Cash or Card: How to Pay While Travelling

When it comes time to pack for a trip, it’s common to wonder whether you should bring cards or cash to pay for expenses while away.

Cash and credit cards both have pros and cons as payment methods for travellers; here are some things to consider as you decide between them.

Benefits of using cash while on vacation

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 an international credit card that waives these fees, you’ll 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.

Things you may need cash for

Cash-only businesses

After the changes many businesses implemented during the COVID-19 pandemic, there are still a number of places and situations in which 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.

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.

Benefits of using a credit card while on vacation

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.

Added 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.

Things you may need a credit card for

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.

Did you know?

A credit card can be a safety net if if the airline you book with suddenly goes under. The situation sounds unlikely, but it recently happened to Lynx Air passengers. Travellers who booked their Lynx Air flights with a debit card (i.e., cash) may have no choice but to file a claim with the defunct airline in hopes of receiving compensation.

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.

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.

What type of credit card should you bring?

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.

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.

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