Paper or Plastic?

International Coinage

The Best Way to Pay for Backpacking

When travelling many travellers are plagued by money management concerns–cash, travellers cheques, debit cards or credit cards? The best strategy when backpacking, especially if you are going to be gone for a long time, is to bring a mixture of cash (large and small destinations), travellers cheques, credit cards and a debit card- this allows one to be used as backup in case of loss, or more commonly, because one form is not accepted. Before you go, it’s always a good idea to call your local bank and inquire into debit and credit card fees and conversion rates so you can plan your money management accordingly.



Generally, U.S dollars are the best foreign currency to travel with; however, British Pounds, Euros and other major currencies are readily accepted in major tourist areas but at less favorable rates. In countries such as Indonesia larger denomination bills yield higher returns (i.e. a $100 produces more foreign currency than a $10 bill) however it’s always a good idea to carry around smaller denominations as they are harder to come by and make for good tips. In addition, in developing countries, you tend to get a better exchange rate trading cash for cash, as opposed to pulling money out of an ATM or obtaining a cash advance.



Travellers Cheques

In major town or cities, travellers cheques are readily accepted. However, there are some countries, such as Borneo that do not accept travellers cheques or even credit cards. Rates tend to be lower than cash and most exchange offices will charge a per cheque processing fee; thus, it’s generally a good idea to purchase travellers cheques in higher denominations to avoid the extra levy. In smaller towns, it is much more difficult to cash a travellers cheque, so make sure you redeem your money before heading out into rural areas. In addition, most hostels do not accept direct payment via traveller cheque; however, some upmarket hotels may accept  cheques for payment, charging an extra commission.

Travellers cheques provide a level of security for backpackers, if they are stolen – the money is not lost and can be replaced with supporting serial numbers. However, the theft must be reported immediately and depending on where you are located, may take a long time to process. It’s always a good idea to leave a copy of your travellers cheque numbers with a family member, at home, just in case you lose your bag.

IT10CIO Change Cambio Learning Experience, Rome 2010


While it’s always a good idea to carry around a debit card, don’t assume that every major city will have an ATM (for instance, Burundi and Borneo), so be prepared with either U.S. cash or traveller cheques. In addition, many ATMS are only registered to accept Plus or Cirrus networks. For instance, in India, practically every other ATM was linked with Cirrus making it very difficult to take out money; whereas Eastern Africa was better connected with the Plus network. While an ATM may physically be present, that does not necessarily mean it works.

In developing countries, it’s always a good idea to view ATM machines as a supplementary means of obtaining cash, as opposed to your main source of funds. Where ATMS are available, stock up on cash to sustain you until you can hit up another ATM or exit the country.  While ATMS in developing countries are a convenient way of obtaining cash on demand, rates are usually worse than at foreign exchange desks. However, the opposite is true in Europe, as ATMs don’t charge exuberant commission charges to exchange money and the interbank rate is better than that offered for travellers cheques. In addition, practically all home banks charge an additional international ATM withdrawal fee, in addition to any local fees, these $3-7 fees tend to rack up quickly especially over a long period, so make sure you pull out enough cash to last for at least a few days. Plan your withdrawals carefully and if travelling in a duo swap withdrawing money so you both aren’t getting dinged for ATM fees. Look into your home bank programs, some waive international withdrawal fees for customers who maintain a minimum balance, alternatively you can try and negotiate a reduced rate with your bank if you plan to spend to significant time abroad.


Credit Cards

Visa and MasterCard rule the credit card world; whereas Amex tends to be popular in America and Europe and Dinner’s Club in widely used in South America. Credit cards are not a major currency for backpackers unless they are booking tours, mid-high range hotels or flights. Similar to ATMS, credit cards are best considered as a secondary means of cash flow as opposed to the principle source of funds. However, in countries such as Nepal and Rwanda, retailers tend to attach a 3-5% commission to all credit card payments. Credit cards may also be used to obtain cash advances, generally with a hefty commission fees.  Remember to check your credit card details, as many cards charge an additional 2-5% of total purchase charges when travelling abroad.

To keep my cash liquid, I like to take 2 credit cards, in case of emergency. I place one in my large pack and one in my day bag, just in case either one is lost/stolen I am not completely without funds. If the cards do go missing, it’s pretty easy to cancel the card without incurring any major penalties. The obvious benefit of both chip enhanced ATM and credit cards as opposed to cash is that they are password protected and can’t be compromised as easily as cash.

Credit Card

The best way to pay for backpacking is a mix of paper AND plastic!

Backpacking Bex