Managing your travel money for your travels can be a hassle if you are planning a long trip. How much do you need to convert in advance? Will it be safe to bring cash will you all the time? Where can i convert my travel money at a better rate?
My past approach was to convert all my travel money in advance before heading to my travel destination. I estimate how much I need throughout my travels and add in a buffer sum for emergency. There is nothing wrong with that if you are going for a short getaway.
But what if you are planning for a long trip? You definitely can’t bring USD1,000 worth of cash with you the entire time.
Ways to manage your travel money during travels
Converting your travel money in advance from your home country prior to your departure is definitely essential. You can’t just travel abroad with no spare cash by your side. The benefit of converting in your home country is the ability to compare the exchange rate at multiple money exchange counter. Thus, allowing you to get the best rate.
The amount to convert would be subjective and it really depends on each individual. But the ideal amount I would convert would be an amount which would be sufficient for 1 to 2 weeks. The remaining sum needed can be obtained through multiple ways. Here are a few alternatives you can look into the next time you travel. There is no one size fit all way and it really depends on your style.
Cash Withdrawal With Your ATM Card
Similar to how you usually withdraw cash from the ATM in your home country, you can do the same abroad. Most of the debit card/ATM card can be used internationally depending on your bank. *Be sure to activate international banking* Most of the time, there is a fees incurred upon the withdrawal. However, if you are able to find international branches of your bank, then the withdrawal is usually free of bank charges in most cases.
If you own a CIMB bank card (a local Malaysian bank), you will be able to withdraw your travel money from any ATM in Indonesia and Thailand free of charges. In global terms, banks like Citibank and Bank of America has international branches around the world. This would be an attractive thing as you are able to withdraw your travel money from international branch with no or lower charges incurred. The exchange rate from the ATM is usually the market rate for the day, a fair rate to convert your travel money.
The major setback is not being able to find international ATM branches everywhere you go. What are the odds of finding the international branch of Citibank in Myanmar or Cambodia. You can still withdraw from foreign ATM but note that there will be a fee incurred upon withdrawal. The fees can sometimes be outrageous. Be sure to check with the bank prior to your departure.
Tip: Talk to your bank on the bank charges incurred upon withdrawal overseas. It is also good to have multiple ATM cards which give you a higher chance of finding your member bank abroad.
Credit Card Swipe
I have never tried this but credit card would come in handy when you are making purchases overseas. Swiping your credit card abroad has its own benefits and drawbacks. Credit card purchase would come in handy in situation where you are making huge purchases. The amazing part is that it allows you to claim credit card points/cashback depending on the card you are using.
Another benefit of credit card swipe is that you get the best exchange rate. It is based on the daily market rate. The drawback from credit card purchase is the currency conversion fees that will be incurred. Nevertheless, this is still the best option to make large purchase abroad.
Tip: Never withdraw cash with your credit card as you will incur a ridiculous amount of charges upon withdrawal. Usually ranging from 4% to 7% depending on the bank.
No Fee Travel Money Exchange Counter
This is a common sign seen in places populated with tourists. When I was in Thailand, I often see small local counter with a huge sign ‘No fee’ Money Exchange. It does look attractive, isn’t it? Withdrawal through ATM and credit card swipe usually result in fees and charges. But don’t be fooled. When you see that sign with ‘no fee’, be sure to check the rates. Though there is no fee charged, the rate given is usually unfavorable making it significantly worse than simply withdrawing your travel money from the ATM
Wait, I am not saying that all exchange counter are bad. But the general idea is to be smart. There is no harm checking the Interbank rates (which is the rate foreign bank pay), usually the rate you get when you withdraw through the ATM. Here is a useful site to check: www.xe.com
Tip: Great tip to look for a few exchange money counter to check for the best rates. I was in Hanoi and i found this place that has travel money exchange counter on the entire street. When you have such place, you can expect to get a slightly better rate as there is competition.
Setting up Internet Banking
Internet banking is another great option when it comes to paying for expenses. I usually set up internet banking for ticket purchases, flight purchases as well as hotel purchases. I made most of my hotel bookings on Agoda.com though internet banking. Either linking the account to my card or directly pay via my online account.
I did not incur any charges on that except exchange differences. This would be depending on individual banks so be sure to check with your bank prior to departure.
The worse option: Foreign Money Exchange Desk in Airport, Hotel and Etc.
This is by far one of the worse option to exchange your travel money. Usually only encouraged if you are desperately needing money. Most of the international airports and hotel have a exchange counter to help convert your travel money to the respective currency. You may think that the rate would be good as you are exchanging your money in an INTERNATIONAL airport. But you will be surprised how wrong you can be.
Most of the exchange counter in the airport gives you the worse rate, usually worse than the no fee exchange counter you find in the city center. The personnel can sometimes deduct fees up to 20 percent making it unworthy.
Tip: Don’t do it! Unless you really need to.
The best way
Now that I have laid out the potential alternatives, what is the best way to exchange your travel money when you are abroad? There is no one best way and the idea is to choose depending on the circumstances. If you are making a huge purchase, credit card swipe would be the way to go. But if you are out of cash, ATM withdrawal would be ideal.
But the one thing you need to steer away is exchanging your travel money in the airport. Whatever it is, be sure to talk to bank personnel beforehand on the rates and charges so you are able to make an informed choice.
Let me know if you have other ways to manage your travel money.
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