Things have moved on a long way since the days of travellers' cheques and traditional bureaux de change. There's now a wealth of smart and convenient ways to take cash into other countries, and with a bit of foresight you can significantly cut the overall cost of your trip by packing the right plastic or being clever with your currency converter.
Read on for a rundown of the most popular ways of taking funds abroad, and the pros and cons of each to help you decide on what's best for your needs.
Many travellers still take the old-school approach to currency conversion by obtaining their holiday spending money up-front in the form of cash. There are some obvious advantages: knowing exactly how much you have to spend in the tangible, familiar form of cash can work wonders for budgeting, and wherever you're going in the world, a wad of cash holds the same appeal - and none of the potential technical pitfalls of plastic.
You also won't be subject to the ups and downs of the exchange rate - which can fluctuate wildly even within a short visit. The rate you'll get is, to a certain extent, down to you: it's worth shopping around before you commit to converting your cash, so be sure to check out what your bank, high street foreign exchange and post office are offering so you can compare the overall cost.
However, not everyone feels comfortable carrying large sums of cash on their person, particularly in unfamiliar surroundings, and tourists are often a target for theft. If you are taking this approach, be sure to travel with a securely fastening bag or money belt on your person at all times, and resist the temptation to carry bigger amounts with you at any given time.
Credit cards provide a handy solution to travellers wanting to ring-fence their holiday spending and pay it off in one or more lump sums at the end of the trip. While this may sound like an expensive option, most credit cards actually work out cheaper than debit cards when travelling abroad. This is because the major credit card companies impose rules on banks and merchants on an international scale, providing some fairly robust protection for travellers. Many cards have in-built insurance for certain purchases (including many that come into play on holiday such as tickets for travel and events) and the big ones like Mastercard and Visa are recognised the world over.
However, credit cards are still a form of borrowing, and you'll ultimately be subject to the same rates of interest as you would be back home. There's always the risk on holiday of enjoying yourself a little too much and splashing out on things you'd normally pass over. Can you be certain you'll be able to foot the bill on your return before the interest on all those fun purchases kicks in?
Pre-paid charge cards
Pre-paid cards are an increasingly popular method of taking money abroad, and there are some strong arguments in their favour: for starters, you'll benefit from the most competitive exchange rates going without having to shop around, and you'll remain locked into that rate for the duration of your trip.
As they are provided by major credit card companies, pre-paid cards are recognised everywhere that accepts Mastercard, and you'll benefit from the same security from chip-and-pin protection to emergency assistance in the case of loss or theft. In many ways these cards have all the benefits of cash, without the security pitfalls. Two of the best known pre-paid foreign exchange cards on the market are FairFX and Travelex Cash Passport.
Potential perils of pre-paid cards include the risk of under-estimating your likely spend before you leave (however, they can be quickly topped up if funds run out) and fact that there will always be times when cash is the only option. For this reason, you'll almost certainly need to carry some cash with you alongside your pre-paid card: we recommend obtaining this before you leave, as using a pre-paid card to withdraw funds from cash machines abroad will usually incur a fee of around Â£1.50 per transaction.
Using your debit card to withdraw cash and make in-store purchases is one of the easiest ways to pay for goods and services abroad - but it's also one of the most expensive. When compared with credit cards there is less regulation in place over what charges the issuers can impose, so many of them slap on hefty tariffs for debit card use abroad. It can be an unpleasant surprise to come to a bank statement that's peppered with costly debit card fees - particularly if you weren't expecting it.
However, in some situations the debit card cannot be beaten for its convenience, and if you're not eligible for a credit card or don't 'do' debt, this may be your only fall-back option when travelling abroad. If this is your preferred method of currency conversion, it pays to figure out how much money you'll need in advance and withdraw it as a lump sum in cash to avoid multiple charges.
Avoid getting stung
The traditional tourists' bureau de change should be seen as an absolute last resort when travelling. These businesses make huge profits from their currency changing services, and their very existence depends largely on our own laziness and desire for convenience. Try to avoid getting into a situation where these guys are your only option for converting money, as you can bet your bottom dollar (or indeed Euro) that they won't give you the most competitive rates!