Dealing with new money can be one of the most overwhelming parts of travel, particularly if it’s your first time overseas. In our world of credit cards, it can be tempting to ignore foreign currency entirely, but you’ll probably wind up spending more in card fees and you’ll also miss out on supporting local economies and fine tuning your money management skills.
Cash versus credit
Plastic may reign supreme in the United States and other Western countries, but you shouldn’t plan to rely solely on your credit card while traveling. Some establishments don’t accept credit cards, even in more economically developed nations, because the processing fees can quickly become unmanageable for small businesses. If you’re supporting locally owned restaurants and shops, you should consider paying in cash regardless of their credit card policy, so that money will stay in the local economy. Reserve your credit card for larger purchases so you’ll have ample time to review the charges, and if your card charges foreign transaction fees, you should plan to use it even more sparingly. Having a little cash on hand will also come in handy if your credit card is lost, stolen, or placed on hold for some reason.
How much to take
Naturally, for safety reasons, you shouldn’t carry more cash than you can reasonably lose. If you’re concerned about finding a good exchange rate overseas, before you depart, you can contact your bank to order foreign currency. (You should be contacting your bank anyway to notify them of your travel plans and prevent any holds being placed on your card.) Start with enough money to get you through small purchases for the first couple days of your trip, plus a small emergency fund to be kept separate from your daily cash supply. If you’re traveling in a remote area where ATM access may be limited, you should increase your initial cash holdings.
Where to exchange
If you don’t stock up on foreign currency before leaving, there will be plenty of places overseas where you can exchange your money, and you’ll likely get a better exchange rate doing so. Whatever you do, don’t exchange at the airport. Airports regularly charge the worst exchange rates on the market. Install a currency converter app on your phone – XE.com makes a good one – so you can keep on top of exchange rates yourself and stave off potential rip offs. Banks and post offices typically offer strong exchange rates, while train stations and touristy areas tend to fall in the same camp as airports. Black market establishments are also best avoided.
When exchanging, feel free to shop around and find the best rate available. Make sure you read carefully and are being offered the correct buy rate, not the sell rate. Other factors that may affect your rate include how much money you’re converting and whether you’re using cash or travelers’ checks.
Whether you carry a money belt is up to you – some travelers enjoy the peace of mind that comes with having cash kept far from prying hands, while others find them ill-fitting and awkward to use. Oftentimes, keeping your wallet in your front pocket or carrying a cross-body purse that zips across the top and staying aware of your belongings will be enough to avoid pickpockets. Naturally, you should also avoid displaying large amounts of cash.
Don’t keep all your money in one place. If you’re in an area where mugging is a significant risk, carry a decoy wallet with expired credit cards and small bills only. Wherever you travel, having an emergency cash stash is an important cautionary measure, just in case your wallet is lost or stolen. Keep enough money to replace your passport and get yourself back home in a safe at your hotel.