There are many different options available for a backpacker to carry money for an international travel. It may be in the forms of Cash, Credit Cards, Debit Cards, Traveler’s Cheques and Prepaid Cards. This blog will try to explain a backpacker’s situation with each source of money and try to explain their best use while travelling abroad.
Best Use: Right after your arrival at destinations, Visa Fee, Bus and Taxi Fare
Carrying Cash is the best way while travelling abroad. However, it is prone to theft always. But anything can be stolen. It always depends on the duration of travel that how much cash one should keep. If you are going on a short vacation to any South East Asian countries, you can carry cash in the form of Dollars. You will require around 500 USD to live in South East Asia for 15 days. So, just carry five 100 USD notes in different places of backpack, in your pocket and in your valet and that will be enough for you.
Carrying cash will help you to avoid long queues in Banks or ATMs. Carrying the sufficient cash will also help a backpacker to satisfy an immigration official at the destination about the living expenses in that country. But if you require a lot of cash for your trip, then carrying a large amount of cash is not advisable.
Always try to convert the money in USD when you left your place for International travel. USD can be easily exchanged anywhere. Suppose, you are going to Thailand from India, it is advisable to exchange your Indian Rupees in Thai Bath in India itself to get good exchange rate, but if Thai Bath is not available at your exchange dealer then convert your Indian currency in USD. Converting Indian Rupees in Thai Bath in Thailand will cost you more.
Airports counters always offer the worst exchange rates. Try to exchange your currency with authorized dealers located in the city markets and before exchanging find out the rates with 4-5 dealers. In this way, you can get the best exchange rates.
Always carry some cash in local currency of your destination to pay any airport charge or taxi or bus charges to your hotel. If you are intended to use public transport at your destination after getting out from the airport, it is better to carry some notes in small denominations or some coins of the local currency to pay the bus fare.
Sometimes, It is not necessary always to get the local currency in destination countries, unless you are planning to stay in the remote areas or intended to use public transport heavily. For Example, Hong Kong Dollars are widely acceptable in Macau in addition to Macau Patacas. Similarly, US Dollars are widely acceptable in Cambodia in addition to Cambodian Riels.
Best Use: In case of emergency like an unserviceable ATM or secure alternative to cash
Generally speaking, traveler’s cheques have been the safest and most convenient means of carrying money with you, and are accepted nearly everywhere. If lost or stolen, they can be replaced, provided you have kept an accurate record of the serial numbers in a place separate from the cheques. Traveler’s cheques are available through banks, credit unions, American Express offices, and other locations, so shop around for the lowest commission fee. However, traveler’s cheques also often subject you to higher exchange fees and less in practice now.
Best Use: Getting cash in local currency at best exchange rates in easiest way
ATM cards are now being used by International Travelers frequently on a wide scale. They often give you the best exchange rate, but be sure to find out how much your bank will charge you as a fee per transaction. The best practice is to withdraw as much as possible in a single transaction to avoid repeated bank charges.
Make sure that you are the owner of an international debit card. Some shopping cards which can be used in ATMs across India may not work abroad. For Example, my State Bank of India shopping card works in All India, but does not work abroad. So just make sure that your ATM card is an International Debit Card.
Debit cards interact with your financial institution via a system of computer networks. Maestro and Cirrus, two of the largest ATM networks, belong to MasterCard. Similarly, Visa owns the Plus network.Take out your debit card and look at the reverse side. You should see a group of ATM network logos. Write them down. You’ll need to check each foreign ATM machine before you use it to see if it is part of your financial institution’s network.Take a few minutes to research ATM availability. Both Visa and MasterCard offer online ATM locators. In some countries, ATMs are everywhere, but you won’t find any Maestro or Cirrus ATMs in Turkmenistan, and Plus doesn’t service Serbia. If you can’t find an ATM in the cities you plan to visit, you’ll need to find out about exchanging travelers checks or cash at local banks.
At least two weeks before you plan to travel, call your bank or credit union. Tell the representative that you plan to use your debit card abroad. Ask if your Personal Information Number will work overseas. Typically, four-digit PINs work in most countries. Remember your personal withdrawal limit to avoid any problem abroad. Be aware of the charged imposed by your bank on each ATM withdrawal. In many places, local banks also charged some fee for using their ATMs. For example, In Cambodia, National Bank of Cambodia ad ANZ charges USD 4.00 per withdrawal just for using their ATM, while Canadia Bank does not charge any fee. So do some research before any withdrawal to save that extra money.
Best Use: Large transactions such as Airlines Tickets, Hotel Bills, Huge Shopping Bills etc.
Armed with a credit card, you won’t really have to deal with converting currency, which means no more worries about converting just the right amount of money, and you will automatically get one of the lowest conversion rates possible. In addition, pick pockets will be less of a threat not only because credit cards are easier to conceal and keep safe but also because even if your card is stolen, you won’t actually lose money. Just report your card missing and you’ll be off the hook for any unauthorized purchases.
But, credit cards charge a foreign transaction fee of 3% per purchase. If you pay for all of your hotel stays and most of your meals and other expenses on a credit card while you’re abroad, those repeated 3% fees will add up by the time you get home. In my opinion, it is better to use credit card only to book your air tickets or to pay bill in large amount while shopping. And avoid withdrawing any cash advances using the credit cards. Interest rate is very high on such withdrawals. Otherwise, use cash as much as you can to avoid any extra hidden cost.
Two weeks before your departure, call your credit card issuing bank. Inform them about your intended destinations and travel period so that they will not suspend your cards on suspicion of frauds, while seeing a transaction at an international destination. Also ask them an international helpline number, if available.
Always watch merchants imprinting your card and keep your receipts. After you get home, check your credit card statement. If you see charges you didn’t make, call your creditor and ask them to dispute the charges.
Prepaid Travel Cards
Best Use: To keep a tab on your expenditure as this is a prepaid card.
Sort of like a custom debit card; you load the card with money before your trip, then use it just as you would a normal credit or debit card. Examples are Visa TravelMoney, MasterCard Traveller’s Cash cards and the Post Office Travel Money Card. In India, almost all banks like SBI, Axis Bank, ICICI Bank, HDFC Bank etc. issue these cards. These cards can be reloaded from your branch by any relative in case of further cash requirement while you are in abroad. As with credit and debit cards, check the fees carefully. Using a financial software system like quicken.com can definitely make it easier to keep track of your expenditures.
Tips for Safe Handling of Your Money:
It’s best to have a combination of money sources: a small amount of cash, a debit card, two credit cards (in case one is declined or stolen!) and some traveler’s cheques. The easiest things to replace are credit cards and traveler’s cheques, and you’ll get instant cash and lower transaction fees on a debit card.
Make sure you keep a record of your debit and credit card numbers and related customer care numbers on a separate piece of paper at separate place away from your cards. But don’t make your bank account details too obvious or record your pin number!
Keep records of your traveler’s check numbers. If they get lost or stolen you will need this information to get them replaced. If the worst happens, call to cancel them immediately.
Protect yourself from credit card fraud while you’re travelling by making sure you sign for a bill before they have a chance to take it out of sight. And try to avoid online banking from a public internet café.
If you can, then always keep a hundred dollar note somewhere deep in your backpack which could not be searched easily. You can always take this chance to reserve emergency money back in your hotel. Just remember to lock your backpack properly.
This is when you’ll be glad that you took out a travel insurance. Firstly, report any theft to the local police (and get written documentation if possible). Then, call the 24 hour emergency assistance line of your travel insurance provider. Depending on your insurance, you’ll be covered for the loss of both cash and plastic – including any losses on your account. You’ll also need to notify your bank immediately so they can cancel your cards.
Store your cash and cards separately to minimise the risk of them all being lost or stolen at once. A money belt is useful for keeping them safe and hidden on your person. If you have an in-room safe, keep one charge card locked away for emergencies. As for as possible, keep your purse in the front pocket at the crowded places. It may cause some inconveniences, but at last it will save your hard-earned money.
No matter what your budget, chances are that the local people of your host country manage on less. And they not only survive, they enjoy themselves. You can learn a lot about saving money simply by observing the lifestyle of the locals around you.