Travel cash

  Essentials

• You need small US dollar banknotes — A modest stash of small notes is helpful for incidental expenses, especially when entering or leaving a country.
• You need just a few large denomination banknotes — Large notes are stored for emergencies or for financing your stay in some badly run countries.
• USD or EUR are best — US dollars or Euros are the most widely accepted and get the best exchange rates.
• Other hard currencies can work in some places — GBP, JPY, CAD, AUD etc. will do, especially in adjacent countries. But it may be hard to find someone to accept them and the exchange rate is often not as good.
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If  you’re looking for information about “travel cash cards,” please read why we think pre-paid cash cards are a bad idea.

This page concerns the hard currency banknotes (dollars, euros etc.) that you will take with you on your travels. You don’t need to buy local currency before entering the country where it’s used.

It’s possible to go to many countries over many months and not spend any hard currency at all. But chances are that you’ll spend a bit entering and leaving countries or in other situations when getting local currency is difficult. While nobody wants to think about an emergency situation such as robbery, having a few days worth of hard currency deeply hidden a secure stash (not even in your travel wallet) can be a lifesaver.

Why do you need travel cash?

In the Good Old Days, travelers carried a stack of traveler’s checks (TCs) and a wad of banknotes, usually small denomination US dollars. The TCs were the main instrument used to obtain local currency. Yet, sometimes you couldn’t cash a TC: maybe there was no bank in the town or the bank was closed, the money changer had rip-off rates, the official exchange rate was extortion… lots of reasons. Cash was a frequent standby and always got a better currency conversion rate.

Times have changed. ATMs are showing up everywhere, even in small towns in poor countries. It’s so easy to get local cash with your debit card. So why do we still need hard currency banknotes?

Small banknotes

• Entering a country — While most airports have ATMs, many land borders do not. Maybe you find yourself walking out of customs and immigration with no local money to get you to the next town where there should be an ATM. You don’t want to change much, since you won’t get the best currency exchange rates in a situation like this. You whip out a small bill, say a $5 or €5 bill (that you’ve kept separate from your other money) and get a terrible rate, but it gets you into town. The best place to exchange money is always a storefront and not some taxi driver or guy on the street. 
  • A storefront money changer
  • A retail shop
  • A street money changer. IMPORTANT: this is the only time when a street money changer might be used. Keep it to $20 or less. Don’t flash your wallet. Count the local cash before handing over your banknote.
• Leaving a country — You will try to estimate how much local currency you need as you near your departure date. But, come the day, you find yourself short for the taxi fare or the airport departure tax. It’s not worth a trip to the ATM to withdraw the smallest amount, get whacked by the transaction fee and then have local money left over. But that €10 or $20 note is just right.
• Tips, bribes and other incidentals — You can normally tip or bribe in local currency, but sometimes the recipient is looking for something better. If the local currency is dropping in value by the day, a hard currency note would be appreciated as a tip or even demanded as a bribe. In the latter case in particular, you want to have just one low-denomination note in view when it’s time to pay, unless you want the bribe demand to go up.

Large banknotes

Since your need should be rare and you want to bury them deep, you need as few large banknotes as possible: $100 or €100. For rare uses, €500 could be helpful.

• Emergency secure stash — What if you got mugged while moving between destinations. The muggers take everything: your main bag, day bag, dummy wallet… even your travel wallet. All you have is your super-secret secure stash. If you don’t have a second debit card or credit card in there, you will have to rely on cash. How much would you need to recover from your predicament? You have to cover your expenses for however many days it takes to get money wired from home or a credit card re-issued. Depending on your location, assume three to five days at least. A rough minimum might be 6 X $100 or 1 X  €500. 
• Countries with sparse ATMs, currency controls, bad infrastructure or labor problems — You can’t use ATMs where there isn’t one, or if the only available ATM is empty of cash or if the ATM system is subject to breakdown. You may not be able to withdraw your daily budget if the country severely limits cash withdrawals due to a financial crisis. Another situation is where bank workers, armored delivery services or security service workers go on strike. In all these cases, you could be forced to use cash to get by.
• Countries with an extremely low fixed exchange rate — A few badly run countries peg the official exchange rate way below the market value. You get the official rate from ATMs, which will spit out fewer units of local currency than your home currency is truly worth. Result: the net cost of goods and services in that country are too expensive. Assuming that a legitimate parallel market (not an illegal black market) for hard currency banknotes exists, then refer to your travel budget to see how much you need for your proposed stay. If you’re staying a long time, consider €500 notes (unless you’re American, in which case a thicker wad of $100 notes won’t involve cost of purchasing those Euros). If carrying this amount of cash makes you nervous, split it between your travel wallet and a secure stash big enough to carry the money.
• Replenishment of small banknotes — If your trip is longer, you might add a $100 note in case you need to replenish your supply of smaller dollar notes.

The customs service of many countries requires that you declare any amount of cash over USD 10,000, but that’s way more than any independent traveler should be carrying.

How much travel currency do you need?

It’s possible to do your entire trip without needing any cash for these purposes, especially if you’re traveling in rich countries. Yet, if you have backup cards in your secure stash, you should still carry at least enough to buy foreign cash for those borders and incidental costs.

This decision is a trade-off between need and risk. You want to carry the least you might require — not so little that you won’t have enough when the need arises and not so much that it makes you nervous to carry it. You might be able to replenish hard currency during your trip, but that depends where you are when you run low and how bad a deal it is to buy the banknotes.

You can do a rough estimate, although it’s highly dependent upon how many countries you will visit, whether they are rich, middle or poor and the cost of your travel style.

Not accounting for the country-specific problems above, you could take:

• $1 X 10
• $10 X 2
• $20 X 2
• $100 X 2 (if you have backup cards in a secure stash)
• $100 X 6 (if you do not have backup cards)

Total: $250 in 16 notes OR $650 in 20 notes.

You can use the same breakdown in Euros, except for the $1 notes. You still need USD for that, since there is no Euro note under €5.

The number of $100 notes can go up if your trip is longer, on the assumption that you can replenish small denominations by breaking a $100 note. You don’t want a thick wad of small notes making your travel wallet thick.

If your budget is tight, you can still use your hard currency banknotes to finance the last part of your trip. Only spend the travel cash that way if your debit card or credit card is still good. You don’t want to find yourself broke in a foreign country.

What kind of hard currency?

There are only two currencies that are worth carrying as travel cash anywhere: US dollars and Euros. While the US dollar is accepted anywhere, Euros are better in non-Euro countries around the Eurozone and West Africa. Regionally, other hard currencies are fairly easy to change: Yen in SE Asia, Canadian dollars in the Caribbean, even South African rand (not a hard currency) in the countries bordering South Africa. 

While you may be able to exchange currencies other than USD or EUR, fewer places will accept them and they’ll offer a less attractive exchange rate than for USD or EUR. Canadian or Australian dollars in Europe get mildly penalized. Even the Euro isn’t so popular in Central and South America. If you’re not sure what currency to carry, go for USD.

Lucky for you if you’re a resident of the US or Eurozone. If not, you will have to buy one of those currencies, which will cost you 1% – 2% of the face value in foreign exchange spread. Then you’ll have a second foreign exchange loss when you convert to local currency in your destination country. Is it worth it?

Or should you take your home currency? You convert just once into the local currency, but have to accept the wider exchange rate spread. That depends upon how well accepted your home currency is in your destination country. 

Why US dollars are the most useful

If you don’t already have US dollars or Euros, default to US dollars (except if traveling to the Eurozone and surrounding countries or West Africa). 

• Acceptability — USD banknotes are by far the most accepted currency in the world. They cost the smallest foreign exchange spread, too. You can’t be wandering all over a city trying to find someone who will take your Canadian dollars, only to find that the exchange rate is poor.
• Small payments — You can’t use coins of any foreign currency, not even US coins. Nobody will accept them. The US $1 note is the smallest hard currency denomination by far and therefore very useful. Will you tip that airport porter the $1 US his modest assistance was worth or bless him with $5 Australian that he’ll have trouble exchanging? (If traveling to the Eurozone, you can use EUR coins for this purpose.)

There are two very large banknotes, the EUR 500 and the CHF 1000 (Swiss francs).

• CHF 1000 is not practical — This note is worth more than USD 1000 at time of writing. It is too big for all but the most high-style independent travelers or less posh travelers planning to spend enough time in a country to spend $1000. Besides, banks and money changers might be reluctant to accept such a large and rarely seen note.
• EUR 500 has a role — Apart from use in Eurozone countries, there are three uses where the €500 note is superior to USD:
  • Countries with a big spread between official and street exchange rates — As noted above, if the spread is wide, you could finance your entire stay in that country by exchanging banknotes instead of using ATMs. The longer your stay, the more convenient to carry €500 notes. 
  • Countries with rip-off ATMs — In some countries, the ATM user fee is high and the maximum withdrawal per transaction is low. If you will be in a country long enough to spend the local equivalent of €500, then it could be cheaper to exchange the banknote for local currency. 
  • Emergency secure stash — Just one or two €500 banknotes take much less room in your secure stash.

It’s not known how long the €500 will remain available because the European monetary authorities are thinking of discontinuing it. Why? Because the €500 note, along with the $100 note are highly prized by criminals. Its discontinuance would be a shame for travelers because it straddles the USD 100 and the CHF 1000 notes. It’s the perfect big banknote.

Age & condition of banknotes

To be sure that your banknotes will be accepted you must be careful about what notes you accept yourself:

• Only the most recent issue — Due to problems of counterfeiting, recipients of your banknotes in many countries much prefer the most recent issue. In fact, there’s so much paranoia around older notes that many recipients will refuse to take them.
• Only in perfect condition — If a banknote is torn, nicked or written upon, a recipient may refuse to accept it. Make sure all the banknotes you get are clean and undamaged. New notes will pack flatter in your travel wallet and secure stash, too.

While it’s easy to get recent, undamaged, even new banknotes before you leave home, you must keep the same standard while traveling. When you are receiving either foreign or local banknotes, inspect every one of them — they should be recent and undamaged. Otherwise, even though they’re “legal tender,” you may be unable to spend or exchange them.

This applies more often to large denomination banknotes. This USD 100 banknote will be rejected almost everywhere, not because it’s crumpled, but because it’s torn. Far smaller sins — a nicked corder or something written or stamped in ink on the note — can also be grounds for refusal. Since low value notes are rarely counterfeited but heavily used, there’s more tolerance for old issues and wear and tear.

Where to buy travel cash?

If you’re a US or Eurozone resident, lucky you — just put those USD or EUR notes in your travel wallet and secure stash and you’re done. For everyone else, it makes sense to buy USD and maybe one or two of those EUR 500 notes. So where do we get them?

• Find the base rate — Go online to a foreign exchange site (there are lots, but we use www.oanda.com) and find out what the benchmark exchange rates are between your currency and USD or EUR.
• Your bank or credit union vs online suppliers — Start with your bank or credit union and a couple of online suppliers, comparing their exchange rates and the fees attached to the transaction

Keep in mind that your bank or credit union can probably hand the banknotes over the counter or get them in a short time, but an online vendor may charge for handling and delivery if the amount of your order is small. Find out where the threshold is for free handling and delivery. If you have to pay a fee, factor it into the overall net exchange rate.

Worse, when you buy online, you’ll usually use your credit card. But the purchase may be treated as a cash advance, with the instant interest charge of 1.75% or more (the first month’s interest at your annual rate). This, in itself, may make online purchase unattractive. You can try using your debit card instead. There won’t be an interest charge, but it may come with a substantial service fee. Find out from your card providers before using either piece of plastic.

After all this, you may decide that a small stack of hard currency banknotes is best acquired at your bank or credit union.

What if you run low while traveling?

It’s hard to know how much cash to take with you. It depends upon the length of your journey, where you’re going and what your travel style is. It’s a bad idea to travel with no cash at all, but risky to travel with too much. So, if you leave home with a modest amount, what if you run out of cash while traveling? 

• USD ATMs — In some countries, notably those few that use USD for regular payments, you can find ATMs that dispense USD banknotes. Pay attention: these ATMs may come with a high transaction fee.
• EUR ATMs — If you’re about to leave the Eurozone, but still traveling, you can stock up with EUR banknotes at an ATM and receive the most attractive retail exchange rate.
• Banks and money changers — You also have the option of buying banknotes at a money changer with local currency. This is expensive, as you have already converted your home currency to the local currency. You can also draw hard currency notes from a bank using your credit card or debit card, with the same cautions as above. Banks don’t seem to like this transaction, so it can be quite bureaucratic.
• Wired money — You can get USD or EUR sent by wire transfer through Western Union, Moneygram or equivalent. It’s expensive.