Cash, a travel money card or a credit card: each has its place abroad, and knowing when to use which saves money and hassle. Rather than picking one, the trick is using each for what it does best. This guide compares travel money cards, cash and credit cards to help you decide when to use each. It is general information, not financial advice, so compare current options and check the fees for your own cards.
Cash: the basics
Cash is universally accepted and useful for small purchases, tips, markets, public transport and places that do not take cards, and it helps you keep a tight rein on spending since you see it go. However, it must be exchanged at a good rate, cannot be replaced if lost or stolen, and carries security risks. Understanding what cash is good for, namely small and card-unfriendly situations and budgeting, and its weaknesses, namely security and exchange, helps you decide how much of it to use abroad.
The pros and cons of cash
The advantages of cash are wide acceptance, usefulness for small and informal payments, and easy budgeting, while the disadvantages are the risk of loss or theft with no recourse, the need to obtain it at a good rate, and the inconvenience of carrying and safeguarding it. Weighing these helps you judge how much to rely on it. Cash remains essential for certain situations, but its security drawbacks mean it is usually best as one part of your money rather than your main method.
Travel money cards
Travel money, or prepaid, cards let you preload money to spend and withdraw abroad, often in your chosen currency and at competitive rates, with the benefit of controlling spending to what you load and the security of not exposing your main account. Our guide on the best prepaid travel cards covers them. Understanding that a prepaid card combines reasonable rates, budgeting control and security, while needing to be loaded in advance, helps you see its appeal as a core spending method abroad.
The pros and cons of travel money cards
Travel money cards offer good rates, controlled spending, and security, as they are separate from your main bank account, but they may have fees to check, need topping up, and can sometimes have less protection than a credit card on purchases. Weighing these helps you place them in your mix. For many travellers, a prepaid card is an excellent main spending tool, combining cost-effectiveness and budgeting, provided you check its particular fees and keep it topped up.
Credit cards
Credit cards are convenient, widely accepted, and can offer valuable purchase protection, but the fees abroad vary greatly, with some charging non-sterling transaction fees and high charges for cash withdrawals, while specialist cards are fee-free. Our guide on using your cards abroad explains. Understanding that a credit card can be excellent abroad for protection and, with the right card, low fees, but costly with the wrong one, helps you use it wisely rather than assuming all credit cards behave the same overseas.
The pros and cons of credit cards
Credit cards offer convenience, wide acceptance and purchase protection, useful for larger purchases and emergencies, but can carry non-sterling fees and expensive cash-withdrawal charges and interest if you use the wrong card or withdraw cash. Weighing these helps you use them well. A fee-free credit card can be a great way to spend abroad with added protection, but withdrawing cash on a credit card is generally best avoided due to the charges, so use them mainly for payments.
Debit cards
Your everyday debit card can be used abroad, but like credit cards the fees vary, with many charging non-sterling transaction and withdrawal fees, while some accounts are fee-free abroad. A debit card draws directly from your account, so it lacks credit card purchase protection. Checking your debit card's overseas fees is important. Knowing whether your debit card is cheap or costly abroad, and using a fee-free option where you have one, helps you avoid unnecessary charges on everyday spending and withdrawals.
Comparing the fees
Fees are where the real differences lie. Some cards charge a percentage on every foreign transaction, fees for cash withdrawals, and credit cards add interest on cash, while specialist travel and fee-free cards avoid much of this. Our guide on avoiding hidden fees abroad explains. Comparing the fees of your cards and a prepaid option, and favouring low or fee-free methods for spending and withdrawals, is one of the biggest factors in how much your money is worth abroad.
Comparing security
On security, cards win over cash, as they can be cancelled and replaced if lost or stolen, while cash cannot. A prepaid card adds the benefit of being separate from your main account, limiting exposure, and credit cards offer protection on purchases. Spreading money across methods is safest. Considering the security of each, and using cards and a backup rather than relying on irreplaceable cash, protects you against loss or theft, which is a key reason to favour cards for most spending.
The best mix
The ideal approach combines them: a low-fee or prepaid card for most spending and withdrawals, a fee-free credit card for larger purchases and emergencies with its protection, and some cash for small and card-unfriendly situations, plus a backup. Our guide on the best way to take money abroad covers building this mix. Using each method for what it does best, rather than relying on one, gives you the cheapest, most convenient and most secure way to manage money abroad.
How to decide
To decide when to use each, use cash for small, informal and card-unfriendly payments, a low-fee or prepaid card for everyday spending and withdrawals, and a fee-free credit card for big purchases and emergencies. Check the fees on all your cards first. Matching each method to the situations it suits, rather than reaching for the same one every time, ensures you spend in the cheapest, safest way for each purchase, making the most of your holiday money.
Contactless and mobile payments
Increasingly, contactless and mobile payments work abroad just as at home, letting you tap your card or phone in many countries, which is convenient and secure. The same fees as your underlying card apply, so a fee-free card used via your phone is still fee-free. Our guide on using your cards abroad covers the detail. Taking advantage of contactless and mobile payments where accepted, using a low-fee card, adds convenience to your spending abroad without changing the cost, making everyday purchases quick and easy. Just check that contactless and mobile payments are widely accepted at your destination, as some places still rely more on cash or chip and pin than others.
In short
Cash suits small, informal and card-unfriendly payments and budgeting but carries security risks; travel money cards offer good rates, budgeting control and security for everyday spending; and credit cards bring convenience and purchase protection, best with a fee-free card and avoiding cash withdrawals. Compare the fees on your cards, favour low-fee methods, and use a mix with a backup, taking advantage of contactless and mobile payments where they help. This is general information, not financial advice, so check your own cards' fees and compare current options before you travel.
Find more in our Travel Money guides.