Payment abroad - cash or card? How to pay while on vacation?

Is the date for your travel abroad fast approaching and you still have a feeling that you have forgotten something? Perhaps you have one more issue on your mind, namely paying abroad. In this article, we will dispel your doubts and answer the most important questions related to travel transactions. You will learn, among others:

1. How do multi-currency cards work?
2. What are the advantages and disadvantages of a multi-currency card?
3. Is it worth using a payment card when traveling abroad?
4. Will cash be useful when traveling abroad?
5. How to avoid the currency conversion fee?

We will discuss the advantages and disadvantages of each of these options and answer the question: cash or card – what is better to pay abroad?

What is the best way to pay abroad?

There is a saying that goes “When in Rome, do as the Romans do” and it is difficult to disagree with this statement. In its original meaning, it refers to the fact that each country has its own unique culture and tradition, but if we expand its scope, it turns out to be reflected in many other aspects as well. I mean, for example, issues related to the political system, geopolitical conditions, and finally, local currency. Of course, there are exceptions to the rule in this respect, such as countries included in the euro area, but the vast majority of countries that are generally tourist destinations have their own currency.

The development of new technologies, including cashless payments, has made it easy in several cases to pay with a card abroad. It cannot be denied that choosing this form of payment is simply more convenient, but is it really the best? The answer to this question is ambiguous and is “it depends”. On what? Let us explain!

First of all, it depends on the destination of a holiday trip or business trip abroad (place of stay, food option) and the time we intend to spend in a given country. While in the case of a trip to countries in the euro area or those where dollars are the commonly accepted form of payment, the banks’ offer is very competitive, the first steps appear in relation to more exotic destinations. At this point, supporters of non-cash payments would most likely point to a multi-currency card. Indeed, it is an increasingly popular solution, but is it really applicable in every situation?

One payment card, many possibilities – how does a multi-currency card work?

In the case of multi-currency cards, i.e., cards with the help of which we can make payments not only in SEK, but also in other foreign currencies, such as USD, EUR or GBP, we do not incur any additional costs related to currency conversion. Importantly, when making a payment, the card automatically recognizes the currency and takes money from the appropriate account. Sounds like a perfect plan? Unfortunately, not entirely. In practice, if we choose more exotic destinations, such as Thailand, Cambodia or the Dominican Republic, using a multi-currency card will not be very useful. This is due to the fact that the vast majority of banks only offer basic currencies in their offer, so in the end we will not avoid the costs associated with paying with a currency not included in the offer.

Advantages and disadvantages of a multi-currency card

We briefly discussed the advantages of paying with a multi-currency card in the previous paragraph. To sum up: after opening accounts in foreign currencies and linking them to a multi-currency card, we gain the option of making payments without the cost of currency conversion and the need to store several cards in the wallet – each in a different currency.

When it comes to the disadvantages, apart from the fact that the multi-currency card will not be used for more exotic destinations, there are also the costs associated with its possession. Of course, as is usually the case, you can avoid fees on this account, only before that you have to meet a number of conditions for a multi-currency card to be completely free. An additional burden are the costs related to running a SEK account to which such a card is issued and to which foreign currency accounts will be linked. For this reason, before you decide to use a multi-currency card, you should, as a priority, carefully read the terms and conditions and check whether it is as beneficial as the banks create them for.

Payment abroad with a SEK card

It is worth noting that compared to the Swedish krona card, making payments using a multi-currency card is really favourable. Basically – apart from the matter of convenience – choosing a SEK card abroad has no advantages. Apart from the fact that each operation requires a currency conversion and in almost every case the exchange rate will be much less favourable than in the exchange office, there are also the costs associated with withdrawing from an ATM.

When you buy a product or service that is priced in another currency, you pay more than just the purchase price. In the same way, when you take out cash from an automatic teller machine in another currency, you pay more than just the amount of the withdrawal. Extra costs may include:

• a foreign transaction fee charged by your bank or card provider (if you are not paying in SEK or withdrawing SEK)
• a currency conversion fee
• a fee charged by the owner of the ATM

Is it worth betting on cash when traveling abroad?

Traveling? Take cash!

According to survey statistics published by ECB 78,8% of purchases in the Euro area were made using cash. ¹ Simply put, 4 out of 5 purchases were made with cash. Outside the Euro area, in many regions cash usage is even higher.

Even with the development of new technologies, the traditional form of payment – cash – will always hold its value because of its simplicity and universal nature. The undeniable advantage of cash is that you can pay with it everywhere – from a small shop in a provincial town, through a local stall, to a hotel or a larger market. If you are a tourist, don’t travel without a bit of cash in your wallet. Transport services such as taxis, buses and city transport often require local currency!  Local cash is probably the easiest way to spend money overseas.

In the case of all types of payment cards, the execution of transactions in the first two cases mentioned could be significantly more difficult, if at all possible. And yet there is nothing nice about the fact that we could not buy our dream souvenir just because we had no way to pay for it. Thanks to having cash in our wallet, we have the ability to control expenses and we do not have to worry that we will exceed any limits, which will result in additional fees. Of course, carrying a large amount of cash with you is not always comfortable – at least because of the risk of theft – but undoubtedly even a small amount should be a so-called “must have” during a trip abroad, especially in the case of technologically less developed areas.

Top tips for paying abroad

1. Paying with the local currency is the easiest way to pay abroad. It is worth finding a favorable exchange rate, preferably before leaving Sweden, for example in Tavex branches in Stockholm.
2. When traveling, it is useful to have some local cash in your wallet in situations where a card transaction is not possible.
3. The Swedish card is the least advantageous payment option abroad because you have to take into account a commission or a high spread, currency conversion fee.

Tavex currency exchange – a convenient way to buy travel currency

Tavex currency exchange offers one of the widest assortment of currencies in Sweden – we sell over 40 currencies from around the world , including the most exotic ones that you will not find anywhere else! Importantly, especially when organizing a trip at the last minute, most of the currencies are always available with us.

¹https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf