Cash, travel, debit or credit cards? Why you should think about your money when travelling.
Planning an overseas trip is exciting, but sorting out your money can feel like a bit of a minefield. Gone are the days of stuffing your wallet with traveller’s cheques. These days, you’ve got a mix of more modern options – prepaid travel cards, credit and debit cards, and of course some good old cash. Each has its pros and cons, and I reckon the smartest approach is to combine a few to cover all your bases.
Having just returned from an overseas trip, here are some of my tips that will help you work out what’s the best money mix for your next adventure.
Prepaid travel cards can lock in good exchange rates
Prepaid travel cards are a top choice for many Aussie travellers because they let you load up on foreign currency before you leave – locking in the exchange rate so you know exactly how much you’ve got to spend.
These cards are super handy if you’re hopping between countries since most let you load multiple currencies. And if you lose your card, the issuer can replace it, so you’re not completely out of pocket. Plus, there’s no risk of overspending – you can only spend what’s on the card, which is great for budgeting.
But it’s not all smooth sailing. Some travel cards come with annoying fees, like loading fees, ATM withdrawal charges and inactivity fees if you don’t use the card for a while. And if you spend in a currency you haven’t pre-loaded, you could cop extra conversion charges. So, as always, read the fine print before signing up.
Credit cards are perfect for big expenses (and points)
Credit cards are obviously the most convenient way to pay for things like hotels, rental cars, flights and meals while abroad. They’re widely accepted, and many travel-friendly cards now waive foreign transaction fees – a big plus if you’re making lots of purchases.
Some credit cards even come with perks like complimentary travel insurance or rewards points. But check the fine print, these extras often only kick in if you meet certain conditions, like spending a minimum amount every month.
One thing to watch out for is cash advances. Withdrawing money from an ATM using your credit card might seem like a quick fix, but the fees and sky-high interest rates will start adding up. If you need cash, a debit or travel card is a far better option.
A credit card is a must-have for any trip I take, but I use it carefully – and stay away from making cash withdrawals.
Debit cards are the safer option for day-to-day spending
If you prefer to spend your own money rather than rely on credit, go for a debit card. Most debit cards on the Visa or Mastercard network are accepted worldwide, and they’re great for controlling your spending – you’re limited to what’s in your account, so there’s no risk of coming home to an eye-watering credit card bill.
That said, international ATM and transaction fees can stack up pretty fast. Some Aussie banks have debit cards with no overseas fees, so it’s worth shopping around for one of these before you go.
Consider exchange rates
When deciding between a credit card or a travel card, be sure to check the exchange rates they offer and compare them with the mid-market rate to check that you are being offered a fair rate. Some providers include a profit margin in the exchange rate as an additional way to make money, or instead of charging transaction fees.
It’s always worth having some cash on hand
No matter how digital the world gets, there are still places where cash is king. Tipping, market shopping or that little café that doesn’t take cards – you’ll need cash for those.
I reckon it’s a good idea to arrive with a small stash of local currency for essentials like taxis or public transport to your hotel. But don’t carry too much – you don’t want to risk losing a big chunk of your holiday budget if your wallet goes missing.
You can buy foreign currency before you leave at your bank or a money-exchange service. Just shop around for the best rates and don’t do it at the airport – it’s notoriously expensive.
What’s the best mix?
There’s no one-size-fits-all answer, but I think a combination of cash, a travel card and a credit or debit card will cover all bases. Use your travel card or debit card for day-to-day spending, your credit card for big-ticket items and cash for tipping or emergencies.
Prepaid travel cards are great for peace of mind since you’re not dealing with fluctuating exchange rates or interest fees. But if you’re confident in managing your money, fee-free debit cards can give you more flexibility and fewer upfront costs.
