Cash or credit cards: Which is better to use when travelling?

Cash or credit cards: Which is better to use when travelling?
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From backpacking trips on a budget to luxurious vacations at villas, there are many options to choose from when planning your next trip.

One consistent concern when you're travelling, however, is payment.

No matter how hard you try, you may sometimes face a situation where you can't go cashless or card-less, and have to use cash or credit cards to pay for things like accommodation bookings or food and souvenir purchases.

Driven by habit or concern, many people bring cash with them even when they have credit cards that cost little and earn rewards. But is cash really the best form of payment when travelling? This guide discusses a few major factors you should consider.

Availability and acceptance

First thing you should consider is whether credit cards are widely accepted in the countries you are going to visit. Developed countries and regions like the US, Europe, Korea, Japan, Hong Kong and Australia should not present any problem. However, for remote regions in Southeast Asia or Africa, you should consider getting enough cash for the whole trip before getting on your flight.

You should also remember that while Visa and MasterCard are widely accepted in most places, American Express or Discover are sometimes not accepted by local merchants.

Exchange rate

Exchange rates can vary significantly and are dependent on where and how you get your money exchanged. The most expensive route is the money changers at airports or local shops at your destination. These places tend to offer less favourable exchange rates with additional fees.

Exchanging cash at your local bank is comparatively better, as local banks typically offer more competitive exchange rates, lower fees, and then the convenience and security factor: your currency exchange handled in a safe and regulated environment.

Your credit cards offer the best exchange rate. According to data from Visa and MasterCard websites, credit card companies change your money at rates that are close to the market rates charged between banks in the interbank market.

From this point of view, you are almost always better off using credit cards than using cash when you are overseas, provided cards are widely accepted in the country.

Transaction fee

While cash transactions don't cost you any money, credit cards do come with some fees. Most credit cards in Singapore charge a foreign exchange transaction fee of 2.5-3.5 per cent on top of the applied foreign exchange rate, which is still much better than the 8~per cent exchange rate you have to pay at your local banks.

Not only that, some banks do not charge any transaction fees, only applying the 1-1.5 per cent fees charged by Visa and MasterCard.

Rewards rate

The best part about credit cards is that you can earn rewards as air miles or cashback. Some cards can even earn better rates for your expenditures overseas or for your travel bookings. Rewards cards can earn north of 5-6 per cent for savvy consumers who actively use their cards and pay their balances on a monthly basis.

For instance, UOB's KrisFlyer credit card earns three miles per S$1 you spend on SIA, SilkAir, Scoot, and KrisShop. When you use this card while travelling overseas on its non-category spend, you can earn 1.2 air miles per S$1 of spend.

Air mile rewards are great because you can usually redeem them not just for air tickets, but also for hotel room bookings.


As long as credit cards are widely in acceptance at the country you are travelling to, it's always advisable to use credit cards instead of cash.

ALSO READ: 9 best air miles credit cards in Singapore (April 2024)

This article was first published in ValueChampion.

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