Taking care of moolah while on the move

Are sunny beaches, fruity drinks and a relaxed lolling around in the sun your style? Or do you prefer bundling up in warm clothes and hiking it to colder climes to beat the summer? Either way, if you decide on going overseas this holiday season, there are host of details to plan, most important among those being how to ‘carry' money if you are holidaying abroad.

There's a plethora of options, from hard cash to cards to cheques each with their own pros and cons. For the newbie globe-trotter , selecting the best of those can turn out to be quite muddling . Here's helping clear up some of the confusion.

Options available

Let's start with plain old cash. Quite obviously, carrying cash in notes overseas is a fairly risky bet, even if it is the most versatile option there is. If you lose it, there's no way you can get it back. And more often than not, a stuffed wallet is an invitation to pickpockets. You can also use debit and credit cards, which are safer, but these may prove to be expensive as banks charge a commission on them every time you swipe abroad.

The next option is the ever-popular travellers' cheques, which have been around for decades. These are financial drafts issued by banks and other institutions. They come in different denominations and currencies and can be used to make payments at stores, restaurants, hotels and so on. They can also be exchanged for cash.

Once cheques are received, they must be signed. When you have to make actual payments, you have to sign them again in the presence of the teller. You further need to provide identification proof at the time of use. It's these key features that make travellers cheques a very safe option and much favoured. Banks issue travellers cheques in a range of currencies – US, Australian and Canadian dollars, pounds, euros and the yen.

The final option is a prepaid travel card, introduced a few years ago. These are cards on which money is loaded in a foreign currency. The card can be swiped at any merchant outlet just as you would a debit or credit card until the amount loaded on the card runs out. The cards can be used to withdraw cash at Visa or MasterCard ATMs. Cards are available in varied currencies; primary ones being US dollars, Euros and pounds. Cards can also be topped up, either by you or your authorised representative. Axis Bank and HDFC Bank have, by far, the widest currency range which can be loaded on the card. Other banks which offer cards are Union Bank and State Bank of India among others.

Comparing options

Knowing the options before you, which is the best? Cash can be carried, but only a limited amount which you may need for small purchases or emergencies only. Large-value payments such as hotels or rental deposits can be made with credit or debit cards instead of carrying the requisite amounts.

That leaves cheques and prepaid cards, especially for the more frequent expenses incurred. Let's see how they're similar. Both score in terms of safety, since signatures mean only you can use them, with travellers' cheques going one step ahead with their requirement of identity proof. However, this identification may become irksome to keep at hand all the time.

The buying of cheques and cards is a simple over-the-counter process, requiring minimum documentation. You lock into exchange rates at the time of purchase offering some protection against exchange rate fluctuations. However, since both are available in certain currencies only, you're exposed to exchange rates in currencies outside the ones on offer.

In case of theft or loss, both can be quickly cancelled or hot-listed and replacements obtained. Even so, in reality, the process may not always be hassle-free or quick and may involve considerable time lag between loss and replacement.

Banks levy charges on cash withdrawals from ATMs for travel cards. Quite similarly, some merchant establishments and money changers charge fee and commissions for cashing travellers' cheques.

Both cheques and cards can be turned in when you get back home for rupees, or you can hoard them for your next trip overseas.

Which to choose?

Between travellers' cheques and travel cards, the latter scores on a few counts. One, a travel card makes for easy carrying in your wallet than a sheaf of travellers' cheques. You further need to keep careful and meticulous note of the serial numbers of your cheques and the ones you have used already to report in case of theft.

Two, since cheques come in specific denominations only it may be difficult to make payments of small or vague amounts. In a card, you can swipe or draw exact amounts. Three, if you want to swap cheques for cash you can do so at money changers during office hours only, unlike cards which can be used at ATMs at any point of time. With the increasing acceptance of cards for payments worldwide, you may not face trouble in using them. Four, with cheques, shops where you use them may also impose their own exchange rates.

Where cheques beat cards is primarily in case of loss. Unless you lose your entire stash of cheques, you will not be at a complete loss for money. With your card, once lost, you will have to wait for a replacement for money. Further, some banks dictate minimum limits for amounts that can be loaded. Axis Bank, for example, needs a minimum of $250 on its USD card while SBI calls for at least $500 to be loaded.

The guiding rule, then, is not to put all your eggs into one basket. Take most of your needs through a prepaid card, but carry some amount in travellers' cheques and cash for emergencies so that you don't find yourself at a standstill if you get robbed.

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