About Me

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I'm an Aussie who likes wandering all over the world but keeps coming back home to paradise and my family. If you are reading this on one of my travel blogs, I hope you enjoy reading them as much as I enjoyed creating them. If you are reading the Diabetes and weight loss blog - I hope it helps in your battle with the beast. Cheers, Alan

Wednesday, May 04, 2011

Travel, Money, Cards and Cheques in Foreign Lands

One of the most frequent questions asked on travel forums is "how much foreign currency should I obtain before I leave home" and "how much should I purchase in Traveller's Cheques". My answers are "as little as possible" and "nothing". Instead, join the 21st Century and use ATMs (Automatic Teller Machines) wherever possible.

Most of my trips involve several countries and many different currencies. For example, I leave next week for a seven-week trip using in sequence the Malaysian Ringgit, Indian Rupee, Malaysian Ringgit, £, €, Swiss Franc, €, Croatian Kuna, BiH Marka, Russian Rouble, £, Malaysian Ringgit and finally home again, with much of the pre-purchasing using US$. Fun :)

I always carry a minimum of three cards; two credit cards and a debit card. On my next trip I will probably add a second debit card.

I carry two different credit cards on different accounts so that if one is cancelled the other is still OK. At this time I am using Amex and Visa, but I have also used MC in the past.

I use credit cards where appropriate to pay for major goods and services such as hotel bills and car rentals instead of cash. That minimises the amount of local cash I need to carry and has the dual benefit of reducing my security risks and limiting the amount of cash I may need to re-convert as I cross a border to another new currency.

Unused foreign cash is not always a problem, but sometimes it can be costly. Minor border crossings where the locals frequently cross over can have excellent cheap currency exchanges; I have used those in Eastern Europe successfully. But others do not. We lost over 10% converting Swiss Francs to Euros in a French bank near the border. Banks back in Oz charge like wounded bulls for turning foreign notes back into Aussie dollars and will not even look at foreign coins. Back in '03 we didn't know that; we came home with about £40 in coins, which is easy to do with £1 and £2 coins, worth about $100 at that time. The bank would not accept them. We spent them on our return to the UK in '06. Today they would only be worth $60.

The cost of credit card use overseas varies depending on the card and the bank. Mine are usually 1.5% and 2.5% depending on the card fee and the bank fee, plus the hidden cost of the difference between the real exchange rate and the bank's rate. I work on an average of 2.5%.

The reason for two credit cards is redundancy. If you carry only one card, loss or theft or cancellation could be a disaster. It doesn't need to be stolen to have a drama. On our first trip the bank officer handling our account left to have a baby and neglected to arrange automatic monthly credit card payment from our primary account. It maxed out; we discovered that courtesy of a cranky non-English-speaking (and why should she?) French supermarket check-out girl in front of a long and increasingly grumpy queue. The back-up card saved the day – and the rest of that month and my sanity.

I keep one credit card in my wallet and the back-up card in my “secret” wallet with my passport and a cash reserve in € or US$ depending on the region.

Whether it is just for convenience or for better prices for many services I have found that there is always a benefit to carrying some local cash. I use a debit card to withdraw from ATMs for cash where possible. The debit card can be linked to my credit card account or, preferably, to a separate account for security. There's not much point in having two cards if both become unusable when one account is suspended. In the recent past some Australian banks, including mine, have suffered from major computer failures for short periods which prevented any withdrawals world-wide. That is why I will be carrying a second debit card from a totally different bank on my next trip. It's the Irish in me: to be sure, to be sure.

Although my credit cards are linked to my primary account if I select Chq or Sav at an Australian ATM, not all foreign ATMs offer that selection. In that case, a cash withdrawal will cost me interest at prohibitive credit card rates until I pay the account to zero. Additionally, not every ATM in every country will work with every card, even if the appropriate symbol appears. I once tried all of my cards at six different bank ATMs in Rio before I found one that worked. I had similar difficulties in Buenos Aires.

I very rarely use the overpriced currency exchangers here in Oz before departing unless I have a need for a specific currency on arrival. For example, I had to pay cash for my apartment in Buenos Aires in US$; I could not get that out of the local ATM and bought it here instead. Expect a cost in excess of 5% using foreign currency dealers. Instead, I assess my likely need for immediate cash when I arrive in the country and head straight for an ATM at the airport or in the nearest border town that will take my Visa debit card. I never withdraw more than I expect to use in three days.

My debit card is related to a fee-free account so the effective fee is simply the difference between the real exchange rate and the bank's rate. With my bank that is usually about 1% (I use www.xe.com for comparisons) and with my building society it is usually a little less.

As I mentioned earlier it is important to plan your cash needs on arrival. There is nearly always an ATM available if you need more. For those times when there is not, I have my "secret" reserve for emergencies of €200 or US$200. One of those two currencies is usually accepted as an alternative, although sometimes the locals use very "flexible" exchange rates. I only withdraw sufficient in local currency for immediate needs for a few days, replenishing as necessary, and try to budget so that I arrive at the border on departure with just enough to buy coffee or a meal or duty-free goods on the air side of the security barrier. If I'm driving I usually turn any remaining cash into fuel at the last gas station before the border.

I do a lot of on-line pre-purchasing of hotel rooms and other services. I don't usually book every night of a trip, but at least the first night after travel. I do not want to be hunting for a place to sleep as I get out of the airport or station jet-lagged or travel-weary. Often the cheapest rate requires full payment (but cannot be cancelled). That has the added advantage of locking in the exchange rate of that day if you think it may drop in the future. Some sites convert to my currency for the purchase at their own exchange rate, which can be surprisingly good, so that debit arrives my bank in AU$ with no fees.

A word of caution. Trying to predict future exchange rates can be risky as others have mentioned. I paid early in March in US$ for a cruise next June from St Petersburg to Moscow because we had reached the dizzy heights of AU$1.00 = US$1.02. Of course, now we are approaching $1.10 I'm regretting that. I'm a traveller, not a Forex trader, so I tend to accept the fluctuations as they happen and say c'est la vie.

Finally, always remember to get your card out of the machine when you finish. I lost a card that way in Argentina. I take extra care these days to look for the final "are you finished" request, not always in English, if the machine is the type that swallows my card.

Cheers, Alan, Australia


  1. I couldn't believe what the Commonwealth Bank charges people to use overseas ATMs now; six years ago, it was only $4 per transaction (even that seemed pricey).

    But last year, I was being charged $7 in the US and Canada, and an absolutely insane $15-$17 in Europe.

    Normally, I would have avoided such charges by using my Dutch ATM card overseas, but unfortunately, it stopped working...

  2. If you go to Buenos Aires for a week, you should bring dollars, because ATM's charge you a lot of money, and it's always better if you have cash here. They accept dollars in many places.
    Also, my Buenos Aires rent apartment accepted our currency.

  3. I realise Austin is advertising his appartment service, but the point is a good one. Most apartment agencies in BA only accept US dollars. Actually, they only accept clean, good-looking US dollars as I discovered whebn the owner rejected my well-used but quite legal notes received from an Ecuador ATM. I give more details on that in my Buenos Aires trip report: http://loraltravel.blogspot.com/2010/07/buenos-aires-argentina.html