First time or a seasoned traveler, we run in-depth research on best travel packages, avail best deals in hotel bookings and best rates for flight tickets. Amid all the excitement, what we often ignore is the basic math on the best deals in foreign currency. For those travelling for the first time, it is necessary to devise an efficient plan to manage travelling, lodging, shopping, dining and sightseeing expenses. But it is even more important to gain knowledge on which financial instruments to carry on your trip in order to ensure a smooth and stress-free holiday. Here’s a guide to the most convenient, safe and cost-effective way to devise your financing options for your first trip abroad.
Exchange your currencies before you leave
Most people who travel regularly, would tell you that it is better to get your currencies exchanged while you are still on your home-ground. Currencies exchanged from native banks, foreign exchange agents and other forex providers is a good idea as you’re most likely to get a competitive rate. Trying to exchange US dollars, for example, in tourist spots in South East Asia or withdrawing foreign currency from ATMs abroad can be a very expensive proposition. First-time travellers could also consider online forex marketplaces where they can get the benefit of exact interbank rates with minimal margins. These rates refer to the forex prices at which banks deal with one another. Consequently, the consumer stands to enjoy a huge price benefit and save money.
Choosing the best transactional instrument
One might think that cash is the best way to pay for different services, as there are no transactional charges involved. However, this is far from the truth. When you get your currency exchanged, you are already paying some commission along with the exchange rates. Travel cards are the best alternatives, while travelling as they are portable, convenient and safer. However, keeping some cash handy when travelling abroad, is recommended as well. As soon as you land and for your basic buys, cash is imperative. Exchange sufficient amounts of cash before leaving for your international destination to ensure that money doesn’t fall short and complement the currency notes with travel cards. You can always come back and sell the remaining currency notes and encash the amount in the travel cards in case of any excess.
Get cards of different bank accounts
Most seasoned travellers keep two debit or credit cards from different banks, while travelling. Two different banks ensure that you are not left without access to funds in case you need more money over and above the currency you are carrying. There are also various withdrawal limits and keeping money divided in two different banks means that you can take out twice the amount, in case you decide to buy something expensive. Some cards works in some places but another one doesn’t; hence it’s wise to have at least one card as backup, be it a debit or credit card which will allow you to withdraw cash during emergencies.
Prepaid travel cards
Prepaid travel cards are Master Cards/VISA cards which are similar to debit and credit cards, but with a few extra advantages. One can use prepaid cards at any ATM, across the globe and at most of the businesses worldwide. You can load your desired sum of foreign exchange in these cards via online forex marketplaces for standard fixed rates. Some of the advantages of using a prepaid card is that they are safer to carry than currency, which is more prone to theft and getting lost. Prepaid cards, however, are pin protected and are fully replaceable in case of theft or loss. They are also a better alternative than traveller’s cheque, which are not accepted in most of the places nowadays. The prepaid cards are also available at better rates than traveller’s cheques. Additionally, prepaid cards come with round-the-clock customer care services and can be re-loaded anytime.
Don’t opt for traveller’s cheques
Traveller’s cheques have started becoming obsolete since the early 90’s with better alternatives such as debit and credit cards, great currency exchange rates and ATMs becoming more ubiquitous than ever before. Nowadays, it is very difficult to encash traveller’s cheques, even at banks. Apart from all these inconveniences, traveller’s cheques aren’t secure as well. If they are lost or stolen voiding the previous ones and getting another one issued is too much of a hassle when you’re holidaying abroad. Hence, it is not a recommended financial instrument to carry while travelling.
The author is CEO & Founder, BookMyForex