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Tip 4: Cash, Credit, Debit: What's Best Abroad?
With so many monetary options available to travelers these days, it's sometimes tough to know the best way to handle money matters when on the road. Your choices are usually dictated by your destination's banking technology -- or lack thereof -- so it's best to carry as many different cards as possible, and to know the pros and cons of each method of getting cash or paying for goods and services while on vacation. Here's a primer on what to expect from the most popular types of cards -- ATM/debit, credit, and cash cards -- and some useful tips on how to make them work for you when traveling.
ATM/Debit Cards
ATM cards have been the most popular way to get cash on the road for several years now. Often referred to as debit cards, these cards now combine the cash-securing function of a traditional ATM card with the universal acceptance of a credit card. They also still offer some of the best currency conversion rates around.
For in-store purchases, however, you may want to think twice about using a debit card, because you are, in effect, giving vendors access to your checking or savings account. Even innocent overcharges on their part (not to mention intentional fraud) can cause you major inconveniences, especially if you are drawing cash from the same account.
Another debit-card drawback: you usually can't use one to rent a car, reserve a hotel room, or conduct any business that requires a deposit. Even if you find a car-rental agency that will accept your debit card, don't use it; use your credit card instead. If there is a dispute about the condition of the car after you've turned it in and left the country, your credit card agency is best equipped to handle the dispute.
Bonus tip: If you have a choice of using either a card's credit or debit feature, you might want to choose the credit function. This way, you won't have to reveal your PIN number, and the charge is usually itemized on your monthly bank statement (rather than appearing as a simple "debit" charge), which makes keeping track of your purchases a bit easier.
Credit Cards
You should always carry at least two major credit cards when traveling -- you never know where one won't be accepted -- and keep them in different places in case one gets lost, stolen, or damaged (they can become demagnetized by some security devices and scanners). Be aware that all major credit card companies charge you a currency conversion fee for the privilege of using their cards abroad (usually between 2 percent and 5 percent of your total purchase), so choose your cards and charges wisely. Keep in mind that there are some perks, such as extended warranties on retail items and reimbursement of disputed charges, that can make using credit cards the best choice. custom foam chicago.
Be sure to call your credit card company before you leave and let them know that you'll be using your card while traveling -- especially if you are headed to Eastern Europe, the Caribbean, or South America. Due to a growing worldwide fraud problem, many card companies withhold approval of international charges until your identity can be verified, if you have not alerted them of your travel plans. Either way, copy down your credit card issuer's international toll-free number in case your card is denied for any reason. These 24-hour hot lines are staffed by English-speaking representatives who can reactivate your credit card immediately once the issue has been resolved.
The other problem with credit cards is that in many places, they leave you little if any room to bargain with a shopkeeper (without a doubt, cash transactions will guarantee you the best deals). In places where bargaining is half the fun of shopping, you'll be missing out on a bit of local culture.
Keep track of dates: If you are traveling in an area where the currency tends to fluctuate wildly, you might want to note the transaction date of your purchase. Shifty merchants will sometimes wait a few weeks (or months) to submit the charge to your credit card company in hopes of getting a better exchange rate. Your credit card statement shows both the transaction date, which is the date you made the purchase, and the posting date, which is the date the merchant presented your card company with the charge. If something seems wrong, call your credit card company and ask them to research the transaction.
Cash Advances
Although a cash advance from your credit card is an extremely convenient way to get local currency -- in many cases, your hotel's front desk will give you one -- it's usually the most expensive way to get it. Not only are you assessed a transaction fee (which varies greatly from one bank or country to the next), but you start paying interest on your account the moment you withdraw the money, and the rate can be exorbitant (20 percent is not uncommon). To make matters worse, the exchange rates on cash advances are usually the worst around.
If you must take a cash advance, be aware that using a teller at a bank can cost you more than using a machine, because banks often have minimum withdrawals (or minimum charges) that can be higher than those at the machines. And since you pay a fee each time you get an advance, it makes sense to get as much cash as you feel comfortable carrying to avoid paying the fee repeatedly.
Know your PIN: Be sure to learn your credit card PIN before you leave; you'll need it to get an advance from a machine (you'll need your passport to get one in person). And be warned: if you don't know your PIN, you can't simply call your credit card company and ask for it the day before you leave. For security reasons, most credit card companies will not reveal a PIN over the phone. They have to mail it to the address on the account, which can take up to two weeks. Also, if your PIN number is a word, such as "Bosco," you should learn the numeric equivalents of the letters on the keypad (i.e., 2 for "B," 6 for "O," and so on), because the keypads on some foreign bank machines have numbers only.
Cash Cards
One of the newest ways to deal with money on the road is by using a credit card company-issued "cash card," such as an American Express Travel Funds Card.
This is how it works: You purchase the card for a one-time fee (around $15 for the Amex Travel Funds Card), then you can pre-load it with up to $2,750 worth of "cash." You can even use your Visa to buy and load up the American Express card. It looks just like a debit or credit card -- your name and an account number are embossed on it -- but unlike a debit card, it is not linked to any bank account, so there are no security worries. And unlike a credit card, there are usually no currency conversion fees for using it abroad. It also functions as a regular ATM card, allowing you to make withdrawals from cash machines with a PIN you choose upon purchasing it.
The security features of cash cards are hard to beat: if a Travel Funds Card is lost or stolen, American Express will replace the amount left on the card within 24 hours, making it the most secure way to carry cash abroad. Cash cards were designed to replace traveler's checks, which seem almost quaint these days and are accepted at fewer and fewer establishments.
Things to consider: The downsides to cash cards include a $400 daily cash withdrawal limit and a $2.50 fee each time you use an ATM. Also, like debit cards, cash cards have a relatively low limit (credit cards, on the other hand, can have limits of up to $100,000 or more) so you can't use them to reserve hotel rooms or rent cars. And you'll need to plan ahead: the Travel Funds Card must be ordered online, and standard delivery takes a week or so.
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