Before traveling abroad: exchanging money or using a card?

Now the holiday season is really starting. Before traveling abroad, it is a common question to take a card with you or buy a currency at an exchange office.

There are several aspects to consider.

One is security. We are not so exposed to the risk of pickpocketing with our card. (Although you have to be smart about where the card is used, it may not be wise to hand out the card at the Egyptian bazaar. You can find deterrent videos of card fraud here.)

On the other hand, cash can pay anywhere. We don’t run into embarrassing situations where they can’t accept cards or they can, but they don’t accept us.

Another problem to consider is cost

Another problem to consider is cost

Either you lose money on currency exchange at the currency exchange, or your bank charges you for currency exchange due to use abroad (or online shopping).

In Budapest we exchanged money relatively cheaply. It is worth switching where there are many exchange offices next to each other.

In these places, between the buying and selling prices, the more popular currencies are usually between one and two forints, ie 0.5% between the two exchange rates. (Although this is not necessarily the case, say 0.25% of the average rate.)

To this we add the transaction tax on the money exchange (0.3%) and we also have to pay if we withdraw cash from the bank. This will add another 0.6% transaction tax, plus any other cash withdrawal fees charged by the bank.

Depending on whether we withdraw the amount in question from the bank

The cost of street money exchange, including taxes, is between 0.6 and 1.2% if we manage to find a cheap money exchange near you. (In rural cities, it is obviously more expensive to exchange money, where there are not many currency exchanges in one place.)

However, the story is not over here.

After all, we may not need a dollar or a euro when traveling to Turkey, Egypt or, say, Israel.

(Of course, the currency is accepted everywhere by tourists, but we do not know more about the awful exchange rate of our dollar in the shop to us. We often charge us 20% below the official exchange rate.)

However, abroad we do not know where cheap exchange offices are, and often we have to change money at airports and railway stations at terribly poor exchange rates.

When we get home, we have to redo the surplus

Which again is a cost. (If at all, it can be returned. If not, there will be plenty of shekels, Egyptian pounds, Turkish lira that will be used or not. And coins are not redeemed even from the well-known currencies.

(On the other hand, there is a currency conversion: we can schedule currency purchases, we can buy euros, dollars up to two months before traveling, when the forint strengthens slightly. Luckily, we can gain up to 1-1.5%.)

Our other option is to use your credit card abroad for purchases and withdraw your local currency from ATMs. (However, check out the videos linked above, too. To be more careful than to be robbed.)

Before we look at the cost of using a foreign card, here are some important information to use when debit or credit card abroad:

Notify our bank if you are going abroad and want to use your credit card there. Banks are constantly monitoring card usage to prevent fraud. If you suddenly start using a large amount of your card at the other end of the globe, you will probably be blocked to avoid further misuse. Even if we are the ones who use the card. That’s why it’s worth calling your bank’s central number and announcing that we’ll be using your card in the next two weeks in Asia.

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