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Cash or Credit? What would you choose?

Handling Money When Abroad

Gone are the days of American Express Traveler’s Cheques and having to find a convenient place to cash them when you run out of money in a foreign country! Today, there are more ways than ever to make sure you always have that foreign cash handy when exploring the world. Here is a short guide to obtaining and dealing with foreign currency on your next vacation. 1. ATMs - By far the easiest and smartest way to access cash while abroad is to use an Automated Teller Machine (ATM). The conversion rate is usually the best available...just proceed with reasonable caution. Be sure that the ATM is located in a well-lit secure area (preferably inside the front door of a bank) and be sure no one can see you type in your PIN number. There are “stand alone” ATMs in many touristy areas that are NOT related to a banking institution, but these tend to charge higher transaction fees, have lower exchange rates and be less secure. Always stick with a well-known name. Check with your home bank before you leave to see if they have any agreements with foreign banks in the country you are visiting to minimize transaction fees and be sure to let them know that you are going to be using your ATM card in foreign countries so they won’t put a security “Hold” on your card when you withdraw cash in another country. Just put in your card and choose “English” as the language option. Then proceed as you usually do here in North America, only realize that you are withdrawing EURO (or another foreign currency)and not US or Canadian Dollars. If you withdraw 100 Euro, the equivalent in US or Canadian will be debited from your account. Many other countries may not necessarily call them ATM’s, but rather something like a “Bankomat” or “Cash Point” or sometimes a “Distributeur”. You should have no problem figuring it out when you see one wherever you may be travelling! 2. Your Home Bank–Your local North American bank can order you some foreign currency before you ever leave home. I usually keep a small stash of unused Euro or other currency from my previous trips, but if I find that I don’t have enough to comfortably arrive in my destination, I may order a small amount from my bank. The exchange rate is usually not as good as using ATMs in Europe, so I limit it to just the amount I think I need to get started with; enough to cover a taxi and some food until I can find a local bankomat. Be sure to give your bank a few days to order the foreign currency! 3. Currency Exchange Bureaus – These should be your last resort, especially the ones located in airports, train stations and high touristy areas. Rates and fees are usually unfavorable. A good time to use a change bureau is if you have several different kinds of currency that you want to combine into one (for example, you have British Pounds, US Dollars and Norwegian Kroner that you want to convert all into Euro at once, lets say). Just be prepared to be hit with a substantial fee for this service. 4. Credit Cards – If you plan to make major purchases while abroad, you’re almost always better off putting it on a credit card that can give you certain protections – especially if the merchant is going to ship the item to you back home in North America. If possible, find a credit card that has the “chip” embedded, instead of just the magnetic stripe on the back. These are more commonly used in Europe and you might have trouble using a non-chipped card for some purchases...especially gas stations and restaurants. And be sure to let your credit card company know that you will be using the card abroad during your trip so they don’t place a security “Hold” on your account when a charge comes in from another country! Also, sometimes the merchant will ask if you want your purchase to be in local currency or US Dollars...ALWAYS CHOOSE LOCAL CURRENCY! If you ask for the charge to be made in US Dollars, you will usually be hit with an extremely unfavorable exchange rate. There are lots of credit cards out there that don’t charge International transaction fees, so do your homework before you travel. And remember for example, Europe and many other countries are much more of a cash society than we are. You shouldn't use your debit or credit card for a 2 Euro cup of coffee or simple meal in a sidewalk cafe. You can save your credit card for hotel stays, “fine dining” restaurant experiences or large souvenir purchases that you may be shipping home. Using cash just makes more sense....and you don’t have those complicated credit card bills waiting for you at home when you return with all the niggly little purchases along the way!

So, you see? With just a little planning and knowledge, you can ensure that your trip abroad anywhere is as rewarding financially as it is personally! For Americans, right now, the strength of the US Dollar against the Euro and many other currencies, makes it a great time for travelling abroad! Are you ready to get packing?

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