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Cash vs Credit: Which is Better for Overseas Trips?

BY Team Loanstreet

Updated 21 Nov 2019

Everyone wants to just drop everything and start traveling these days, right? Whether you’re a hardcore wanderer or merely a casual one, one of the main issues when going abroad is how to pay for things. Thankfully, with the dawn of the modern age of travel comes several options that can make your life as a traveler much more convenient. In this article, we’ll explore these options so that you can see what suits your needs and travel smarter.

What's covered in this article?

Cash – Your currency or their currency?

Cash - the most liquid of assets. The most straightforward way of paying for goods since man stopped using barter as the main way of conducting business. The main convenience of holding local currency is that there won’t be any uncertainty with regards to paying for local goods and services. As a safety precaution, you should always have at least a small amount of local currency available when traveling overseas. Currency bureaus at airports offer less attractive rates and also charge commission fees for conversion, so if you can exchange your currency outside of the airport prior to your trip, you should definitely do so. You’ll also save a lot if you research beforehand about exchange bureaus with the best rates in your destination country. As they say, it pays to be well-prepared!

So, now we know that local currency is convenient, but is it safe to hold it? How much should you have on you when traveling? Well, the main risk of holding a large amount of cash is that it is prone to theft by pickpockets or robbers. One tip for staying safe from pickpockets is not to keep all your cash in one place. Divide up the money with someone else in your travel group, or if you’re travelling alone, keep some in your luggage so that you don’t lose all your money in one go if your wallet gets stolen from your pocket.

Debit card

Debit cards can be very handy overseas, as they are small, have fraud protection which allows you to cancel cards you’ve lost or which have been stolen. You can also use them to make purchases or pay for your hotel, and also to retrieve local currency from an ATM easily. However, in order to do these things, your debit card has to be one that can be used overseas and has cross-border cash withdrawal function, which depends on what debit card you own and with which bank. For example, debit cards with MEPS can be used in other countries such as Indonesia depending on the which bank has issued it. So do your research beforehand! Check with your issuing bank to make sure where and how your debit card can be used.

Also be aware of withdrawal charges, overseas transaction charges and currency exchange rates that may apply. Debit cards can be like a godsend if you can use them overseas, but also note that with all that power concentrated in one card, you can also lose it all in an instant if it’s lost or stolen. Try to diversify your methods of payment if you can.

Credit card

Just like debit cards, credit cards have the benefit of being small and easy to carry around. They also have fraud protection, just like debit cards. While a debit card also has fraud protection, they do not have insurance coverage like some credit cards do. You can also take a cash advance on your credit card, which is very helpful if you find yourself in sudden need for cash.

A cash advance is like a short term loan in cash - similar to how swiping a credit card is a short term loan in the form of credit. You take a cash advance by using your credit card at an ATM machine. However it should be noted that taking a cash advance involves a variety of fees - usually 2-5% of the cash advance amount, so using this method can be costly. The advance you are entitled to is also well below your credit limit.

Another facet of using credit cards is the rewards that you can get. Most credit cards have a reward system that will allow you to redeem gifts or other rewards in the long term if you use the card frequently. Some credit cards also give you access to premium airport lounges and even cash back for your overseas transactions.


Cash may have the least total conversion fee but there is risk in carrying a large amount of it. Other options are definitely more convenient and safer, but each alternative has its pros and cons. With debit cards, you are limited to the amount of money you have in your bank account, and should your pin number be stolen (as there are many methods of doing that these days) thieves can easily withdraw money from your bank account and fraud protection will be too late to protect you then!

Credit cards seem to be the most versatile alternative, as your credit limit allows you more wiggle room to work with in terms of spending, and the possibility of taking out a cash advance gives you flexibility that will be very helpful on your travels! It can’t be denied that having a credit card can be a major advantage for you, but ultimately the choice is up to your preferences. Use a credit card comparison tool the find out which cards suit you best. Travel safe!

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About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


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