Difference between revisions of "Money"
Revision as of 15:08, 16 August 2004
This is an article in Travel topics.
Virtually all travellers will need to spend money on their trips. There are a number of ways to do this. You are always trading off expense, risk and convenience.
The acceptance of Credit Cards varies by country. Rarely can you buy everything by credit card, but in most of the developed world you will be able to buy most of your major purchases (hotels, air travel, car rentals, expensive purchases and expensive restaurant meals) on credit card. In less developed locations your credit card may be totally useless. In all cases there will be some expenses that cannot go on a credit card so you cannot rely on a credit card exclusively.
The biggest advantage of a credit cards is convenience. You do not need to know exactly how much money to bring with you. You also don't need to deal with the inconvenience of money exchange.
The next biggest advantage is the low risk. In most countries you are not responsible for any expenses made on your credit card that occur after you report it lost or stolen. Credit card companies will also protect you if you are charged more than you agreed to pay, or if you pay for something and never receive it.
Many credit cards also include some forms of insurance protection for all expenses made with the card. This can include cancellation insurance for flights (usually only in the case of serious sickness), theft or loss insurance for goods, Collision insurance for rental cars and even travel health insurance when you are travelling. You should look over you credit cards insurance carefully before you start to travel to see what it provides. It may even be worth getting a travel credit card, if you don't have one, just for these coverages.
The biggest disadvantage is cost. At one time credit card companies used to apply the exchange rate they got to your exchanges. However, most credit card companies now incorporate a exchange fee into the exchange rate that they offer. This is generally in the 2-3% range. You can call your credit card company and ask what the fee is as well as asking what the current exchange rate is for the currency that you would like to find out about. One thing that should be noted is that the exchange rate is applied at 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.
If you have multiple credit cards it is often a good idea to only carry around the one you will usually be using and keep others in a safe location. Then if your main one gets lost or stolen you will not be left without a credit card, or have to go through the hassle of replacing a credit card in a foreign country.
Travellers' cheques were at one time the primary method of taking money with you when you travelled. These days they are not as common, but they are still widely available and relatively widely accepted. Generally these are not accepted as widely as credit cards and they are usually not as convenient to use.
Travellers' cheques are issued in a specific currency. American Dollars is the most common currency, but many different currencies are available.
With Travellers' Cheques you are protected against loss or theft. Once you report them as missing, the issuing company will replace them. However, this can take time and be inconvenient.
There is also often a fee associated with travellers' cheques. This may be a straight fee or it may be hidden in the exchange rate if you are buying them in a foreign currency. If you are buying them in a foreign currency it may be worth it to find out if you can buy them with cash in that foreign currency.
Cash is the most versatile method there is. Virtually everywhere takes cash. The one exception is that some car rentals may not rent you a car or ask for a very large deposit if you don't have a credit card.
In some countries you may be able to get by entirely with American money or other local generally accepted currency. However, this will often be at a huge expense as the exchange rate offered by merchants and hotels is usually not very good. (Can be as much as 15% or even more).
This biggest disadvantage to cash is the risk. If you loose it you can't get it back, and if someone finds out you have a large wad of cash you become a potential mark.
Money exchange is a very complicated business. All money exchanges work on the basis of selling a foreign currency at one rate and buying at another, with the difference being the spread. Newspapers usually will quote the average of the two as the daily rate. Where there is more competition, the rates are likely to be better.
Currency exchanges are not all created equal. Where the best rates are available varies tremendously from one country to another and from one currency to another. 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 you loose some money on every currency exchange it is important never to exchange too much money. It is usually a good idea to make sure you spend most of the cash you have. Therefore, if you have a large chunk of cash left over at the end of your trip and you were planning on paying for your hotel or car rental with credit card, pay for some of it with cash to get rid of the currency.
If you are exchanging very large amounts of money it may be possible to do a certified cheque currency exchange. This is sometimes offered at a cheaper rate at currency exchange. You bring in a certified cheque to a currency exchange and they give you a certified cheque made out to you in the new currency.
Most major currencies are subject to counterfeit these days. It is a very good idea to 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-counterfeit technologies. This can be 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 wont get compensated, and you may end up having to explain it to the police.