A lot of people prefer to use cash instead of credit card because it limits how much they can spend. There’s even research showing that the “pain” of separating from cash reduces how much people spend. However, this relationship with money is the opposite for me. I’ve developed my financial habits around using credit cards because it’s easy to see my balance and know if I’m over spending each month, whereas I could keep spending cash without realizing that I’m reducing my cash balance because I don’t track the cash I have on hand. This seems equivalent to how others don’t track their credit card balance.

When traveling, these interactions with money and credit cards don’t apply the same way if you want to be savvy about your finances and save money. For example, most bank cards will charge you large transaction fees to withdraw cash at foreign ATMs. There are exceptions, but I only know of a handful of people who carry these special ATM fee-free cards. Therefore, most people will bring a travel credit card which waives foreign currency transaction fees.

But using a credit card when traveling is actually very risky because it is highly susceptible to theft. The problem is so bad that in some countries like South Africa, the waiter at a restaurant will bring the credit card charging machine to your table and swipe the card in front of you as a sign of good faith that they are not writing down your number while its taken out of sight. The moment your card number is stolen, you lose your ability to track expenses, then you need to sort it out with your credit card company, and you might not be able to spend money to complete your trip. Your risk of theft might be low over 1 or 2 weeks, but it will eventually happen if you travel more.

Also, since credit cards aren’t secured with a separate pin code, you have to take special measures such as calling the credit card company and telling them where you’ll be traveling. This lets them authorize charges from that country, so it avoids your credit card information being sold and immediately used in some other country, but it doesn’t prevent the local thief from taking advantage of their (your?) newfound fortunes.

Ironically, for someone like me who prefers using credit cards to track spending, I avoid using credit cards as much as I can while traveling. The rewards points are nice, so I use the cards to buy flights and book accommodations online where cash may not be the most convenient, but I know that the only interaction are with a computer.

So, what do I do instead? I use CASH! Here are my reasons. An ATM card is a lot more secure and I can withdraw in small specific amounts at a time because I use a card that waives all transaction fees. Because I’m able to transact in small bills as needed, I reduce actual physical theft that can happen when you flash a lot of money around (aka a credit card). And most importantly for me, I can still track my spending by transferring a starting balance and slowly withdrawing to lower the amount. An additional benefit is that I can see how much I use in each country because ATM’s are physically bound.

Just as travel opens us to new cultures and experiences, it can also open us to new money experiences and habits. Please spend responsibly and always pay your credit card balances in full each month.

Published by BE

I write about my travel and money experiences. View all posts by BE