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How to best use cash while traveling abroad

April 19, 2020
7 min read
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We talk a lot about using cards here at TPG -- both credit cards that can earn valuable travel rewards and travel debit cards that can help you avoid foreign transaction fees. If you are paying the bill at a large five-star hotel, you will probably be able to pay by card.

But there are plenty of situations when traveling that using cash is unavoidable. Tipping a bartender, buying a drink from a corner shop or a meal at a small, rural family-run restaurant are all situations that may all need physical cash.

So here are some tips for using cash while traveling.

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Wait until you reach your destination to exchange cash

You may have seen cash machines at airports offering cash in multiple currencies. Convenient, right? You will pay dearly for that convenience.

The machine will either impose fees for withdrawals in foreign currencies, or more likely give you an awful rate. Similarly, those currency exchange booths located conveniently airside at airports while you wait for your flight will also give below market rate for your cash.

You will usually receive a better rate if you wait until you arrive at your destination to physically exchange foreign currency for local currency.

Related: How to avoid hidden costs when traveling

If you're taking out cash while you're traveling, try to avoid costly ATM fees.(Photo credit should read BORIS HORVAT/AFP/Getty Images)
(Photo by HORVAT/AFP/Getty Images)

Shop around

Like shopping around for souvenirs or duty-free alcohol, you might find slightly different rates for the same currency exchanges depending on the location or retailer. If you're in the arrivals hall of an airport and need to exchange cash to pay for a taxi into town and there are multiple currency exchange booths, it's worth spending a few minutes quickly comparing their rates. They may be very similar, but the difference between one booth offering even 1% higher can be worth checking — especially if you are exchanging a large amount.

Ensure you are comparing like-for-like -- one booth offering a surprisingly good rate might be slugging you with a large transaction fee while the other, slightly higher rate may be fee-free.

Related: Where’s the cheapest duty free? We checked 50 airports to find out

Have enough, but not too much cash on you

Should you take enough cash with you for the whole trip and exchange it at the destination for the best rate? While this would avoid foreign cash machine fees, the more cash you are carrying with you, the greater the risk something could happen to it. I would not recommend a big night out on the town with $500 (or the local equivalent) in cash in your wallet. This isn't smart traveling. Using hotel safes can help to keep the money more secure.

You want to have enough money on you for what you need, but not so much that it becomes a liability. I would generally keep enough cash to last a couple of days of incidentals (that I cannot use my card for). I would not keep a week's cash in my pocket -- I don't need it all there and then, so don't want to risk something happening to it.

(Photo by baona/Getty Images)
(Photo by baona/Getty Images)

Be aware of cash machine fees

This is where it can get tricky. You may have a card that allows cash withdrawals abroad where your card issuer may not charge a cash withdrawal fee. It is critical to know if you will still be charged a fee by the cash machine operator itself. Most foreign cash machines will charge a fee for withdrawing cash. In Thailand, for example, you could be looking at a fee as much as $6 per withdrawal.

Some travel and debit card operators may waive/absorb this fee as part of its product offering, though many will pass this on to the cardholder.

The best way to check is in the fees and charges section of your card's terms and conditions. If there is wording along the lines of "we do not charge fees of our own, however, you may be charged a fee by the cash issuer", that means there could be a substantial fee each time you withdraw cash. If there is, this is likely to be a fixed fee per withdrawal, rather than based on the percentage of cash you withdraw. In this case, it may save to either bring cash in your home currency with you (to exchange at your destination) or make less frequent, larger withdrawals to reduce the fees you are paying.

Liquidate your coins

If you do end up with cash at the end of your trip, you can usually exchange it back or to another currency if you are traveling on to somewhere else. However, currency exchangers will usually not accept coins and deal in notes only. If you end up with a handful of foreign coins at the end of a trip, try and use them up -- it can be a good use to purchase a small souvenir or snack at an airport as you are leaving the country rather than getting home, not being able to use them and then they sit in a drawer forever.

Related: How to avoid the most elaborate travel scam I’ve ever seen

New 12-sided £1 and 1 Euro coins on a credit card with a new £5 note, £20 note, 10 Euro note in Liverpool as the new pound coin entered circulation - with early teething problems expected at coin-operated machines across the country. (Photo by Peter Byrne/PA Images via Getty Images)
(Photo by Peter Byrne/PA Images/Getty Images)

Try and use cards where you can

Though this guide is about using physical cash, it's worth noting that there are many benefits to using cards overseas where possible. It's worth asking at places like restaurants if you can pay by card, even if it isn't obvious if you can.

Cards are convenient -- you don't have to worry about exchange rates or the safety of carrying big wads of cash with you. You can avoid fees and maybe even earn rewards. Always select to pay in local currency if using a card to get a market rate. Choosing your home currency will give you a worse rate.

Related: What is dynamic currency conversion and why should you avoid It?

Bottom line

Cash can be a frustrating but necessary evil of traveling. At some destinations you can use cards instead but there are many places, especially in developing areas, where cash is still king. There are costs and complications involved which are part of traveling, but with these tips, you should be able to minimize them.

Featured image by Getty Images

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  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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  • Annual Hotel Savings Benefit
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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
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Rewards Rate

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent, Good

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases