How Should I Carry Money When I Travel?

As you would suspect, there are many answers to this question. First of all, you can carry cash. If you're not terribly concerned about loss or theft, this is not a bad option. Certainly it's the most convenient choice. And you can carry cash in one of several hidden pouches (see the end of this article for choices).

Another choice is the traveler's check. Sometimes these are necessary, as in developing countries. But in most places they are awkward and inconvenient. To cash them you need to find a bank and then you may need to stand in one or more lines. And the rates charged for cashing them are variable and sometimes downright unreasonable. We heard of one person recently who was charged six dollars to cash a twenty-dollar check. Most of the time we just carry a small amount in traveler's checks as a backup for other resources – and we rarely use them.

For travel to developed countries, such as Western and Central Europe and the Holy Land, the best alternative to traveler's checks has become the ATM card. In developed countries the machines can be found readily and are reliable. There are three types of cards available.

First is the ATM "cash card" that you can get at your bank or credit union. Their only function is getting cash from the machine. Since you are using your own money, the only cost for using these cards is the relatively small use fee charged by the banks. For the most part these work well, though the machines occasionally prove to be stubborn. And be aware that there is a daily limit to the amount you can withdraw.

The second option is the debit card. These are issued by Visa or Mastercard and, as with the cash card, you are using your own money so the transaction costs are relatively small. The big difference between the two is that you can use the debit card to make purchases at stores and restaurants. There is also a daily limit and, of course, the money must be in whatever account you specified when you got the card. Reliability of these cards in machines is at least as good as with cash card.

Finally there is the good old credit card. Visa and Mastercard are the most widely accepted. These can also be used in ATM machines if you have a PIN number (see below). The main drawback is that you are borrowing money when you use them, so the cost is higher. You can expect a 5% to 6% service fee plus interest on the unpaid balance if you don't pay it off right away. Most people, us included, don't plan on using our credit card to obtain cash. But we use it liberally for store and restaurant purchases (since the business pays the fee). And it's good insurance.

One of the best reasons we have found for using an ATM card for cash is that the exchange rate is almost always better. We have found that service fees charged for "cash" conversion, no matter where you go, are higher than what we have been charged by the card company.

Remember that with all three types of "plastic" you will need a PIN number. Before you go make sure you have the number memorized and written down in a location separate from the card. And don't guess at the number when your using a machine – if security is tight, the machine may not give you back your card if the first try fails. In a pinch, if the machines don't work you can get cash with a credit or debit card at most banks. You will need an I.D. (often a passport and driver's license), and there will be an extra fee.

To help you make up your mind I'll tell you what we do – you can use this as a guideline. To start with we take about $20 per person per day in cash. With group travel most of your expenses are prepaid. You should only need cash for lunch, refreshments, tips and small souvenirs. If you can use a credit card for lunch, so much the better. Next we take a similar amount in traveler's checks just for backup – we seldom use any. We also take a bank "cash" card since this can be the easiest and least expensive way to exchange money. But, as with the traveler's checks, we may not use the card at all. Finally, we take a Visa credit card that we use absolutely every chance we get at stores and restaurants.

We highly recommend that you do not carry any of this in a purse or wallet. All big airports and cities have pickpockets. The best defense against them is to get a pouch or a money belt. Target sells several inexpensive choices. The pouches are worn under your shirt (on the chest for man and under the arm for women). The money belt is on the inside around your waist (outside "fanny" packs are very vulnerable). Either of these have plenty of room for cash, traveler's checks, your passport, a couple of bank cards, and your driver's license or state I.D.