Traveling with Money. Which Form of Money is Best to Use?

When you travel abroad, you have to decide whether to use cards, paper money or checks. You often forget that their are fees to exchanging so this will remind you and guide of what to use.

Traveler's checks are probably the safest, but not the cheapest way to carry money abroad. If you make a note of the check number, you can claim for a reimbursement if they are lost or stolen. You may be charged commission when you buy them and they are subject to the local exchange rate at the point you cash them. You may also be charged a handling fee when you cash them.

When exchanging cash some banks and building societies have preferential rates if you hold an account with them, so check your own. It's usually better to change your money before you leave. Airports and ferry terminals tend to give the exchange worst rates, but you may get a better rate if you order your cash up to four hours before you pick it up.

Be wary of exchange offers that state 'commission free' they may be offering a lower exchange rate than they are paying. Also watch out for flat fees, they can be worthwhile for changing large amounts. Handling fees are usually lower but they add up if you repeatedly change small amount.

If retailers offer to let you pay in your home currency it is an indication that they will do the conversion themselves. The exchange rate they offer is usually worse than that offered by your credit card company.

When using your credit card to pay in a foreign currency, most cards will add a 3% surcharge to the banks exchange rate. It's worth getting a card that doesn't do this, but these cards may have higher interest rates so always pay the balance in full.

Avoid using debit cards abroad. Some debit cards add a fee every time you use them for foreign currency transactions.

If you use a hole-in-the-wall or cash-point machine you will probably be charged a cash withdrawal fee when you draw foreign currency.

Pre-paid credit cards are a great way to take money abroad. You can buy them at many high-street newsagents and put funds onto them. Then you can use them just like a debit or credit card. If you loose your card most providers will replace it for a small fee with funds intact. All in all these are the pros and cons on how to use your money.

Spend Wisely!