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Q:

What's Best When Traveling? Cash, Check, or Charge?

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Probably the most common cash-only purchase overseas     Photo: Getty Images/Photodisc/Michael B

A:Paying for your vacation is fraught with potential pitfalls. Here are a few tips about what form of payment to use when, how to get the best exchange rates and avoid conversion fees, and other things to know before you go:

Cash

Travel with a handful of local currency for your first 24 hours abroad. You should have enough on hand to pay for a meal and transportation to your hotel, and to find an ATM (more on that in a minute). You can change dollars at your home bank, or if you’re traveling to a large foreign airport that will likely have ATMs, you can make a withdrawal upon your arrival. Avoid change bureaus at airports, train stations, and other tourist areas; their rates are astronomical.

You needn’t carry a wad of cash. You should have some small bills on hand for tipping and small purchases. If you plan to do a lot of shopping in markets (versus storefronts), plan on carrying bills in low denominations. Countries in Asia, South America, and Mexico are more cash centric, so you’ll need more currency in those destinations. Otherwise, using a credit card for most of your purchases is wise.

If you’re traveling to countries such as the British Virgin Islands, Ecuador, Panama, the Bahamas, and Belize you needn’t worry about changing currency; these destinations widely accept payment in U.S. dollars, even if it isn’t the legal tender of record.

Debit and ATM Cards

You’ll need your debit/ATM card for making withdrawals in local currency. To prevent hiccups in getting cash, ensure your card is on the worldwide Cirrus or PLUS networks. ATMs get the same competitive interbank exchange rates as credit cards, but expect to see currency-conversation and foreign (out-of-network) fees from your bank and the bank from which you’re making the withdrawal.

Debit cards are also useful for making purchases. However, often debit cards don’t have the same fraud protections as credit cards. Report fraud, or even suspected fraud, within 48 hours to prevent being held accountable for those purchases. Be sure you have on hand the international help hotline for your bankcard; the 800 number listed on the back of the card might only work in the U.S. and Canada.

Don’t use your debit card to pay for rental cars or hotel rooms; these outlets might place a hold on large sums while the vehicle or room is in use. For these purchases, opt for your credit card.  

Credit Cards

This payment method generally offers the most protections and best exchange rates (especially when compared to change bureaus). Most cards charge conversion fees of one to two percent on each purchase; however, there are a few cards that don’t charge international fees.

Here’s something to consider: Increasingly countries in Asia, Canada, Europe, and South America have “chip-and-PIN” credit cards that require users to enter a number (as Americans are accustomed to doing only with debit cards). Automated kiosks, as travelers might find at gas stations and train stations, often don’t accept the magnetic-strip cards common in the U.S. Merchants accepting Visa, MasterCard, and American Express should allow payment with either form of card. U.S. banks such as Citi, Bank of America, and Chase frequently issue dual form cards, but check with your bank to be sure.    

For the ultimate protection—and help adhering to your travel budget—consider a prepaid credit card. MasterCard offers one of the “chip-and-PIN” variety. Of course, you should notify your bank and/or credit card company of your travels and take other cyber-security precautions.

Travelers’ Checks

This payment method has gone the way of pillbox hats and PanAm: it’s vintage. Travelers’ checks might be a valuable back-up plan when ATMs are scarce, but most travelers will find them unwieldy to cash.

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