MoneyWise

Whether you go on a budgeted or fancy holiday, it should remain an enjoyable one. Impromptu ones or planned ones, all kinds of holidays are fun and exciting. Its just that the planned ones give you a heads up. These are some money tips you can use. Money is the greatest of our worries. We are vacationing to relax but worrying about money would defeat the entire purpose of your trip. Vacationers are the biggest targets becoming victims of theft. Its easy for criminals to target them because they know you are sure to be carrying a lot of cash. Be alert. That's the most important thing for you to do.

Carry all. Cash, plastic, ATM, and Travellers Cheques. You never know which you may need. Just ensure you remember to use, whichever kind you do, most judiciously. Taking care to remember the service charges on ATM’s can sometimes be very steep or that Debit cards do have security issues in case your number and pin are hacked. Using the Credit card excessively on holiday, may want you to cash back on it later causing excessive amounts of interest to pile up. Travellers Checks are safer than cash but a pain to get cashed sometimes. Also you may not get a good rate of exchange sometimes.  Carry Pounds, American Dollars or/and Euros, these are exchangeable anywhere all over the world. So, while you must carry all kinds, remember to use them as sensibly as possible.



Automatic Teller Machines and Debit Cards
ATM’s are probably the fastest, cheapest and the most convenient way of obtaining cash worldwide. The biggest advantage of exchanging money with your ATM card is that all cash withdrawals, regardless of size, are exchanged based on the wholesale exchange rate, which is usually reserved only for very large interbank exchanges. Sudden withdrawals using an ATM could cause the bank to get suspicious and freeze your account. So in case you plan on travelling, inform your bank when and where you will be travelling. The fees differ from bank to bank and also tend to change without notice. So make sure you know what you are going to be charged for using your card. Also, keep the PIN (Personal Identification Number) memorised. Most countries accept a four digit PIN, so make sure to get one issued from the bank, in case yours is longer, it could get rejected. Debit cards can be used at ATM’s to withdraw money too. You can even use them to purchase items. The fund’s are transferred from the bearer’s bank account immediately.

Advantages
They are accepted worldwide. There are ATM machines available in almost every corner of every street nowadays. In case you are travelling to remote areas, you would have to check for any form of travel money anyway.

If you can use one at home, you can use one abroad. Plus you get the currency you want with the greatest ease.
The rates offered by ATM’s are the most reliable rates you can possibly get.

Debit cards ensure that you have paid for the item/service immediately, rather than you having to worry about paying for it later.

Debit cards can be used to withdraw money or a PIN based transactions no extra charges in the form of fees, other than a foreign ATM fee.

 

Disadvantages
There is a limit on a per day withdrawal. So make sure you know the limits and make other arrangements in case you need more.

You can get the best rates if you withdraw big chunks of money, due to flat ATM fees. But carrying huge sums of money is not advisable on a vacation.

The chances of theft are high, in case the card is found and used by a clever criminal before you can inform the bank, when you lose it.

Debit cards allow the bearer to use it over and above the available balance in account. Thereby creating unhealthy overdraft.

There are cases of Debit card PIN theft. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.

Having said this, ATM cards are still the best way to withdraw money. They require no photo ID, can be used online and have high limits. Always save the receipts.



Credit Cards
When we travel, we don’t know how much cash we will need. Also, we may not want the inconvenience of going through different rates of exchange. The biggest advantage of a credit card is convenience. The acceptance of Credit Cards varies from country to country. In most developed nations, you can pay for almost anything with a card, but it may not be so widely used and accepted in some developing or under developed nations. If you have multiple cards, keep one handy with you and the rest in a secure place, in case you do lose it, you won’t be stranded in a foreign country, without a card and going through the replacement hassles. The best and most accepted cards used worldwide are


Visa
MasterCard
American Express

Advantages
The first and biggest as we mentioned is the convenience

Once a card is stolen and has been reported by you, you are not liable to pay for any transactions after that. So, the risk is relatively lower.

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. Also note that you can often tie in a credit card to a frequent flyer program, so you get more miles and free trips faster.

 

Disadvantages
Beware of cloning or copying. If this is done, your card be easily used fraudulently, without it being physically stolen.

Another big disadvantage is the cost. Most credit card companies take an exchange fee, which ranges from 2-3%. You have to double check with your credit card company. Also, some companies apply the rate of exchange the day the expense is posted to your account, not the day it was charged. The fluctuation in the rate of exchange therefore cannot be ascertained.

Tendency to overuse. When we return, tend to cash back, and pile up on accumulated interest.
 


Traveller’s Cheques
Traveller’s Cheques are a safe and easy way to carry money and can be cashed as and when you need to. The do not have any expiry date. One time, Traveller’s Cheques were the primary method of taking money abroad. The popularity has diminished greatly in recent years due to Credit cards, Debit Cards and ATM facilities available more freely than before. Though they are still used and accepted worldwide. Traveller’s Cheques are usually available in US and Canadian dollars, Australian Dollars, Pounds Sterling, Euros, Japanese Yen and Chinese Yuan. The most common one being the US Dollar. These are generally issued in larger denominations.

Advantages
Carrying TC’s gives you the freedom of converting them whenever you need. So you aren’t carrying excessive hard cash around with you.

They are pretty much useless to a thief, who would have to countersign them and show a photo ID to use them.

If the TC’s are lost or stolen, they are replaced free of cost. How many times this will be done is not known but photocopies of the TC’s, your purchase receipt and the police complaint copy would be required for the same to be processed.

 

Disadvantages
When you cash them, they often get traded for a lower rate of exchange, making them slightly costly. Be suspicious of claims of no fees.

When lost, the replacement process takes time and could be inconvenient.

They may be difficult to cash if you are travelling to remote areas.



Cash
This is the most versatile method there is. This is also the best method and the easiest to use for payment. You have the freedom to carry as much as you want, any amount of denominations. You can pay for what you want. But, carrying large amounts of cash is never advisable. This is the one form which isn’t replaceable. Once lost or stolen, its gone. The standard to be used for currencies is the US dollar, which is accepted almost all over the planet. You tend to lose some money due to rate of exchange fluctuations. Do try and finish as much as foreign currency you have before the trip ends. If you are changing large amounts of cash, do it at a certified currency exchange.

Advantages
You can carry notes of any denominations.

It is accepted everywhere, easiest method to pay.

 

Disadvantages
You can be a target by local thieves.

Once lost, its gone forever.



Cash Cards
These are a recent phenomenon. They became popular in the US over the last 10 years and have now spread around the world. These look like Credit or Debit cards, and do give you the same facility of using to pay for services. But they have a distinct difference. You can only use the amount that has been preloaded into the card. So, there is no risk of debt as you cannot get credit or overdraft facility. You get a pin when you purchase this card, and you can use it the same way you do a Credit or Debit card, including using for ATM’s. Money can be loaded on to the card through cash at a bank, post office and via a bank transfer.

Advantages
You don’t run into credit or overdraft issues.

You can monitor the children’s spending too, you get a complete breakdown to monitor what was spent, when.

These are extremely popular for travelling. Specially for students studying abroad, they can carry the card and parents can load amount required, as and when.

 

Disadvantages
There is a deposit you have to keep with the card company. Every time you top up the card, you are charged a small fee.

Countless fees. Application fee, Termination fee, Transaction fee, ATM withdrawal fee, Inactivity fees, Card replacement fees, Card renewal fees.



The Action Plan
There are always preventive steps that can be taken by you to ensure your safety, safety for your money and having a really joyous holiday.


1. Do not email your Credit card or debit card details to anyone, for example the hotel you’re booking. The safest way is to convey the details over phone, out of hearing range.


2. Always ensure you have kept your money properly. Around your waist, inside your shirt, wherever you are comfortable. Or get a Money belt. While this may be uncomfortable sometimes, its important to keep your money safe. Get one which isn’t going to stick to your body on a hot day. Also, if you need to remove any money somewhere, go and do so, in a hotel restroom or room. Never let people see you digging into your clothes to get something out. Never do things that attract attention.


3. Divide the cash. Don’t keep it all in one place. Take special care in infamous countries like Italy. Again, be alert. People who are experts at this, always seem to know where your hiding place is. Waking up after a train ride, without your wallet or purse, can be one of the rudest shocks.


4. Always keep the money with you. Not packed in any suitcase. Always use the hotel safe to keep your valuables.


5. Keep a spare wallet, using the spare for all or some credit cards, ATM cards, Debit cards, Travellers Cheques, Drivers License. Keep this wallet right at the bottom of your haversack / backpack.


6. Make photocopies of your Credit / Debit cards, ATM cards and Travellers Cheques, and keep this in a suitcase, along  with telephone numbers of the banks. This will not keep your money safe, but it will save you a great deal of hassles in case you do lose anything.


7. Make several photocopies of your reservations, hotel confirmations, passport, visas, service vouchers, any other receipts and keep them in suitcases.



Finally, a small note. The above are tips for you to keep your money secure, not to scare you. They are small little reminders about how you can make sure you do indeed have a wonderful holiday. As we mentioned above, losing your wallet or purse is the worst shock you can get, specially on holiday. Do everything required to make sure you DO have a great vacation.