Cash or Credit
The recent strength of the Australian dollar has provided great incentives for Australians to travel abroad. Amongst the difficulties of planning a holiday a major financial concerns of international travel is of course safe and secure access to money. Travellers will often find that most of their everyday purchases will need to be made in cash. The question is how you will get access to this cash. Do you carry a wad of cash with you and hope it is enough to last the trip or do you use your credit card to make cash advances and dread an expensive credit card bill?
The answer in most cases will be a combination of the two and depend on the duration of the trip. Clearly travellers need to carry some cash for those petty purchases but carrying a lot of cash overseas entails serious security concerns. The longer you travel the more cash you will need and so the more likely it is that you will have to use your credit card.
The use of credit cards overseas can generally be very expensive, however there a few exceptionally cheap credit cards that are excellent for overseas travel. If you are thinking of travelling overseas or are shopping for a good travelling credit card you should review and compare the following credit card fees and features; cash advance rates, ATM withdrawal fees, international transaction fees, exchange fees, and travel insurance.
Credit card cash advances are charged at very high interest rates often over 20% p.a. and may be subject to an overseas cash advancement fee too. Cash from credit costs are further increased by the overseas ATM withdrawal fees most lenders have which can top $5 per transaction. Exchange fees are sneaky costs that not many travellers consider that average around 1.5 to 3.5% of the transaction value. International transaction fees are another expensive cost though some lenders do not charge international transaction fees at all. While travel insurance is important to have some credit cards offer it automatically and others may offer it at a discount if you meet certain conditions.
Best credit cards for overseas travel
Best travelling credit cards are the ones that offer service, convenience and security with little or low fees and charges. The right card for you obviously depends on your spending needs. If you plan on carrying cash with you and use your credit card for most of your large purchases (e.g. hotel accommodation) rather than cash advances then you may prefer a card that has no international transaction fee. For travellers who will need to use cash to make most of their purchases then they should be more concerned with ATM fees and cash advancement fees.
Published: 3 December 2010
