Travel money: Cash, credit card, ATM card or traveller’s cheques?

Go to any travel forum and you are be likely to find many posts on the types of travel money to carry. To help you decide whether to bring a wad of cash, a stack of traveller’s cheques or plastic cards, here are their respective pros and cons.

Cash
Have cash will travel: For some travellers, this is a popular choice, especially if they are on a short holiday. Certainly, cash is convenient and there are no fees or commissions to contend with.
The obvious disadvantage, however, is the risk of theft. It is also bulky and inconvenient to carry around, especially in countries where the local currency equivalent of, say, US$100 stacks up to look like a brick. Despite these risks and inconveniences, travellers like Francis Jee prefer travelling with local currencies.
“If it’s a large sum, you can shop around for good rates. Bringing cash also means that you don’t get stressed out by credit card payments after your trip, and it encourages you to stay within your budget,” he says.

Traveller’s cheques
Traveller’s cheques are issued in specific currencies, with the US dollar being the most common. At one time, this was the No 1 option for travel money but today, not many travellers use them.
You get saddled with fees — when you buy them and when you cash them. If the fee is per cheque, for example, then cashing many cheques in small denominations can be uneconomical. Likewise, if the merchant claims that there are no fees or commissions, then the exchange rate is unlikely to be competitive.
Maryann Tan, who is currently travelling through South America, finds that, despite the security that traveller’s cheques offer — they can be replaced if stolen and a counter-signature is required for use — they end up being more of an inconvenience.
“If you plan to travel in Latin America, it can be a real pain. It works in most capital cities but in Bogota [Colombia], I had so much trouble trying to change them,” she says, pointing out that not all merchants or banks accept them. In addition, you can only cash the cheques during working hours, so you’ll need to slot such trips into your itinerary. Tan adds that some banks also require you to furnish them with the original purchase receipt.

Credit card
Easy to carry and widely accepted, they can be replaced if lost or stolen and comes in handy at all times, particularly if you need to rent a car or book last-minute domestic flights. On the flipside, if you’re travelling to less developed countries in Asia or Latin America, they may not be widely accepted, as Tan has discovered.
“And if they do accept credit cards, they want to see proof of identity, so you’d need to have your passport with you.” Then, there is also the risk of shady merchants misusing your credit card information or cloning or duplicating your card. Although you can dispute fraudulent charges, it can be a tedious affair and you may end up cancelling your card anyway.

ATM
Perhaps the most convenient way to obtain cash anywhere in the world is the automated teller machine (ATM), as long as your debit card is part of major networks such as Cirrus or PLUS. According to a consumer survey conducted by Visa last year, most travellers in Asia-Pacific are opting for ATMs.
The survey, which covered 13 countries, found that almost half (46%) of respondents had withdrawn cash at an ATM overseas during their last holiday.
Writing in about.com, Nancy Parode says using a debit card can help you stay within your budget because the card takes money from your checking account. So, when you’re out of money, you’re out. As for the drawbacks, your debit card may not work in all ATM machines and in some rural areas, finding an ATM that supports your network may be difficult.
Rick Steves, an author of European guidebooks and a travel show host, says ATM transactions using bank-issued debit cards come with various fees.
On www.ricksteves.com, he says your bank may levy a flat transaction fee of US$2 to US$5 when you use an ATM, and/or may charge a percentage (1% to 3%) for the currency conversion, and the ATM you use might charge a fee as well. If your bank charges a flat fee, he suggests withdrawing larger amounts so that you make fewer visits to the ATM.
Tan, who prefers this option, says it is advisable to alert your bank that you will be making ATM withdrawals abroad. If you’ve recently opened a bank account, ensure that the ATM card issued is usable abroad.

Note that personal identification number (PIN) lengths vary from country to country. If you’re travelling in Asia, ensure that you have a four-digit PIN code, says Travelfish.org, as six-digit PIN codes don’t always work in the region.
“The ATM keypads in Asia don’t necessarily have letters, so if your PIN code is word-based, ensure that you know the corresponding numbers as well. If you get stuck, use your mobile phone keypad to figure it out,” suggests the travel website.

Prepaid travel money cards

Prepaid travel cards, such as Visa TravelMoney and Virgin Dollar Visa Card, basically combine the security of traveller’s cheques with the convenience of debit cards. How do they work? All you need to do is load the card with cash and use it for your expenses — much like a prepaid mobile account. You can also use it to withdraw cash from ATMs and replace it if it is lost or stolen.
However, travellers point out that fees imposed for transactions are steep. In a review of travel money cards, The Guardian newspaper noted that some cards levy hefty charges for everything from applying for the card to topping up, withdrawing cash from an ATM and even closing the account.
Choice, an Australian consumer watchdog group, says users should be aware of the hidden costs, adding that some cards include a service charge on their exchange rates.