If you have a set budget for a vacation, you know it can be very tricky to know when to use cash or credit card when travelling. A simple mistake could change a lot how much you spend on that trip. So, how do you know when to use credit or cash?

First of all: be prepared

Never travel with only one option. The unexpected happens. Always have some cash – can you imagine if your credit card doesn’t work for some reason? On the other hand, it’s always good to have credit card to possible bigger purchases, so you don’t have to carry so much cash with you.

Consider the exchange rates & carry some cash

When choosing between cash or credit card when travelling, consider the exchange rates. The rate numbers you see on TV are used to business transactions between different countries, and although travellers generally can base their expenses on that, it’s very difficult to find exchange rates for travel that are exactly the same as those. Always consider it will be slightly higher.

That said, keep in mind that when getting in the new country, you might get bad rates at the exchange kiosks that you find. Ideally, start to exchange money as soon as you start to plan your trip; that way you can choose dates when the currency is better.

If you want to know more about the right moment to exchanging currency, read our article about it.

Get to know your credit card

Especially if it’s your first international vacation with this card. It is an international card? How much does it charge you in taxes when you purchase something in another country? Foreign transaction (FX) fees can vary between 2.7% and 3%, but some credit cards have a better deal. It’s definitely worth to try to find more about it before boarding in your next trip.

Decided to use credit card?

Then pay in the foreign currency – that way you avoid possible loss. When using credit card in another country, you’ll be asked if you’d like the merchant to convert it to U.S. dollars, which is usually a bad idea. Choosing to pay in the foreign currency is the best deal, because of the conversion rates. If you allow the merchant to choose them for you, they you probably pick rates that are unfavorable to you. If you let your credit card network choose that for you, it is more likely that they will be more aligned with the general market rates.

Want more advice from specialists?

If you need more instructions on travel and exchange rates, contact us! Our team will be glad to help you with this and other financial-related issues. We are on 1446 Lonsdale Avenue, North Vancouver, BC.