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Cash, or credit card, is king when travelling abroad

Top up your card before you go and you should get the best value with maximum security, writes ORLA O'SULLIVAN.

On a Bank Holiday in Burma, we got a taxi across Rangoon and paid $10 for a Coke and a coffee, as you do, in a country where the average annual income is $300. We weren't trying to lord it in the Burmese capital; we were in the only place, an upmarket luxury hotel, that would cash a traveller's cheque.

We arrived, unknowingly, at the start of a five-day bank holiday, with limited local currency and no access to ATMs. To the extent that they existed, they were inside banks.

With limited cash dollars, credit cards were the only way to pay.

The moral of this story is to have multiple means of accessing cash when abroad. The cost of those methods is reflected in the accompanying tables. Travelling will get easier as the eurozone expands because you can withdraw cash on your bank cards on the same terms as apply at home.

Outside the eurozone, it's rarely as challenging as Burma.

However, you don't have to be in exotic places to encounter glitches. "It's amazing the number of Americans who come here with no cash, only credit cards," says a Galway guesthouse owner.

Not only does she not accept them, the tourists find they lack the PIN they need to get cash advanced from their card account. Conversely, if you use your ATM card in the US, you may be in for a surprise.

In a universal practice in the US, known as surcharging, the owner of the ATM charges a fee separate to whatever your bank charges you. The typical surcharge is $1.50, but it can run to $5, in tourist traps.

As a foreigner, you may be able to have that surcharge overturned and should be able to avoid it - if you use your ATM card in a bank. In shops, you're likely to be out of luck. So found Michael O'Sullivan, a retired civil servant in Donabate, Co. Dublin, who travels annually to the US.

"To use my ATM card without paying that fee, I'd have to queue up for a bank teller. I couldn't use the machine," he says.

Consequently, he favours making cash withdrawals from ATMs using his credit card. Before leaving, he transfers funds to his credit card so that his bank does not charge a cash advance fee, or assess interest on the amount advanced/all that is outstanding from the date of withdrawal. In that, Mr O'Sullivan's bank, Bank of Ireland, was typical.

It was unique, however, in paying interest on funds advanced to credit card accounts 'pre-loaded', in the industry jargon. Mr O'Sullivan enjoyed a rate better than that on many deposit accounts: "about 2% before tax," he says.

The fun ended in November, 2002. "It's not behaviour we wanted to encourage," said bank spokeswoman Mary Brennan.

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Banks' charges for overseas cash access are "much of a muchness", she added, an idea echoed by others. Ms Brennan advises travelers to consider non-monetary aspects, such as the security of card withdrawals versus the lower foreign exchange cost if buying currency in the bank.

Credit cards preceded debit (ATM/Laser) cards, so they are more widely accepted. For example, permanent tsb debit card customers (Laser) just got the facility last month to withdraw money abroad.

Also, you get marginally better exchange rates on credit cards it's said, but that is hard to quantify. Policies vary by region, and MasterCard, for example, does not make public the rates it charges the banks, said spokesman James McDonald.

Still, the UK Consumer Association says it is most economical to use credit cards for foreign currency requirements.

Bank of Ireland's Ms Brennan estimated that the difference in buy and sell rates typically amounts to about 2pc on ATM transactions. That's more than the standard published ForEx fee of 1.75pc on credit card transactions.

Ulster Bank is the only major bank to charge more, at 2pc. Ulster Bank is also alone in charging a cash 'advance' fee even when there is extra credit in the card account. Other banks charge only the ForEx fee in this scenario.

National Irish Bank and permanent tsb are favourably distinguished by not charging to advance cash where there is no credit in the account. In that scenario, there will be interest charged on the outstanding balance, with NIB's annual percentage rates being lower than TSB's (max: 14.9pc versus 17.8pc).

NIB spokeswoman Pamela Yeh said its customers travelling outside the eurozone would do best to use pre-loaded credit cards, with the exception of those travelling to the UK.

Potentially, they could use the ATMs of several banks affiliated with NIB for exactly the same cost as in Ireland. Withdrawals could be free or 23 cents, depending on the customer's type of bank account.

Travellers cheques are arguably outmoded, but provide the security of a refund if lost or stolen - assuming records have been kept. Note, cheques cost prohibitively more in euro than in other currencies.

You pay to buy them and, typically, to cash them. Also, if you're on a multi-country trip you'll probably have to pay to exchange from the currency on the cheque face to the one you need.

All this, plus the fact that travelers cheques often are not accepted might prompt you to risk being stranded penniless. Bank of Ireland customers, for example, could have a Moneygram sent them, typically "within an hour" at a cost that compares well to travelers cheques.

The all-in cost of a Thomas Cook non-euro cheque is 4pc to 5pc (unless it's cashed at a Thomas Cook office).

A Bank of Ireland MoneyGram costs 7pc, plus a local agency's ForEx fee, for a modest advance: under ?400. Large amounts cost 4pc.

After travelling around the world, this writer still has $700 of $1000 in travellers cheques purchased three years ago.

They're in reserve for a coffee in Burma.

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