When you are planning a trip abroad, you are likely very aware that the country you are going to may not use the same currency that you do when in your native country. However, how important is it to exchange your currency when traveling? Do you really need to have the local form of cash on hand? Here is why exchanging currency when traveling is essential.

Cash Tips

As you travel, you may find that you use services that require you to tips, someone. If you are traveling to a resort or hotel, this will happen especially often. Whether it be the bellhop at the hotel, the maid who cleans your room or the concierge who gives you a great restaurant recommendation, you will likely need to hand over a dollar or two as a way to say thanks. This is a perfect example of a time you will need the local currency on hand. You can find out more information at FXCompare to get the best online rates available and to get money transferred straight into your bank account before your vacation.

Street Vendors

Part of the fun of exploring a foreign country is shopping from local street vendors, buying either gifts, souvenirs or delicious native food. Many street vendors will not accept credit cards and definitely won’t take a foreign currency as payment. You will want to have at least a little bit of local currency on hand for these situations.

Ground Transportation

If you need to use local ground transportation such as a bus line, a train or a form of a taxi, you may need cash. Accepting credit cards is actually a recent development in more modern cities so smaller, undeveloped areas may not let you use a card to get around the area.

Small Charges

Even locations that accept credit cards may have a minimum amount you can charge per transaction. You may not be able to buy a quick candy bar or sandwich without also being required to pay more for other, unnecessary things just to get your transaction balance up. While doing this once or twice may not be a huge hassle, it is a way to quickly spend excess money. If you simply carry a small amount of cash, you will be able to avoid paying credit card minimums.

Foreign Exchange Fees

If you plan on using your credit card for every purchase, you may be hit with lots of small foreign transaction fees. Many credit cards will change you up to a 3% fine for using your card overseas. It may not seem like a lot but that means an extra 3% every time you swipe. This can add up quickly! Converting your cash to the local currency may cost you a onetime fee but it will be much less than all those small charges adding up.

As you can see, it is essential to have at least a little bit of the local currency on hand when traveling. So head to your local bank, look online for a currency exchange service or find an ATM while abroad that will help you transfer your AUD to USD!