The best ways to pay when you’re travelling
Cash and travellers cheques are no longer king of the road for far-from-home purchases
Cash, credit card, debit, travellers cheques and mobile wallet (smartphone) transactions provide a lot of currency options when travelling.
They vary, however, in terms of convenience, acceptability, security, transaction and currency exchange fees, interest rates and other charges. So it’s best knowing which works at the destination we’re heading to.
The Government of Canada’s Travelling and Money web page suggests we “make sure to always carry a backup source of funds in case of emergency or unexpected delay.”
Travel currency options include:
Cash: In some cases, “Cash is king.” You can get a better deal with cash at craft and farmers’ markets, but it’s no longer king of the road and there are safer alternatives.
Necessary in some cases and places, cash isn’t all one should travel with because when lost or stolen, most travel insurance won’t cover it and policies that do have limits.
You can haggle a better deal with cash, but trying to rent a car or buy a plane ticket with it can prove difficult. It’s safer on a trip to draw cash from an ATM than carrying a bundle, but you’ll pay transaction and currency conversion fees.
The Canada Border Services Agency (CBSA) requires we declare “currency or monetary instruments” of $10,000 or more when crossing the border. These include Canadian and foreign currency, stocks, bonds, travellers cheques and bank drafts.
All countries have similar rules to prevent money laundering and financing criminal activity, so check with embassies, consulates or their websites about currency restrictions when planning a trip. Violating foreign currency rules can land you jail.
Don’t keep it all in one place, like a wallet or purse, in the event of loss or theft. Spread it across different pockets and places, such as a money belt or hidden pouch.
Check the rates at competing exchanges. Airport exchange kiosks have the highest rates and banks are usually the lowest. Black market conversion is risky. You can be robbed, get counterfeit money or arrested if caught for illegal activity.
Credit cards: An internationally recognized form of currency, plastic is best for big purchases, like plane fares, accommodation, restaurants or expensive items.
Cards offer various travel insurance options, like rental car coverage, pur- chase protection and loyalty rewards.
Unlike cash, credit cards have security and 24-hour customer assistance if lost, stolen or fraudulently used, but can be suspended when patterns of use change, so let card companies know when and where you plan to go, including stopovers.
Major cards are accepted globally, but not all businesses take all brands, so it’s best to travel with more than one.
There are businesses operating on a cash-only basis.
Most cards charge for foreign transactions following international exchange rates, whereas merchants may give you a break on conversion fees, but hit you on the exchange rate.
Except for emergencies, avoid ATM cash withdrawals or face cash advance charges up to 5 per cent and usage fees on ATMs not tied to your bank.
Debit Cards: A better ATM option for quick cash. Check which is widely accepted at your destination.
If you have funds in your account, you won’t incur bank fees or interest rates.
Like credit cards, debits have fraud protection but they can be double-dipped or cloned, so don’t let a clerk or waiter process your bill where you can’t see the transaction.
Unlike credit cards, they don’t include insurance options and purchase protection for faulty merchandise or shipping errors.
Not all businesses abroad accept debit cards, especially in rural and remote areas. Prepaid cards: Safer than cash and similar to credit and debit cards if lost or stolen, though fees may differ, prepaid travel cards are limited to funds “loaded,” like gift cards, and handle various currencies.
Check if they will be accepted at banks, hotels, car rental agencies and other businesses at your destination.
And depending on the brand of card, there can be fees for transactions, loading it at an ATM or bank, exchange conversion or to close the account.
Travellers Cheques: Less popular than they used to be and similar to prepaid travel cards, they come in various denominations and currencies, although U.S. dollars are most popular.
If lost or stolen anywhere in the world, they can be replaced within 24 hours but only with the receipt, which should be kept separate from the cheques.
Mobile Wallet: Using a mobile device, containing credit, debit or prepaid card information, this relatively new tap-and-pay method is gaining popularity around the globe.
The cloud-based technology is touted as being safer from fraud than plastic and you can access transactions, receipts, loyalty points and your account balance from anywhere.
Transaction fees, currency conversion costs and other charges are based on the affiliated card.
A good place to check exchange rates for the countries you plan to visit is the Bank of Canada’s online currency converter. hstancu@thestar.ca