It is a question that comes up before almost every holiday, and the honest answer is that it depends. The best approach varies depending on where you are going, what you are doing and how your bank handles foreign transactions.
The Case for Cash
Cash has a few clear advantages when travelling abroad.
It is accepted everywhere. In many parts of the world, smaller businesses, markets, street food vendors, local transport and rural areas operate on a cash-only basis. No matter how good your card is, there will be moments where cash is the only option.
You know exactly what you are spending. There is something to be said for the discipline of paying with physical notes. When you can see your cash going down, it is easier to stay on budget. Card spending can feel less real in the moment, which sometimes leads to overspending.
No foreign transaction fees on the cash itself. Once you have exchanged your money at a good rate here in the UK, spending that cash abroad costs you nothing extra. There are no per-transaction charges and no surprises when you get home.
Tipping is simpler. In many countries, tipping is expected and is almost always done in cash. Having local notes to hand makes this easy.
You are protected if your card fails. Cards can be declined abroad for all sorts of reasons, from the bank flagging an unusual transaction to a technical issue at the terminal. Having cash as a backup means you are never completely stuck.
The Case for Card
Cards have become increasingly practical for international travel, and for many destinations they are genuinely convenient.
Widely accepted in cities and tourist areas. Hotels, larger restaurants, supermarkets and major attractions in most popular destinations will take card without any issues. Contactless payments are increasingly common, even outside the UK.
No need to carry large amounts of cash. Keeping a significant amount of cash on you comes with its own risks. Cards reduce the amount of physical money you need to carry at any one time.
Some cards offer excellent exchange rates. Certain UK bank accounts and travel-specific cards process international payments at or very close to the mid-market exchange rate, with no additional fees. If you have access to one of these, it can be a cost-effective way to pay for larger purchases.
Useful for emergencies. If something goes wrong and you need to spend more than expected, a card gives you access to funds quickly without needing to find an exchange bureau.
The Hidden Costs of Using Your Card Abroad
Not all cards are equal when it comes to overseas spending, and it is worth understanding the potential costs before you rely on yours.
Many standard UK debit and credit cards charge a foreign transaction fee of around 2 to 3 percent on every purchase made abroad. On a £1,000 trip, that adds up to £20 to £30 in fees alone, just for using your card.
On top of that, if you use a cash machine abroad to withdraw local currency with your card, you may face:
A foreign ATM withdrawal fee from your own bank
A fee charged by the ATM operator
A less favourable exchange rate than you would get by ordering in advance
These costs can stack up quickly, particularly if you make several withdrawals during your trip.
One trap that catches a lot of travellers is Dynamic Currency Conversion (DCC). This is when a card terminal or ATM offers to convert the payment into pounds for you, rather than charging in the local currency. It sounds convenient, but the exchange rate applied is almost always poor. Always choose to pay in the local currency when given the option.
What Most Travellers Find Works Best
For the majority of holidays, a combination of cash and card tends to work well.
Use cash for day-to-day spending, markets, street food, tipping and any smaller purchases where card acceptance is uncertain. Keep your card available for situations that may require it such as larger hotel chains, restaurant reservations, car hire etc.
This approach gives you flexibility without putting all your eggs in one basket.
Does the Destination Make a Difference?
Yes, significantly.
Some countries lean heavily towards cash. Japan is a well-known example, where most businesses, temples and transport services still prefer or require cash. If you are heading somewhere like this, it is worth reading our guide to Japanese yen to understand what to expect.
Other destinations are almost entirely card-friendly. Scandinavia, for example, has somewhat moved away from cash, and it may be a good idea to always keep a card on you. Our guide to Denmark covers this in more detail.
Most popular holiday destinations sit somewhere in the middle, where cards work well in the main tourist areas but cash remains useful for local experiences and smaller purchases.
Before You Travel
Whatever combination you decide on, a bit of preparation makes everything easier.
Let your bank know you are travelling, so they do not block your card for unusual activity
Check whether your card charges foreign transaction fees, and consider a travel-friendly alternative if it does
Order your cash in advance at a good exchange rate rather than leaving it until the airport, where rates are typically much worse
Keep your cash and cards in separate places, so losing one does not leave you without either
Get Your Travel Money Sorted Before You Go
If you have decided to take cash, or a mix of cash and card, ordering in advance is the easiest way to get a great rate. At TravelCash we offer competitive exchange rates with 0% commission, and you can collect from a bureau near you at a time that suits you.
Find your nearest TravelCash location and have your travel money ready before you leave. It is one less thing to think about when you get to the airport.
