There is always that part of planning the vacation when you need to decide how much spending money to take with you. Do you take cash or use a credit card? Choosing what you want to buy and/or do is the easy part. Selecting how you pay for it is another story. Travel Farther Smarter – in association with You, Me and The Dock, can help you decide on this decision. We would like to make a few recommendations that can help save money, especially when traveling abroad. Selecting the right payment method for any type of purchase can assure you the best possible value when in unfamiliar surroundings.
Throughout our adventures, we have learned which payment methods work best and when and where to use them. The three most predominant forms of payment are your country’s dollars, the visiting country’s currency or a credit card designed for traveling. These will be the three most basic monetary ways to pay for goods and services in any country. I will extrapolate more on these three methods in the following paragraphs. It is highly recommended to first learn the country(s) you are visiting’s currency and its denominations. You should also follow its exchange rates with your own currency before you arrive at your planned destination. Knowledge has a tendency to eliminate many mistakes made in your initial purchase or currency exchange transactions.
Traveling with your country’s currency – Cash. If you are traveling with an iPad, smartphone or laptop – similar device, ‘favorite’ an Exchange Rate site (a link provided). If you are coming from a developed country and are going to a developing country, most likely your currency is worth more than the country you are visiting. There are a few exceptions to the rule, but the norm is more likely than not. I have found that when bartering with street vendors or local merchants, having a higher valued currency weighs favorably to your advantage (bartering will be another article).
If you are negotiating a larger ticket item like jewelry, an excursion or tour, cash speaks loudly. Especially if they know you are paying with an internationally traded currency like the Euro (EU) or U.S. Dollar (USD), you will be more likely get the price you want to pay. There are many positives to making deals with cash, but there are a few negatives as well. One of those negatives is that once the cash you brought from home is gone or mostly depleted, its hard to get more. For example, some US banks won’t permit international transactions via a foreign ATM. However, if your bank allows these types of transactions, then most likely it comes with a heavy fee or an extra charge accessed to your account. It is always a good idea to have a portion of your available funds in local money. As you read on, there are many advantages to having multiple methods for paying. I will also discuss any possible added fees attached to the these other forms of payment in the following related topics. There are a few currencies that carry a lot of influence throughout the world and its markets.
Exchanging into local currency. Converting your cash into local currency can save money, time and any confusion regarding change back from purchases. If you pay in USDs or local currency, either way you will most likely receive change in local money. Every merchant sets their own exchange rates and usually they are far below the going market rate. Always ask or look for signage giving their exchange rates if you want to pay in your home currency.
Lets begin with the advantages of exchanging money. You should have an idea after doing your research ahead of time what rate to expect. Rates do change daily, but normally not in large leaps and bounds. Most foreign banks will give you the best exchange rate or lower commission paid. However, there are also independents that will exchange as well, but at a higher commission rate. Commission paid for exchanging money is anywhere from .5 to 1 percent. Exchange booths are more readily available and located up and down the main thoroughfares. You can also exchange money at the airports. You will need your passport and they do not take ripped or defaced currency.
Prices in all the local shops and restaurants are mostly displayed in local currency. You can take advantage of this in two different ways. The first is that most goods and services are cheaper than back home. This is especially true in developing and under-developed countries. The second advantage is if you are converting internationally traded currency such as US, Canadian or Euros, your conversion value to local money will probably net you anywhere from 25 to 35 percent more in buying power. These are two big advantages when traveling on a budget.
Making Purchases with a Credit Card. Using a credit card for traveling is not a bad idea if you know how to control your spending, use caution in handling transactions, and know exactly what your credit card company charges for international fees and assessments. There are a few steps you need to take when traveling internationally. The first thing you do is contact your credit card provider about a week before your trip. You need to find out a couple of important pieces of information and at the same time, give them some as well.
A very important question you need to ask your card company is what additional charges will be accessed when using the card internationally. Some credit cards, as well as personal bankcards can carry fees that could amount up to 10 percent or more. I would suggest to take a card that has little to no international fees of any kind. I prefer using the Capital One Card. It does have an annual fee, but the advantages far outweigh the cost. A few of the advantages are no international purchase or exchange fees, all purchases including international go towards my rewards program, and I get that day’s highest exchange rate possible.
Credit cards can be compromised or stolen. When in a foreign country, it is a little more difficult to call and cancel your card and request a new one to be sent, and especially within 24 hours. Before leaving your home country, give your card company the dates that you will be gone and all the possible destinations you will be visiting. You can also arrange to receive an email regarding any international charges made to the card and the amount charged.
Don’t let the “cons” discourage you from using a credit card. There are lots of “Pros” as well. The first is convenience by paying with plastic. However, still always know your visiting country’s monetary value. If tip giving is involved, I suggest you carry some local money and pay the tip that way. Another advantage is you get the best exchange rate. For example, when we were in Mexico and purchased our favorite bottle of tequila from the local market, it showed a selling price of 18 USD or 321 pesos. After paying with our Capital One credit card (in pesos) – no fees added, we received an email that notified us that the final charge was only 16.69 USD. We received the best exchange rate that day.
Note; always remember to take a backup card and apply the same rules as your primary card.
Having a good mix of currency will assure the proper payment no matter what you do or purchase while on vacation. If you practice common sense and know the power of the above three payment methods, you might even achieve staying at or under your budget. Now isn’t that a good feeling!
If you have any questions about the above topics or would like to discuss other important issues regarding vacation information, please feel free to contact us. We are on Facebook, Twitter and/or email us directly at email@example.com. Remember to always “Love, Laugh & Travel Lots”!
Author: Anthony Scopel
Photos: You, Me and The Dock
Published By: You, Me and The Dock – in association with Travel Farther Smarter
Technical Mastering: Matt Kemper