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Money
From Wikitravel
Contents
This article is a travel topic.
Information on using money is covered in the Buy section of destination guides. This article contains general information useful in many destinations.
There are a number of ways to obtain and exchange money while traveling. You are always trading off expense, risk, and convenience.
[edit] Debit and Credit Cards
Debit and credit cards can be used to withdraw cash from automatic teller machines (ATMs) and to make purchases at stores, restaurants, and hotels where they are accepted.
[edit] Acceptance of Debit and Credit Cards at Point of Sale
The acceptance of debit and credit cards varies by country, with acceptance being more common in more developed countries. Acceptance of credit and debit cards may be close to non-existent in less-developed countries. Check the country guides for details on credit card acceptance.
The most accepted cards by far worldwide are VISA and MasterCard. American Express and Diners Club cards have global networks but acceptance varies widely depending by country and store type. Discover, JCB, NYCE, Star, MAC, and Shazam are regional. They are rarely accepted outside of the region they are issued in, and even then acceptance is often limited to areas catering to visitors from that region.
[edit] Acceptance of debit and credit cards at ATMs
Mastercard, VISA, Cirrus, and Plus are accepted at nearly all ATMs worldwide.
Some developing countries either have no ATMs, very limited ATMs, or are not connected to the international networks. This includes Myanmar in South-East Asia, as well as parts of Africa. In Japan, most bank ATMs don't work with international cards (the cards are even an incompatible size), and you need to look for a post office, 7/11 or Citibank ATM. In certain countries, not every ATM accepts foreign credit or debit cards.
Generally, only the main bank account linked to a debit card can be accessed at ATMs outside of your home country.
[edit] Debit cards compared to credit cards
Debit cards are linked directly to a bank account and immediately deduct the amount of the purchase or withdrawal from the account. Credit cards are cards that are not linked to a bank account, but that instead charge against a credit line, which must be repaid at a later date. If the charges are not repaid before the end of a grace period (usually 0 to 25 days), interest will be charged.
If you withdraw from an ATM using a credit card (as opposed to a debit card), in addition to foreign transaction fees, you will typically be charged a "cash advance" fee (usually 2%-3%). In addition you will be charged interest on your cash advance starting on the day you pull money from an ATM, unless you have a credit balance on your account.
When making point-of-sale purchases, notwithstanding the fees, it is usually better to use a credit card than a debit card, since if your card is stolen you can easily dispute the charges on a credit card, while a stolen debit card may lead to an overdrawn bank account requiring many additional hassles. Credit card companies will also protect you if you are charged more than you agreed to pay, if you pay for something and never receive it, or if your card is cloned (duplicated) without your knowledge and then used for fraud without being physically stolen.
Credit cards also may include other benefits such as cancellation insurance for flights (usually only in the case of serious sickness), theft or loss insurance for goods (usually only if stolen within 90 days of purchase and a proper police report is filed), collision insurance for rental cars, and emergency health insurance in certain situations while you are travelling.
Credit cards may provide rewards programs that give you free flights or cash back after a certain amount of spending. The cards may be linked to a frequent flyer program.
If you have an American Express card, in case of a lost or stolen card, you can obtain cash advances and replacement cards easily, by visiting and American Express Office.
[edit] Considerations When Traveling With Debit and Credit Cards
- It is a good idea to carry multiple debit and credit cards from multiple banks and issuers just in case one is lost or stolen or doesn't work at a specific ATM. Also, it is a good idea to carry around only the card you will usually be using and keep the backup cards in a safe location where you are staying, providing further safequards in case you are robbed or lose your belongings.
- You may have to get international ATM support specifically activated for your debit or credit card. In addition, some banks will stop your card if they notice sudden transactions in a foreign country. It is best to notify the bank beforehand and get a note added to your account so it does not get passed through their fraud section.
- Be sure you know the PIN for each of your debit and credit cards, in case of an emergency. Many people are not able to access cash using their card because they forget the PIN code. PIN code lengths vary from country to country, but up to six digits are usually accepted anywhere on the Plus/Cirrus networks. If you have a six-digit PIN and six digits don't seem to work, try entering just the first four numbers of your PIN, or find another ATM. If the ATM requires 6 digits and you have only 4 digits in your PIN, enter 00 as the last two digits. If your PIN is based "word based" know its numeric equivalent. Many ATMs outside the USA have no letters to correspond with the numbers. (example: "CASH" = 2274)
- In most countries, you are not responsible for any expenses made on your debit and credit card that occur after you report it lost or stolen.
- In case of an emergency, you can use Western Union to wire yourself some money using your debit or credit card (if you know the numbers). However, exorbitant fees will apply.
- Many credit cards issued in Western Europe feature a chip and PIN system, where credit cards all have a chip built in and you have to type your PIN code into a reader instead of signing a receipt. All stores that display the Visa, Mastercard, or Amex logos must also accept the sign-and-swipe version of the credit cards; however, some may initially refuse to do so (be persistent, ask for the manager if necessary). With self-service vendors such gas pumps and ticket vending machines, you may be out of luck.
[edit] Additional Considerations Regarding Fees
- If you are staying for a long time in a single country, you may save on fees by opening a local bank account and obtaining a local ATM card. You will usually need a local mailing address and you may need a valid residence permit.
- When making point-of-sale purchases, most US-issued Visa/MC debit cards can only be used in "credit" mode (i.e., swipe-and-sign, as opposed to PIN-based "debit" mode). In addition, if you are faced with a situation where a PIN is required (such as certain unmanned train ticket kiosks in Europe), it is certainly better to use a debit card than a credit card, as PIN-based transactions with a US credit card may incur cash advance fees (in addition to any foreign exchange fees).
- The exchange rate applied may be the rate on the date the expense was posted to the account, not the date the charge was made. Therefore if you are dealing with a fluctuating currency it is impossible to know exactly what exchange rate will be applied for an expense until a few days after you make the expense. In general, Visa/MC cards seem to get slightly better exchange rates than AmEx, although the difference is not material.
- When you are paying by Visa or Mastercard, some merchants will offer to convert your transaction into your home currency ("'Dynamic Currency Conversion'"). If this offered, you should decline it, as an exorbitant exchange rate of 7% may be charged [1]. Always check your receipt, and if you see anything involving your home currency in a country that doesn't use that currency, ask the merchant to re-do the transaction in the local currency. If the merchant insists that the conversion is automatic, it is worth arguing or reporting the incident to your credit card company. Visa "requires the merchant to disclose the fee and must provide the consumer with a choice" of getting the bill in the customer's home currency or the local currency. [2]
[edit] Traveller's cheques
A traveller's cheque is a cheque issued for a fixed amount in a specific currency that you purchase with your funds in advance. Traveller's cheques are only available in major currencies. For example, if you are in travelling to the USA, you could purchase 10 x $100 US traveller's cheques before you travel there, and use them when you arrive. You sign each cheque when you purchase it, and again on the same cheque to redeem it.
The main advantage of travellers' cheques is complete protection against loss or theft. Once you report them as missing, the issuing company will replace them. You must also keep a record of your used cheque numbers. Most traveller's cheque issuers have arrangements to replace them around the world in a short time frame so you are not left without cash. If you are unsure which cheques you have already cashed and which are missing, your refund may be delayed until the issuer can figure out which ones are presented.
Traveler's cheques can be exchanged for cash at most banks. Exchange bureaus will also usually cash them and a hotel may sometimes provide this service to its guests. American Express travellers cheques can also be exchanged at American Express travel centres. Fees for cashing travellers cheques vary by destination and institution. Some banks will cash some brands of cheques free. American Express will cash their cheques free at their travel centres if they are in the denominated in local currency. Often fees apply. The fee for cashing can be a sliding scale or flat fee, or may only apply above a certain threshold. If you are cashing travellers cheques into different currency to their denomination, fees may also be built into the exchange rate.
Traveller's cheques can also sometimes be used for purchases at point of sale, although nowhere near as widely as credit cards. In general, only the largest stores and hotels will accept travelers cheques for payment.
You will pay a fee to buy travellers cheques. If they are denominated in a foreign currency this fee may be built into the exchange rate.
If you are buying travellers cheques in a foreign currency you lock in the exchange rate on the day you purchase the cheques. Buying travellers cheques prior to travel in small increments can have the effect of averaging out the exchange rate you obtain, and you don't have the risk involved in keeping foreign currency cash for extended periods.
If you have travel insurance you may care to compare the benefits under your policy. Credit card companies will usually offer a 48-hour emergency replacement or cash advance service for a fee, and these fees may already be covered under your policy.
[edit] Cash
Cash is the most versatile method there is. Aside from some car rentals and a few gas stations, virtually everywhere takes cash.
In some countries you may be able to get by entirely with US Dollars or another major currency. However, this will often be at an additional expense as the exchange rate offered by merchants and hotels can be not very good. Merchants in border communities may accept currency of neighboring currencies. For example, northern border areas in the United States may accept Canadian coins on par with corresponding U.S. coins, but not Canadian dollars, and in the U.S. South, a Canadian quarter is worthless.
For remote travel, be sure to bring only notes in good condition and only the most recent redesign (unless it's really new). Banks at your destination cannot easily or cheaply exchange worn-out currency for replacement as they can with their country's own currency. Worn paper currency may be devalued if it is accepted at all. Even if in good condition, previous designs of your currency may not be accepted due to counterfeiting concerns. If possible, go to your bank early in the day, and well before the departure date, and ask for "like-new" currency.
This biggest disadvantage to cash is the risk. If you lose it you can't get it back, and if someone finds out you have a large wad of cash you become a potential mark. Some defenses are discussed in the pickpockets article, but there is no complete defense — carrying cash always involves a risk. Travel insurance may cover a theft of cash to a certain value.
When using local money, familiarize yourself with the basic note designs and their security features (watermarks, holograms etc), and watch out for counterfeits and obsolete currencies. Banks and money changers (operating out of an office, not flashing wads of cash from a coat pocket) are nearly always safe, but taxi drivers, petty traders and such, may be tempted to palm off useless bills. When in doubt, reject unfamiliar bills, and be particularly suspicious of large notes.
[edit] Where to exchange cash
All money exchanges work on the basis of selling a foreign currency at one rate and buying at another. Make sure you know the current interbank exchange rate before you leave home [3]. Where there is more competition, the rates are likely to be better. In some cases it may be better to exchange your money before you leave, in others it may be better to do it in your destination. Rarely is the most convenient location (such as at airports, or major hotels) the best rate available. In some cases it can be significantly higher. As there are fees associated with currency exchange you should not exchange more than you need. Most major currencies are subject to counterfeiting these days. Study the bills of the currency of the foreign country to become familiar with how it is supposed to look and feel. Almost all currencies employ anti-counterfeiting technologies, including colour shifting ink, watermarks, special threads, iridescent inks, raised printing, holograms and other features. Become familiar with them so that you can quickly check them when you get a new bill whether it is as change or from a money exchange. If you are unsure, don't be afraid to say you would rather get a different bill, or just say you would rather get 2 smaller bills for change (As an example if you get a ten in change that you don't like the look of, ask for two fives instead). If you end up with a counterfeit you won't get compensated, and you may end up having to explain it to the police.
[edit] Convertible currency
A convertible currency is a currency that can be easily converted into another country's currency; conversely, an inconvertible currency is theoretically worthless outside its country of origin. A few countries, like Cuba, still issue one convertible currency for tourists and one inconvertible currency for locals. In some countries like Tunisia and India, importing or exporting (inconvertible) dinars and rupees is technically a crime, although such regulations are rarely enforced for small amounts.
Convertibility is set by law and not always entirely reflected in reality: some currencies like the Indian rupee are inconvertible in theory but fairly easy to trade in practice, while others like the Swazi lilangeni are fully convertible in theory but next to impossible to sell or buy in most of the world.
Despite the name, inconvertible currencies can often be purchased at a discount outside the country of origin, as people holding onto them want to get rid of them. Finding somebody to buy them is more difficult. Also note that state-run shops in some countries will also insist that tourists produce certificates of exchange to prove that their money was obtained from a legitimate source like a local bank at the official (usually poor) exchange rate, and such certificates are also often required if you want to change back any unneeded money within the country.
If travelling to a country with an inconvertible currency or one that you can't, in practice, buy or sell in your home country, you should convert all your money to a major international currency (US dollars, Euro or the British pound, whichever you can) before leaving the country. In general, these currencies can be exchanged at banks anywhere in the world: US dollar, Euro, British pound, Japanese yen, Swiss franc, Australian dollar and Canadian dollar.
[edit] Hard currency
In many poorer countries with inflationary, unstable, and/or inconvertible currencies, a foreign hard currency may prove more useful than the local currency. Although its value fluctuates, the "gold standard" for currencies remains the U.S. dollar. It may be accepted as payment directly by locals, though not necessarily at a great exchange rate. In fact several countries in the Caribbean, the Americas and South-East Asia use it as their de facto – or even official – currency. The euro is also increasingly well accepted, at least in regions with many European visitors, and small countries with economically powerful neighbours may also accept regional hard currencies (e.g. the Thai baht in Laos and Cambodia, the Australian dollar, or sometimes the New Zealand dollar in much of Oceania).
You can use hard currency when haggling with locals by offering hard instead of local currency. Use the conversion rate to your advantage and make an offer in hard currency. Showing a few US dollar bills in the process might help but be sure to show only what you are willing to pay. Also, if you plan on haggling sure to have small bills available so you don't need much change back, especially if you just haggled a price much lower. You don't want to be giving a vendor $50 for a $5 item; you'll only be inviting the vendor to try to sell you more things or even worse, let nearby pickpockets know how much you have.
It is wise to carry an emergency stash of hard currency separated from all your other belongings and valuables. Some businesses who deal with a large number of foreign tourists may also accept foreign money, but often at an inferior exchange rate to allow for the inconvenience.
[edit] Black market exchange
In some countries the official exchange rate is fixed at a completely unreasonable or unrealistic rate. In these countries the black market will provide much more realistic evaluation of the currency's worth, and is practically unavoidable. For example, in 2007 the official exchange rate was 250 Zimbabwe dollars to the US dollar, while the black market rate reached 600,000 Z$ to the dollar.
That said, the risks of black market exchange are legion. First and foremost, black market exchange is illegal and both buyer and seller may face severe sanctions if caught: the seller may even be (or work with, or tip off) a police officer out to trap tourists. Second, the risk of fraud is high: you may get obsolete banknotes, fake banknotes, less than the promised amount or nothing at all. Consider carefully whether you need to exchange in the first place, as businesses in countries with basketcase currencies will often be more than happy to accept hard currency directly instead (although this, too, will often be illegal), and you may get all the local currency you need back as change.
The key guideline to successful black market transactions is to receive the money before you hand yours over. Count the bills, inspect the bills carefully, compare them to any you already have, and only then surrender your own money to the vendor. Do not allow them to take back the money they gave you, as this is where various sleight-of-hand tricks can be pulled to replace the legitimate bundle with something entirely different.
In countries where foreign exchange rates are reasonable, it is best to avoid the black market entirely: you risk losing all your money for gain of a few percent at most.
An exception may apply in countries such as Nepal and India where doing a legal exchange at a bank can involve wasting an hour or more but most hotels will change money for you instantly and fairly safely. The rate may not be much better, but the convenience is.
[edit] Coins
You can't exchange coins once you have left a country. Either exchange them before you leave, drop them in a charity box, or souvenir them.
Becoming familiar with coins and currency for your destination country and not mixing coins from various countries in your purse or pocket can save you collecting too many coins before you depart.
[edit] Carrying money across national borders
Countries track large movements of money across national borders. If you are transfer money between international bank accounts this is done automatically, but if you carry large amounts of money (typically more than $10,000 USD, Euro, of similar) you will need to declare it. Don't forget monetary instruments such as travelers checks count as well.
The rules about personal and business checks can be confusing. If the check is "cashable" and payable to yourself (or traveling party, etc.) that counts against the total. But when abroad, you can mail a check to someone in your home country (or do it online) provided the bank in which the check is drawn is located in the same country as the payee. (If not, you must report.) In other words, the funds never accompanied you, and you're just giving permission to your home bank to pay someone domestically. Having to pay taxes is not an excuse for non-reporting; but again, the funds to pay them would have to be located in another country for these rules to apply.
Some nations (mostly third world) have such a low import/export limit in the country's home currency (not US$, euro, etc.), that these limits may practically represent pocket change. Often, this is due to local laws not having been updated for hyperinflation. However, in such cases, the currencies are generally not convertible abroad, and/or the rules not always strictly enforced.
[edit] Getting money in an emergency
American Express credit card holders can get emergency cash in the form of its travellers' cheques at foreign American Express offices, and designated affiliates (often a travel agency or bank). If the location is not a bank, you will have to go to one or a foreign money exchange to cash the cheques. Be sure to bring a blank cheque from your checking account back home or at least know the routing and account number (the digits printed at the bottom of each check). There is a one percent fee for issuing the travellers' cheques, and the total sum is NOT a cash advance on your American Express card. (They will cash advance your credit card without further permission from you if there's a delay in cashing the check, though. Keep tabs on your checking account, and make sure it clears in a few days.) Also, there's no requirement that you're destitute, as the service is available for whatever reason.
If you have someone willing to send you money, there are several options for getting money fast in an emergency. These include:
- Wire transfer services like Western Union
- Having someone back home directly depositing money into your bank account. You then use an ATM to make withdrawls.
- Sending a few banknotes via an overnight courier service (this is reliable, but is sometimes not allowed in the courier company's terms of service.)
- You could sell personal possesions, such as a camera or sport watch.
- If you know your credit card numbers, you can use western union to wire yourself some money
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