This blog post was updated on April 30, 2020.
Traveling internationally is always exciting, but it can throw you some curve balls too. You may have easily snagged some cheap flight deals, but it’s not until you’re searching hopelessly for an ATM in the middle of Peru or you can’t find a restaurant that will take your credit card in Cambodia that you realize just how important different payment methods are when you travel. If you know your options for carrying money overseas, you can make a much more informed decision on which method is right for you and your trip.
Credit cards are for the most part largely accepted around the world. However, all that plastic can have its setbacks. You’ll want to know if your credit card charges foreign transaction fees — fees imposed on every transaction you make. While most credit cards are doing away with these fees, it pays to check first in case you need to limit your transactions.
Travelers can also make the mistake of assuming credit cards are going to be accepted everywhere. Some restaurants, tours, and attractions might not take your credit card. Also, you’ll want to do some research on your destination to determine if credit cards will be accepted. For example, on a small Greek island, you might be hard pressed to find someone willing to take your card. Also, if your credit card is lost or stolen and you have fraudulent charges on your bill, removing them can take a long time, which you might not have on your two-week vacation to Paris.
There is a reason cash is king. No matter where you go, your cash will most likely be accepted. While you can take out cash from an ATM or a currency exchange bureau when you get to your destination, it’s always a good idea to take out a little bit of foreign currency from your local bank, online, or at the airport before you depart on your trip (just in case you arrive to a broken down ATM or no ATM at all).
Cash does have its drawbacks while traveling, namely that it can be a bit risky to carry around. If your cash is stolen, you can’t replace it and you’ll just be out of funds. To lessen the risk, only take out what you need for a few days, rather than taking out your entire trip budget on day one.
In the 1980s and 1990s, traveler’s checks were all the rage while traveling abroad. However, traveler’s checks have become almost obsolete, falling out of fashion and becoming difficult to use. However, they can serve a purpose if you are worried about cash or credit cards being stolen abroad. Traveler’s checks can provide the most security as they can be replaced. The downsides, however, tend to outweigh the positives: Most banks charge fees to use them and many places no longer accept them.
Prepaid cards have almost completely replaced traveler’s checks. You can load up this card with as much money as you want and use it just like a debit or credit card. These cards can be good for travelers who don’t have a bank account or credit card (perfect for your 16-year-old going on a summer tour of Europe!). Just like any form of payment however, they do have a few drawbacks. Prepaid cards often come with activation fees, fees to reload the card, and ATM fees when you withdraw cash.
Like a credit card, a debit card can be a viable option for paying overseas. It can’t be stolen as easily as cash and you also can avoid credit card interest charges because you’re just using money from your own bank account. However, debit cards can also be a hassle while overseas. Make sure your debit card is part of a major network like Plus or Cirrus. If it isn’t, you might have trouble using it at all ATMs. Solely traveling with a debit card can also pose problems when paying for hotel nights and car rentals, as they usually will not be accepted. Many car rental companies won’t take them or the hold placed on your account wipes out your travel funds completely. ATM skimming scams are also prevalent around the world. To keep secure, it’s best to only use ATMs inside banks if you can.
Aside from trip planning, travel abroad also means figuring out how to get and use money. Before you even book your cheap flight deals, be sure you have diversified and have two or three options for paying abroad to avoid the headaches and hassles that can come with carrying money overseas.
What have you found to be the best payment method on your travels? Share your tips with us in the comments below.