Cash or Card: What’s the Better Way to Pay While Travelling?
When you’re packing for a trip, it helps to know where cards win, where cash still matters, and where fees can sneak in.
Nerdy takeaways
Default to paying in local currency (not CAD) to avoid dynamic currency conversion markups at terminals and ATMs.
Bring both cash and a card, and store your backup separately (hotel safe or a different bag) in case of loss or theft.
Use a rewards card for big pre-trip bookings (flights, hotels and tours) to earn points and potentially help hit a welcome bonus — but watch foreign transaction fees and deposit holds.
Using cash while on vacation
BACK TO TOPCash can help you stick to a budget and cover everyday situations where cards aren’t practical — but it’s worth planning ahead to minimize fees and reduce the risk of carrying too much.
Cash flow control
One of the main benefits of sticking with cash while travelling is that you’re more likely to do better at keeping to your budget.
If you only have a certain amount of money to spend, you’re less likely to be frivolous with it if you mainly use cash.
Carrying cash may also make you more aware of the exchange rates, which can help you have a better idea of how much you’re spending.
Fewer fees
Another perk of cash is that you can avoid foreign transaction fees. Unless you have a credit card that waives these fees, you’ll typically pay about 2.5% extra for every transaction you make in a foreign currency. While it may not seem like a lot at first, those fees can add up very quickly over the course of an international vacation.
Some cards don’t charge foreign transaction fees, but they may come with other costs (like an annual fee), so it’s worth comparing the overall value.
Cash-only businesses
Even in highly digital destinations, you’ll still run into situations where cash is king. In some countries, taxis will only accept cash. The same can be said for small businesses like street food stalls or family-run shops.
Tipping
Cash can also be helpful if you’re in a situation where you would like to tip. For example, you might take a tour and want to tip your guide, or you might stay at a hotel or resort and want to tip the housekeeping or bar staff. In these circumstances, physical currency is quite handy.
Small discounts
Depending on the location and the type of business, you may earn a slight discount if you offer to pay in cash. This is because credit card issuers charge processing fees, also known as interchange fees, to businesses that accept credit cards as a method of payment. The cash “discount” may be offered to you when it comes time to pay. You can even ask if there’s a price difference for cash and credit card transactions.
How much cash should you bring?
The exact dollar amount you’ll need depends on the length of your trip and the types of activities you have planned. A longer trip that involves eating out or visiting a lot of attractions will likely require more cash than a shorter trip that involves cooking your own meals or a lot of free activities, like hiking.
If you’re travelling internationally, it’s best to take out foreign cash in larger amounts, rather than a little bit at a time, so that you can avoid ATM fees. The more frequently you withdraw money while abroad, the more fees you pay. You may be charged fees by your own bank and/or the ATM operator, and exchange-rate markups can apply.
If you need cash abroad, ATMs often beat airport exchange kiosks on rate — but compare fees, avoid independent “tourist” ATMs when possible, and always choose to be charged in the local currency.
However, while it may be in your best interest to withdraw large amounts at a time, don’t keep all of that cash in your wallet or purse. Take what you need for the day and leave the majority locked in a suitcase or hotel safe. Unfortunately, pickpocketing and theft is common in many cities around the world, and you don’t want to risk losing all your cash.
The Government of Canada also recommends carrying a backup source of funds in case of emergency. Keep your backup card or extra cash separate from your wallet (for example, in a hotel safe or a different bag).
Using a credit card while on vacation
BACK TO TOPCredit cards are typically the most convenient and secure way to pay abroad, especially for bookings and larger purchases — as long as you understand the fees, holds, and currency-conversion prompts that can raise your costs.
Convenient spending
Carrying credit cards while travelling is incredibly convenient. Instead of visiting ATMs and worrying about keeping your cash safe, you can make purchases quickly as you go.
Mobile wallets (like Apple Pay or Google Pay) can also reduce the need to carry your physical card day-to-day, but it’s smart to bring the physical card as a backup — especially for hotels, car rentals, or places that don’t accept tap.
Security
Another huge benefit to travelling with credit cards is that doing so is more secure than travelling with cash. If you lose your wallet or get pickpocketed while abroad, you can report your credit card as stolen. Your account will be locked so nobody can use it, and your issuer may refund you for any purchases made by the thief. On the other hand, if you lose cash, you’re often simply out of luck.
Reservations or online bookings
Many Canadians pre-plan their trips and excursions online. This includes booking flights, hotels and even tours. When booking online, cash isn’t an option, and while you may be able to complete the transaction via a digital payment method like PayPal, a credit card is often the easiest route to go.
Using a rewards card can add value here, since flights and hotels are often among your biggest trip expenses — and earning points (or meeting a bonus threshold) can meaningfully offset the cost of travel.
Security deposits
A credit card may be required to stay at some hotels or to rent a car. Even if you pay in cash, the hotel or car rental provider will keep your card number on file as a way to recover funds should you somehow damage the property. In some cases, your card will even be charged a small security deposit, sometimes called an incidental deposit, and then refunded at the end of your stay.
These holds can temporarily reduce your available credit, so leave extra room on your limit — especially on longer trips.
Large purchases
A credit card might also be needed if you want to make a big purchase — perhaps unexpectedly — and don’t have access to enough cash. ATMs have limits on how much you can withdraw and, again, there are ATM fees to consider.
» MORE: How to transfer money from your credit card to your bank account
What type of credit card should you bring?
The type of credit card that’s best for your trip depends on your vacation plans, but:
If you’re planning a road trip, bring a rewards credit card that earns points or discounts on gas station purchases, which you’ll probably make often.
If you or a member of your party has health concerns, you may want to carry — and also book your trip with — a card that offers travel medical insurance coverage.
If you’ll be spending time in several airports over the course of your trip, you may want to bring a travel credit card that gets you into airport lounges or offers discounts on airport parking.
If you’re travelling internationally, it’s best to bring a no-foreign-transaction-fee credit card so you don’t waste funds just because you’re shopping in another currency.
If you plan to spend a lot of foreign currencies, consider a prepaid card or a multi-currency account that can be a useful backup for some travellers. These options let you hold and spend foreign currencies (often with transparent conversion) — just watch for load, withdrawal, and inactivity fees.
In the end, you may find it’s best to have access to both cash and a travel-friendly credit card when travelling. This way, you can choose accordingly based on your purchase needs.
Even if you aren’t paying a foreign transaction fee, watch for “dynamic currency conversion” (DCC) prompts that offer to charge you in Canadian dollars at the terminal or ATM — choosing the local currency is often cheaper. If the screen asks “Pay in CAD?” or offers a “guaranteed exchange rate,” choose the local currency instead.
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