Some great ways to spend abroad

Travelling abroad is full of excitement, but managing money in a foreign country can be tricky. Between hidden ATM fees and unfamiliar exchange rates, it’s easy for travellers to make financial mistakes that can add unnecessary costs to the trip.

Swipe and save: Using credit cards abroad

Credit cards are often a convenient and secure way to pay when abroad. They offer several advantages, such as:

• Rewards and cash back as point redemption. Many credit cards offer travel rewards, points, or cash back options.
• Fraud protection. Credit cards typically come with strong fraud protection, ensuring that unauthorised charges are not the card owner's responsibility.
• Better exchange rates. Credit cards often provide more favourable exchange rates compared to currency exchange bureaus or cash transactions.
• Lost cash can’t be replaced. In case of loss or theft, cash is gone. But a lost credit card can be cancelled and replaced.

It's important, however, to be aware of foreign transaction fees, which are typically 2% to 3% of every purchase made abroad. To reduce these fees:

• Choose a card with no foreign transaction fees. Some credit cards are specifically designed for international use without charging additional fees.
• Pay in local currency. When given the option, choosing to pay in the local currency helps to reduce costly dynamic currency conversion fees.

And before international travel even begins, it's a good idea to:

• Check the expiration date on the credit card before travelling.
• Inform the bank that the card will be used abroad to avoid any security blocks.
• Ensure that monthly repayments are set up to cover expenses while travelling.

Top tips on using debit cards abroad

Debit cards are another convenient and secure way to spend money overseas. Many travellers prefer using debit cards for direct access to their funds without relying on credit.

There are a few ways to make the most of using debit cards abroad:

• Monitor the card balance regularly to avoid overspending.
• Be aware of ATM withdrawal fees as some banks charge extra for foreign withdrawals.
• Consider travel-specific debit cards that offer low or no foreign transaction fees.

Should you take cash abroad?

Having cash on hand when travelling abroad offers several advantages. Cash is universally accepted, especially in places where card payments aren’t common, such as markets or smaller shops. It can also make it easier to tip, pay for taxis, and cover small expenses quickly.

However, carrying cash also comes with risks, particularly in tourist-heavy areas where it's important to avoid holiday scams.

It's also wise to have a plan for exchanging money. Travellers may want to:

• Know how much to convert: Estimating the right amount of cash needed can prevent over-exchanging or ending up with a surplus of foreign currency.
• Avoid airport exchange counters: As they often have unfavourable rates and higher fees.

Is it cheaper to use cash or cards abroad?

Both cash and cards come with benefits and risks when used abroad and neither choice is necessarily cheaper.

For example, credit cards can offer advantages such as better exchange rates, fraud protection, and the convenience of not carrying large amounts of cash. Some credit cards even waive foreign transaction fees, making them a smart choice for frequent travellers. But it's a good idea to be mindful of hidden fees, such as dynamic currency conversion charges, which can increase costs unexpectedly.

On the other hand, cash offers immediate payment without fees at the point of sale. But the risk of theft and the hassle of exchanging currency can make using cash less convenient.

Using a combination of both may be the best practice: a credit card with no foreign transaction fees for most purchases and a small amount of cash for emergencies or places that don’t accept cards. Researching the destination beforehand to understand the best approach is always helpful.

Using pre-paid travel cards internationally

Another possible option for international travel is a pre-paid travel card, which can be a convenient and secure way to manage money abroad. These cards allow travellers to load a specific amount of money in a foreign currency before the trip and lock in the exchange rate to prevent surprises.

There are several benefits to pre-paid travel cards:

• Security. Pre-paid travel cards are safer than carrying cash since they can be easily cancelled and replaced if lost.
• Budget control. Pre-loading money onto the card helps ensure that spending stays within limits.
• Fixed exchange rates. Some cards lock in exchange rates, helping avoid fluctuating rates during travel.

But take note that pre-paid travel cards can come with added costs, such as reloading charges or ATM withdrawal fees. Researching cards that offer low or no international fees can help reduce these costs.

Navigating digital wallets overseas

With just a smartphone, it’s easy to make contactless purchases abroad without the need to carry physical cash or cards, making it ideal for travel. Digital wallets, like PayPal, offer added security, such as encryption and biometric authentication, reducing the risk of fraud or theft.

However, depending on the location and service provider, fees may apply when using a digital wallet abroad, including foreign transaction fees or currency conversion fees. To reduce these, travellersmay want to :

• Choose a digital wallet that offers competitive exchange rates.
• Check if the digital wallet supports the currency of the destination to avoid unexpected conversion fees.

Before travelling, it’s a good idea to set up your digital wallet and ensure that everything is working correctly. For example:

• Add multiple payment methods, such as a backup credit or debit card, in case the primary card doesn’t work.
• Download any necessary apps or updates ahead of time.
• Verify acceptance to ensure digital wallets are widely accepted at the destination.