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Credit card or cash? Which is best when traveling abroad

For the best currency rates when abroad, get

For the best currency rates when abroad, get cash in a bank or bank-owned ATM, says one expert. Photo Credit: Getty Images / Ismail Çiydem

Credit and debit cards have modern flair, but cold, hard cash is still an international traveler’s best friend.

But how do you even get foreign currency these days? How much cash should you take? And whatever happened to travelers checks? We talked with currency expert Bruce Beattie, owner of Foreign Currency Exchange Services in Birmingham, Michigan, who keeps close watch on travel money issues around the world.

Why would an international traveler need cash at all? Isn’t cash old-fashioned?

“Cash is still critical for emergencies and for smaller purchases where you can’t use a debit or credit card,” Beattie says. “Have some foreign currency so if you arrive at an airport and can’t find an ATM, you have enough money for a taxi, train or a bottle of water at least.”

Can’t I just use my debit or credit card abroad? I have one with no foreign transaction fees.

U.S. credit cards still do not work everywhere in the world or can work in strange ways, he says. For instance, “Germany is still largely a cash country even though it is the biggest euro zone,” he says. “You can’t charge a cup of coffee there. They want cash for anything under $30, basically.”

Sometimes, even a no-fee credit card will register overseas as a cash advance, incurring fees. Sometimes, your credit card simply won’t work, even if it has chip and PIN technology. Always take backup cards. And, of course, cash.

What ever happened to travelers checks?

They still exist, but almost no one uses them. “It got to the point that counterfeiters figured out how to make them,” says Beattie. “In one famous case in Milan, $40,000 of fake travelers checks were passed. Then nobody wanted to take them anymore. We stopped selling them in 2007. People would tell us they couldn’t cash them anywhere.

“If you still have them, deposit them into your bank account. They are still good.”

If you don’t bring enough foreign currency, where can you get it abroad?

“Currency exchange windows at airports, railway stations and hotels have the worst rates, and cruise ships, too, because you are a captive audience,” he says. Instead, use a bank or bank-owned ATM, preferably one inside a bank for the best rates and safest transaction. “If you use an independent ATM you are at risk of skimming machines [that criminals install to commit fraud]. Also, privately owned ATMs can charge as much as 10 percent in fees, plus the regular exchange fee.”

What if you find yourself without any cash or credit cards?

“Someone can wire you money via MoneyGram or Western Union. In our experience, transit time, depending on where you are, is 10 minutes to a week. Sometimes, someone takes a cut of it along the way,” he says.

What about a prepaid credit card you can add value to?

Be careful. “Some prepaid cards you buy are actually like gift cards and can only be used in the United States,” he says. However, a card such as the prepaid VISA TravelMoney card or Travelex Cash Passport prepaid MasterCard is reloadable and usable in other countries, making it good for students studying abroad.

If you buy too much foreign currency, can you change it back into U.S. dollars when you get home?

“Yes. But you will get less for it than you paid for it.”

What about old foreign currency? Can I still use it when I travel or trade it in?

“It depends on the currency itself. Some have a window in which you can turn it in. For instance, Germany uses the euro. But the old German mark has not closed the window for exchange; it still has value. But the Italian lira and French franc? Those countries stopped honoring that currency a few years ago.”

So if I have old French francs, are they worthless?

“Pretty much, except to the secondary market of collectors. Some people collect old foreign currency. It has to be in pristine shape,” he says. “But a lot of currency has the same problem. In Switzerland, any currency prior to the past two issues have been demonetized. It has no value. Sometimes I have people come in, maybe their father has passed away and they open a safe-deposit box and find this old currency, maybe 4 grand worth of old Swiss francs, and I have to tell them it has no value.”

What countries have money that never expires?

The United States and just a couple of others. The euro, which the public began using in 2002, does not expire — at least not yet. “Most currency expires. Brazil, for example, has had three or four currency changes since the ’70s,” he says.

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