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Best travel money options. Credit cards, debit cards or cash?

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When you are going on an overseas trip, you may wonder if you should rely on cash, credit cards or debit cards.

Here are tips to help you along:

Exchange rates

First off, before you even get on the plane to your destination we recommend you have some local currency in your pocket for taxi fares, meals and so forth. This is especially so in far-flung areas where plastic may not be accepted.

Avoid buying foreign banknotes at an airport where possible -- either in Singapore or overseas. This is because the exchange rates will not be as competitive and you will usually end up paying a lot more in fees and commissions.

Also, don’t buy foreign currency from a street seller in the country you travel to -- you may end up with counterfeit notes or worse, be the victim of a robbery.

Tip. Buy a few notes of the country’s currency from a Singapore money exchange bureau. Do this well in advance of your trip so you can shop around for your best deal.

Debit cards

Debit cards are a convenient way to withdraw cash when you are overseas. You will usually have to pay a currency conversion fee. You will also have to pay for ATM withdrawals as well as a possible fee added on by the foreign ATM provider. Fees vary between banks, so you may want to shop for the best possible deal.

Tip: Make fewer, larger withdrawals to minimize charges.

Credit cards

Credit cards can be used for reserving hotel rooms, paying for larger purchases and for emergency expenditure when you are overseas. But they are not good for cash advances.

This is because credit card providers charge a currency conversion fee as well as a cash advance fee for withdrawals.

By pre-loading sufficient funds into your account you may be able to avoid paying interest. Check with your bank before you leave.

Tip: When paying with your card always pay in the local currency otherwise you’ll be paying at least an extra 4% for currency conversion. Don’t get caught out.

Traveller’s cheques

Traveller’s cheques sound like a relic from the past. They are indeed becoming less common. But if you do use them, remember to record the serial numbers and store them separately.

The best option

Using a combination of payment types is the best option. Do a bit of homework and get a good deal on your exchange rate beforehand. Minimize the number of times you make cash withdrawals from the ATM whilst overseas. And pay with your credit or debit card for larger purchases.

Parting advice

Let your card provider know where you are going, so that they don’t cancel your card for “suspicious transactions”.

Do carry more than one credit/debit card in case one is lost or pilfered.

Remember your travel insurance. It can cover you for the cost of replacing your lost or stolen travel documents, credit cards, lost money and travellers’ cheques.

Wherever you go, whatever you do, remember it’s vital to have good .
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