Travelling Abroad? How to choose between cash, travel card and travel credit card
Money management while travelling abroad is critical. In a foreign country, with the exchange rate working against you, it’s important to smartly manage the margins to control the high costs of foreign travel. There are several ways to spend money in a foreign country. In this article, we will look at three options only — cash, credit card, and forex card — and examine the benefits each provides.
FOREIGN CURRENCY
You don’t need to stick to just one of these three options. You can mix and match them as per your convenience. That said, cash is a necessity in any country. You may want to access services or buy goods in markets where card payments may not be accepted. However, it’s also necessary to be smart about your cash use. There are a few things you must always keep in mind. Before you go for currency conversion before your trip, always give yourself a bit of time to research the lowest currency exchange rates. Secondly, you should not lock all your liquidity in cash. You can split up your travel fund into multiple instruments for safety. If something were to happen to your cash — theft, damage, loss of baggage and so on — you would be able to derive liquidity through other modes. Lastly, you should also divide your cash into smaller wallets instead of carrying it all in one. This way, if one wallet is lost, you will have others to fall back on.
TRAVEL CREDIT CARD
Apart from cash, perhaps the one accessory that every traveller must have is the travel credit card. A credit card is, of course, a way to spend borrowed money. However, an international travel credit card is that and much more. Beyond the ability to transact abroad, such a card can also provide you a host of services. Often, these credit cards provide a bundled travel insurance policy through which you can claim reimbursements for lost baggage, flight cancellations, theft, accidental damages and others. Most travel cards provide you domestic or international airport lounge access while you wait for your flight. Just about every credit card offers reward points, discounts and deals. These discounts may help you access the lifestyle you aspire to. For example, you may get discounted movie tickets, access to fine-dining experiences, concierge services, online shopping rewards, and deals on hotel bookings. Lastly, the rewards may also be in the form of air miles which will allow you to buy air tickets at discounted rates. Therefore, every seasoned traveller must consider having a travel credit card in his kitty.
FOREX CARD
The travel card is basically like a pre-paid cash card that you can use abroad for cash withdrawals, POS transactions and online shopping. These cards also come in a multi-currency variant that can help you while travelling to multiple countries. It scores over carrying cash because the balance on your card is pin-protected. Forex cards also provide you bundled travel insurance, a free replacement card, and a toll-free helpline to assist you. Also, the exchange rates on offer for forex cards may be better than other modes. Since your card balance is loaded at a single price point, you don’t need to deal with exchange rate fluctuations and also avoid having to pay the 2-5 per cent transaction fee that you pay for using your debit and credit cards abroad. The forex card may also come with a self-help portal through which you can recharge your balance or transfer back the balance to your linked bank account.
In summation, carry cash with you up to a safe limit. Use a travel credit card to maximise your rewards, get the best deals and discounts, and to get bundled offers such as travel insurance and lounge access. And you can split your liquidity between cash and a forex card to avoid transaction charges and rate fluctuations.
(The writer is the CEO of BankBazaar.com)
