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It's always a dilemma for travellers – should I pay with cash or credit card overseas?

Cash

It's often a good idea to have some foreign currency with you before you leave home so that you have cash on hand to handle your immediate expenses – travelling to the hotel from the airport, buying a meal or to pay for your visa-on-arrival. In this way, you will not be caught without cash if the nearest ATM isn't working or the local money changer has closed.

The key is to not carry too much cash, less you become a target of theft or robbery. The definition of what is 'too much' is a difficult one, but a good gauge is to have cash to last you for the first 48 hours in that country. This is especially true for areas that do not have convenient ATMs or banking services available nearby. Another tip is to separate your cash and not put all of your in a single compartment.

Credit Card

Using a credit card overseas has its own advantages; it resolves the fear of losing substantial amounts of cash, comes with a security PIN to prevent fraud and is convenient to carry. It is especially useful for making big-ticket purchases such as booking hotels, buying flight tickets or paying for car rentals. 

In recent years, banks have also actively promote Travel Credit cards which give you exclusive discounts and privileges with participating merchants. Another perk is that some of them offer free/discounted travel insurance coverage! These privileges can add up to significant savings, simply by choosing a different mode of payment at no extra cost!

A few caveats to bear in mind: some hotels and car rental companies may put holds on your credit card for the amount of your total expected bill. This can use up your credit limit before you actually incur the charges. Another thing to note is that smaller restaurants and hotels may not have the facilities available for credit card payments so you should always keep some cash handy.

What if I lose my money while travelling?

Most travel insurance cover personal belonging losses to a limited effect, but do read through the fine print of your policy to find out exactly what it covers.

You can usually claim for loss of money/credit card due to robbery or theft overseas, but losses due to your own negligence may be a difficult case to fight. You will also need to file a police report within 24 hours and obtain a copy of the report to effect any insurance claims. 

For credit cards, the first thing you should do is to call the issuing bank to cancel the card so that no fraudulent transactions can be charged. Most banks will also be able to send you a new card internationally or arrange for you to pay for your hotel on a credit advance.