South America. And not in the Magreb or UAE either. So, if there are still countries where traveller checks are more convienient than the ATM, name those countries! A general non-veriviable oneliner is not very helpfull otherwise. –  Jacco Feb 4 '12 at 11:19
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@Jacco: I was thinking of Japan, but it's only from what I've read, rather than from personal experience. –  Andrew Grimm Feb 4 '12 at 11:24
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@AndrewGrimm: for Japan, all you need to do is find a 7-11 (they are all over!) and use one of the ATMs there, as those ones take western cards. –  BrendanMcK Jun 2 '12 at 6:23

19 Answers 19

up vote 75 down vote accepted

I think the current usual solution is to get a debit card (or failing that a credit card) with low/no foreign transaction and cash withdrawl fees. (In the UK, the Halifax Clarity Card is the best for this at the moment)

Then, when you get to the country, take out cash periodically. Not too much in case of issues, but don't assume you can do it too often as you may not always be able to find a cash machine depending on where you are.

It's worth getting a little bit of currency before you go (if you don't have it left over from another trip), so you can buy a coffee while you wait for everyone who got off the plane quicker than you to finish using the cash machine at the port/airport/station!

Edit: Since you've said you're in the US, I can't suggest the best card for you to get to avoid/minimise foreign transaction fees, but asking on the personal finance SE site is likely the best bet for finding out what that card is.

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Have you ever run into issues with skimmers on ATMs? –  Darren Kopp Jun 21 '11 at 21:33
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@Darren I have, but they attempted to use the details fraudulently many months later. I would suggest getting an independent travel credit/debit card, and cancelling it once you return home. You should note you're not liable for the fraudulent transactions, it's the inconvenience of having the card cancelled whilst abroad that is the concern. Many institutions get around this by overnight shipping you a new card at cost price - something to ask about when you apply. –  jozzas Jun 22 '11 at 1:41
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I like to have some kind of safety net, after realizing that I was traveling in foreign countries with exactly one source of cash, my ATM card. So now I make sure to have a bit of US cash, for instance a hundred dollar bill that can be changed at a bank, and a second credit or ATM card that I know the PIN for. It doesn't need good rates since it will only be used in an emergency, and I do not keep it with my primary ATM card. –  smackfu Mar 8 '12 at 23:06
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Remember that if you get cash out with a credit card, then you will typically be charged interest from the moment you withdraw –  Casebash Mar 14 '12 at 5:17
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In addition to what @Casebash said, credit cards often charge a higher rate of interest for cash withdrawals than they do for purchases. Also if you have an existing balance on the card, I have known the CC company to not pay of the balance in chronological order, but to pay of the cheapest interest part of the balance first and leave that expensive cash withdrawal on the card till the very last $ of the balance is cleared. –  Rincewind42 Jun 3 '12 at 0:53

Some banks actually have international agreements to not charge fees to each others members. For example: A Bank of America member can use any BNP Paribas ATM without an ATM fee and vice versa. As far as credit cards go, there are a few that have zero foreign transaction fees. The exchange rate with cards are pretty good so I would rely on that most of the time and use cash more as a last resort. More cards are getting smart chips as well. So far the only American card I have found with no foreign transaction fee, no annual fee and a smart chip is the BA Travel Rewards Card, but you may have some luck shopping around for another card.

When it comes to cash I find that the absolute best exchange rate comes from an individual who is traveling the other way. You can exchange at the market rate since it will benefit both of you. Otherwise ATMs are the way to go. Avoid TravelEx at all cost! They will cost you the most money. Since I travel frequently to Europe I make sure to just save ~150 Euros for the next time. It's enough money to get to the hotel and extra in case of emergencies. I have it to last me until I can get to an ATM.

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If coming from the US, get a CapitalOne 360 Checking account (formerly INGDirect).

With the debit card you can make ATM withdrawals with ZERO fees levied on the US side. (The only possible fees are by the local ATM/bank. My experience is that developed countries = easy to find fee-free ATMs; developing countries = difficult.)

In my experience this is easily the most cost-effective way to bring your money around. The exchange rate is always at least as good as anything you can get from a money-changer. Example: While in Macau recently, I got a rate of 1 USD = 7.967 MOP. Even in a very competitive market for money-changers, one rate I saw was 7.872, or about 1.2% worse.

Hence, even in countries where the ATMs usually levy some fee on international cards---e.g. Thailand ATMs usually charge 180 THB (or 5.64 USD)---you will still save money by withdrawing from the ATM, rather than changing your money with a money-changer.

Needless to say, ATM withdrawals have the additional advantage of being safer and more convenient than lugging around a lot of cash or travellers' cheques.

With this account, you can also instantly check online how much USD exactly was deducted for your X amount of local currency withdrawal. So if you'd like, you can even test the waters by withdrawing a small amount first and see what the rate is. If it is worse than the local money-changer rate (which I have never experienced), then you can go with the money-changers.

P.S. The only inconvenience with the CapitalOne card is that you can only withdraw a maximum of US$500 worth of money per day.

P.P.S. There are probably still other fee-free cards for international ATM withdrawals, but this is the one that I know of. I'd be very interested in learning about other similar cards.

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My answer is Europe centric:

We are used to banks in the USA that will give you a debit or check card with a magnetic stripe. Credit cards are the same way. Some of these credit cards have a chip and almost none of them require a pin when used as a credit card.

On the other hand, when you fly / sail / swim across the pond to Europe, almost every local card has a Chip and a Pin.

Most European stores will accept US credit cards. I was able to buy food, grocery, etc. using my USA credit cards.

Ticket vending machines for trains or buses, other automated machines, small merchants, etc. will require the Chip and Pin. Lack of Chip and Pin what had me waiting in line to buy a ticket for 80 min at Gare du Nord in Paris, and barely caught my train.

Now defunct: The Travelex Cash Passport, which is chip-and-pin protected is a good idea, but it costs a lot. If you load it in small increments, they can charge you just about 14%.

You can also open an overseas account, but I have heard that such an account is usually considered a red-flag for an IRS audit.

Read this very enlightening thread started by Joel Spolsky.

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Unfortunately Travelex discontinued the Cash Passport in May 2013. –  Dan Neely Sep 12 '13 at 15:22

It depends of your bank (eg : with HSBC you can withdraw for free in any HSBC in the world), your credit card, your country, the country your travelling to, etc.

eg : If your within the Euro (with euro) : you won't have any fee.

In any case, you should check the partnership of your bank with banks of the country you'll be visiting.

eg : in France, BNP Paribas has a partnership with Barclays in the UK so you can withdraw pounds for free

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I always change an amount of the foreign currency at home that allows me to live there with no problems for 3-4 days and take it with me. Then as soon as I run out of money I use my maestro card to just withdraw money from a ATM. Additionally, I always try to use my credit card whenever possible to minimize the amount of cash I need. In my opinion it is the most secure and convenient option. You can't lose a lot of money when you get robbed, but on the other hand you always have enough cash if there is not ATM close by. Just make sure that you know the numbers to block your cards.

Concerning traveler checks: Intrinsically a good idea, but has some practical problems: 1) you always have to find a bank to exchange them. Not only a ATM that is open 24/7 but a real bank that can have ridiculous opening hours. 2) Actual, foreign banks are not allowed to take any commission, but not all of them obey this rule. It can be difficult to explain that in some countries. 3) In various countries it took me a long time to change my traveler checks money. First you have to find a bank, then you have to queue, and then finally, it seems to be a lot of administrative work... they check your passport, then they check the serial number, after that they have to get the money, etc..

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Traveling to Europe:

  • don't bother taking US dollars, traveler checks, regular checks, gold bars or anything like that
  • get internationally recognized credit card(s) and a debit card(s) - Visa or Master Card (preferably combination of both); choose ones with low spread and no surcharge for major currencies like Euro or British Pound;
  • do not get exotic cards like American Express or Diners Club, they don't get accepted in most establishments in Europe
  • get cards with EMV chip
  • make sure that your bank offers full fraud insurance
  • pay by credit card whenever you can (unless business looks suspicious)
  • take cash from ATM in larger chunks - if your bank charges you for ATM withdrawal, there is usually minimum charge per transaction
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How do you know if a card has low spread? –  cspirou Jul 20 '13 at 18:13
    
@cspirou: from T&C or fee table provided by your bank. –  vartec Jul 22 '13 at 8:53

First of all, you should check the main way to pay in the country you are going to. Also check the way to change your money to your host country's currency.

When using a debit/credit card, remember that it can become broken or simply stop working, and you should have some cash to solve this potential problem.

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  1. Calculate an estimated cost of the trip.

  2. Withdraw 1/3 before leaving and convert at your local bank (that will cover your airport shuttle, first meals, etc).

  3. As you run out of cash, withdraw at any ATM (every 2 or 3 days, ideally not at the same branch).

  4. Ideally use your Credit Card only for souvenirs and last shopping before leaving (that will prevent the need to carry your credit card and potentially lose it during your stay).

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Travelers' Cheques are outdated almost everywhere and with high fees.

If you're a couple, taking a Visa for one and a MasterCard for the other won't usually cost more than two of the same make and it's practical, as ATM fees can vary widely from bank to bank and city/country to city/country, depending on their favored card network there. Especially off the beaten track, i.e. in Central Asia, Africa, ... Remember also that in some countries ATMs are rare and/or decorative only, even in big cities.

In the Euro zone, if you have a European card in €, paying with a debit or credit card doesn't involve fees, and taking cash at an ATM or doing wire transfers is not more expensive than in your home country (usually, if you have a good bank, this equals 0 €).

Cash, in US dollars or Euros, is usually widely accepted or easy to change; if you're afraid of pickpockets (and rightly so in many places!), use a money belt under your clothes, it's very safe. Do not use money 'bags' around your neck – the necklace will be easy to cut for the robber. Cutting the belt and taking it while it's under your trousers/skirt/... is much more difficult!

In some countries like Uzbekistan wads of cash (and bags of cash) are usual because of the inflation and black market, but keep in mind that these are local banknotes, not hard currency! Do not show how much you have, or you'll be considered a 'dollar-on-feet'.

You may also keep small but sufficient 'emergency' banknotes in an 'international' currency like USD or EUR in a variety of places/pockets: don't put your all your eggs in the same basket.

Of course, all these things are less necessary in Europe or North America, where access to ATMs is frequent and varied, and where loads of cash (apart e.g. from Germany) are quite unusual!

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I usually use an ATM card to get cash locally plus carry some dollars as a backup that I could exchange if needed. I recently found another way to take money into a country that gets around the ATM daily limit and can have lower fees on larger amounts - Western Union.

You can create an account with them on their website before your trip and connect a bank account to it - it takes a few weeks to verify with small deposits to your account (and if I recall correctly a postcard to your home address with a secret code on it that you have to enter in the website). Then you can send money to your self using the (cheaper) 3 business day service. The fee was $14 for sending $2500 to myself in Peru. Less if you send less. You pick up the money at any Western Union office using the money control number from the transfer plus your passport as ID - there are usually many WU offices in a medium sized town. You chose when placing the transfer whether to take the money as dollars or local currency. The exchange rate seemed to be within 1% of the best rate at money exchange shops.

Comparing this fee to the $5-12 fee that I am charged to take out $300 of foreign currency from ATM this is a better deal if you can plan ahead and want a larger amount of money for your longer trip. Using an ATM card to take out $2500 might take 7 days to accumulate the total amount and cost $35-84 in total fees. ATM exchange rates also vary by bank - they usually make some money on the exchange rate (I think 1-3%).

Note: the WU fee for instant transfers is much higher - more like 9% - so if you are doing this to save fees be sure to pick the slower option. Also when you send the money online you may need to verify your identity by phone using your US drivers license. I do this using Skype from my laptop.

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Credit Cards are a fairly safe method, when they are accepted. Note, however, that save for very few credit cards, the vast majority will charge you a conversion fee on each transaction (around 2%-5%).

Using a debit card, and taking out money at an ATM when needed, is another alternative (although you again may be limited by the ATM network). There are also fees, but usually not as dire as the dedicated exchanges.

You may also find that banks that are off the tourist traps will give better exchange rates.

From my experience, when traveling in a first world country, you are safe taking about 20% in cash, for incidentals, filling in the rest with debit withdrawals and credit cards, as available.

Be sure to call your credit card company and your bank before you leave and let them know your dates of travel. It will save you uncomfortable moments in front of an ATM or in a restaurant when your transaction is denied.

Finally, be aware of your debit card daily and one-time withdrawal limits. Because of the fees, you may well want to withdraw up to the max, and if your max is too low, and if you can only withdraw up to that max once a day, your access to cash may be restricted. When you are calling your bank, also inquire about these limits, and see if you can have them raised, if necessary.

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For all Germans out there or people who can open a bank account, ComDirect bank issues a free Visa card that can be used in both countries without any fees and a good exchange rate. I used it in over 40 countries and never had to pay any fees except one time when I withdrew the equivalent of just 3 Euro. The fee was 16 cents or so.

Also keep in mind that in some countries you cannot use Western cards at all. Myanmar, Iran and North Korea come to mind. In Venezuela you could use your cards but you would get a rate that is over 100% worse than exchanging US dollar cash on the street.

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Cheques are not as common in the EU anymore. Credit cards are widely accepted in ATMs and in restaurants/hotels etc. However for small amounts they might only accept cash (e.g. amounts < €50ish)

Most debit/credit cards are chip & pin here in EU, and many merchants might only accept that.

Both Mastercard and Visa are the most common form of credit cards. Other USA cards might not be accepted (e.g. American Express, or Diners Something (see I don't even know the real name)). For cash, I'd suggest withdrawing money from ATMs to get cash. Most ATMs accept a wide range of credit and debit cards. If you have a Cirrus, or Maestro card (you'll see it on the back of the card), you should be able to use it in that ATM.

For Eastern/Southern Africa (e.g. Kenya, Zambia, Tanzania), most ATMs/banks (which aren't that common) accept credit cards, but Visa is more commonly accepted than Mastercard. (e.g. 100% of the places I went to accepted Visa, but 30% accepted Mastercard. It was a pain, because I had a mastercard)

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Some countries in the east of Europe are happy to accept credit cards for even small purposes. I bought snacks for a couple of euro in Hungary at petrol stations when I ran out of cash euros and it was no problem. –  hippietrail Jun 29 '11 at 11:19
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Petrol stations would have credit card facilities (since people could often pay €50), but a small newsagents or small cafe might not. Also Hungary doesn't use euro, check the exchange you got! –  Rory Jun 29 '11 at 11:34
    
Oops sorry forint! In other countries the fact we have card facilities (ATM also, not just credit) does not mean you can use your card for small purchases. In Australia the minimum is typically $10 even though the card machines are pretty ubiquitous. –  hippietrail Jun 29 '11 at 11:37
    
Some merchants (e.g. pubs/newsagents) might not accept card transactions for less than a small amount (like €10) –  Rory Jun 29 '11 at 11:40

I always go for a mix of funds types. I carry two different credit cards, one of them is also a debit card. I carry some home currency and I try to get some currency for the country to which I am travelling before I enter the country.

I have had mixed results with exchanges. In my own country, Australia, they charge lots of fees to convert the currency and generally give you a bad rate, especially at the airport (a conversion fee and a percentage of the amount and a bad transfer rate). In other countries I have found that I have received excellent conversion rates and the airport was no different to the city. I have never used travellers cheques myself but I have heard of bad conversion rates for them.

You will really need to make a decision based on where you are going. Major cities generally mean cards are fine and lots of exchanges, smaller towns mean cash only and sometimes make sure you have smaller notes.

Be wary that some countries money is hard to convert in other countries. Vietnamese dong isn't accepted in many places for exchange. Accept that you will lose some money in exchange.

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My suggestion would be look for prepaid travel cards, like the Visa TravelMoney card. Banks offer these under various names, so consult yours and see what they have. Basically, what you do is before you leave you buy local currency of the country you plan to visit (or just USD) and that fixed amount is available through your new card. You can use this card to withdraw cash at ATMs without being hit by conversion fees at the ATM itself, or swipe it at merchant locations for payments. Visa also has a global assistance hotline that can get you replacement cards, if you happen to lose one; loss is limited to the amount of funds set aside for that card anyway.

I have found this method to be a lot less tedious than having to carry large amounts of cash or bothering about whether travellers cheques will be accepted. If a prepaid travel card is not available in the currency you want, the best thing to do is to get a USD travel card, then use it to withdraw cash; you get charged at Visa's wholesale currency exchange rates plus a 1-2% transaction fee (depending on your bank).

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Wow, that looks like possibly the best combination of all recommendations in one card. Thanks for sharing. –  Darren Kopp Jun 22 '11 at 23:42

It really depends not only on where you are going but also from where you are coming. I usually carry with me enough money to pay for everything I need on the first 3 days. The rest of my money I try to get with my credit cards and I usually try to carry two of them. Always try to pay for hotel, car and other similar before you start your trip. In this case, at least, you will be able to sleep the first night. Try to get the money in the country currency instead of in an intermediate currency to avoid double fees. Also, try to not do your money exchange in the airport. If possible, not even in your hotel. These are the two who charge highest fees. Most of the US credit/debit cards are not the so called "smart cards" or "card with chip". This was an issue for me in some places in France back in 2004, when I could not buy some last minute souvenirs. I also try to not get money back from the country. Usually I try to spend all of them but, if I could not, I try to pay for some incidentals in the hotel using this money. You can always try to pay part of your hotel with local cash and part with a credit card if you have not payed in advance.

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I like to bring a little local currency back home with me, especially coins. It will be super useful next time, letting you get a drink or a luggage cart in the airport if you arrive tired and can't find an ATM. It also makes a lovely "I will go back there some day" item to keep around your house. Just $5 or $10 worth makes all the difference. –  Kate Gregory Jun 21 '11 at 23:09

Before you leave, call your bank. You'll want to alert them that you'll be using your credit or debit cards overseas, so as not to trigger fraud alerts. Then ask them if there is a network in your destination that involves lower fees. For example, my bank gave me names of specific banks in England, Italy, and Germany and told me that if I used ATMs at those banks, I would not be charged extra service fees. Very reassuring.

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This is great advice, I totally did not do this last time... Lucky I didn't have it disabled. –  Darren Kopp Jun 21 '11 at 21:31
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Yeah, I had problems with this in France. Ended up having to call a UK 0870 number on my cellphone for 30 minutes whilst it got sorted. The phone bill was phenomenal. –  Polynomial Nov 23 '11 at 10:22
    
One thing to add to this: if it's a joint account, and the other card-holder is not travelling with you, let the bank know that as well! Otherwise you may find that use of your card in your home country will get your account blocked. –  Cam Jackson Aug 23 at 5:13
    
I know people who did this and still had their cards stopped. Some banks have an automatic system and adding a note to the account doesn't prevent the issue. –  Liam Sep 2 at 8:22
    
@Liam could you name those banks? –  Lohoris Sep 2 at 11:16

What I now do and it has worked really well for a few years is plan on average how much I will need, leave it all in a bank account with a visa debit card (maestro doesnt always work).

I then just draw it out in 2/3 goes.

Safe, convenient, easy and cheap.

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Visa is most widely accepted in my experience. Only in Russia I found places where they accepted Maestro where they did not accept Visa. –  Jacco Jun 29 '11 at 15:11

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