There is no absolute formula for getting the most of your dirham in a foreign country, so Gulf News asked industry experts to examine the pros and cons of the different forms of travel money, to help you decide how to pay while on holiday.
Payment cards are now widely used but one thing is certain, every shop in the world still considers cash is king, so take some paper bills with you before heading off.
After all, once you arrive, your cash will come handy when paying your taxi, bus, train ticket or roadside souvenir items. And you will certainly need cash if you're going completely off the beaten track.
The problem with carrying cash is that you could lose all you have if you get pickpocketed or robbed.
"Cash is arguably easiest, especially if you take US dollars, as they are generally accepted in most places, or can be changed easily. Yes, there is the risk of theft or losing it, but it is only a risk if you carry it all around with you," says James Thomas, managing director of Acuma Wealth Management.
Carrying large amounts of cash can also lead to the potential problem of dealing with large sums of leftover currency, according to Shankar Ram, head of products for Visa Middle East, in a press release.
So, the rule of thumb is to avoid carrying vast amounts. "Carry a little money for day-to-day needs such as transport, food and minor souvenirs. The rest can be paid for on a credit card," advises Rumil Sanjana, general insurance director at Nexus Insurance Brokers.
In most parts of the world, access to ATMs is also very good, so there's actually no need to carry around a thick wad of bills.
But a major drawback for using cash is that you could lose a lot when you convert your dirham to a foreign currency.
Mohammad Abdul Karim, regional director-UAE for American Express Middle East, notes that cash-dependent travellers actually tend to lose twice — once when they convert from local currency to the currency of the destination, and then vice versa upon return.
Most financial experts say that charge cards and credit cards actually work best when travelling. There are many payment card products today that provide holiday seekers varied benefits ranging from confirmed hotel reservations, emergency card replacement to insurance covering travel accidents and lost baggage.
"Back in the days of travellers cheques, life was easier. Cheques were guaranteed against loss and available in many currencies. Today, the card has won that battle… Visa and MasterCard have captured the world," notes Steve Gregory, managing partner at Holborn Assets.
Also, with plastic money, you can get the same exchange rate that the banks offer to each other, with no middleman adding extra fees for the exchange, according to Sanjana.
However, there is no absolute guarantee that you will make the most of your money if you take the card option, because fees and exchange rate profit still apply to your plastic. "Exchange rates may be better or worse than cash when using a card," Gregory points out.
Some banks and credit card companies charge a service fee for foreign transactions which can be as high as three per cent. For prepaid card users, watch out for extra charges. Some banks charge 2.5 per cent for international transactions and Dh10 for cash withdrawals, which, unfortunately can also be capped up to Dh1,000 per day only.
In that case, it is wise to do some research beforehand, advises Sanjana. "Also, remember to pay credit card bills on time on returning home from the trip, otherwise, you could end up paying a lot more as a result of high interest rates."
"You should check with your provider if there are any charges to use abroad. Some will charge more than others. Yes, there is likely to be exchange costs, but generally comparable to changing cash, and do remove a lot of hassle," adds Thomas.
Security, too, remains an issue. "The danger with cards is the risk of cloning. Cloning happens when someone has a copy of your card and manufactures a new one to spend your money," says Gregory.
Some people say the use of travellers cheques is a dying trend, but they are still a useful travel payment tool because they are safer than carrying a lot of cash and can be easily replaced if lost or stolen, as long as the receipt is retained.
"Some issuers even offer a three-hour replacement service. However, it can be difficult and expensive to cash travellers cheques outside of banks, with poorer exchange rates often found at hotel bureau de changes and airports," says Sanjana.