travel money advice (other)

Take note of the following things to consider regarding each method of payment. Taking into account the characteristics of each of these methods of payment will allow you to save money and minimise the cost of transacting overseas.

Cash

This is the most flexible by far once you have it. There's nothing stopping you from spending cash once it's in your hot little hand. And there's nothing to stop someone else from spending it if they get their hands on your cash! Even though it is the most flexible and easy to use, it does come with its concerns.  You must be vigilant of the cash you carry around and be wary about carrying too much cash. It is best to make sure you don't place all your cash in the one spot. Have some in your wallet/purse, money belt and a secure spot in your backpack or daypack.  So if you unfortunately are robbed, hopefully you won't lose all of your cash.

Even in developed countries where most people use credit cards all the time, cash is still something you should have.  It provides you with security and something to fall back on just in case your credit cards or ATM cards don't work.

ATM Cards

Before heading overseas, jafatravel.com's travel money advice is to be aware of the fees and charges that your bank imposes for each withdrawal. Types of fees and charges to look out for are:

• withdrawal fees per transaction;
• Mastercard/Visa conversion fees passed on by your bank
• conversion fees separately imposed by your bank

Conversion fees are roughly 1-2% of the transaction cost.  If you are being charged withdrawal fees per transaction, you will want to limit the number of transactions you make. A rough guide as to how much you should withdraw at a time is that the withdrawal fee should equal about 1% of the amount of cash you withdraw. For example, if the withdrawal cost is $5, you should withdraw around $500 worth of the foreign currency. This gives you good value for the transaction fees you are paying and ensures that you don't carry too much cash around at any point in time.

Credit Cards

Just like ATM Cards, jafatravel.com's travey money advice is find out the fees and charges for overseas transactions for your credit card. Credit card providers generally charge a transaction fee of between 1-2.5%. If you have time, you should shop around for a credit card with the smallest transaction fee. This is especially worthwhile if you are spending a substantial amount of time travelling.

As an alternative to using credit cards, you can use pre paid travel cards.  These provide the same advantages as credit cards with the added benefit of setting pre determined spending. This is advantageous in the event that your card is stolen.  Thieves will only be able to spend up to your pre determined limit.

Travellers cheques

jafatravel.com's travel money advice is not to use of travellers cheques as the costs associated are far more than other forms of payment. For each transaction, you end up paying conversion and exchange fees twice. The first is to actually purchase the travellers cheque, and the second when you convert the travellers cheque to local currency.

When purchasing travellers cheques you may incur commissions or a once off transaction charge. On top of these charges, you will lose money with the exchange rates provided. The spread on exchange rates with travellers cheques is usually far greater than those for ATM cards and credit cards. These costs will also apply when you look to convert your travellers cheques to local currency.

The benefits of travellers cheques have become largely redundant. Security wise, they are no different to your ATM card or credit card. As soon as you have realised that you have lost your travellers cheques, you will look to cancel them and obtain replacements. Replacement travellers cheques are usually organised within 24 hours. The same applies for your ATM cards and credit cards. These security benefits are just the same as what is provided with your ATM card or credit card.

Pre paid travel cards

Mastercard, Visa and other credit card providers now have prepaid travel/debit cards which are great for budget travellers and backpackers.  They provide terrific security as you can determine how much funds are available to use on the card. In case your card is lost or stolen, the most that a thief can spend is your pre determined limit.

The pre paid travel cards also allow you the benefit of a normal credit card.  If you are organised enough to arrange a pre paid travel card and you are very security conscious, then you really should obtain one. Otherwise, a credit card will suffice.

Purchasing local currency before you leave

jafatravel.com's travel money advice is not to purchase local currency before you leave.  This is the most costly way to change currency as banks have a large cost for holding foreign currency offshore. The spread on the exchange rate and the commission charged mean that it is not at all worthwhile.  

The wide availability of ATM machines and places accepting credit cards mean that you will be able to readily access local currency when you arrive at your destination (unless you are travelling to an undeveloped country). This alleviates the need to obtain currency before you leave.

The only situation where it might be worthwhile obtaining currency before you enter into a country is when you are about to cross the border by road or rail. However, ATMs are generally available in most countries or there will be some facilities to change money. But you should play it safe especially travelling around some of the underdeveloped nations and throughout some countries in South East Asia. Another option is carrying a small amount of US currency with you.

jafatravel.com hopes this travel money advice is useful and helps point you in the right direction to save money and minimise fees.

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