Friday, February 16, 2007

Travelers Cheque? Makel leisure travels easy with financial tips

travelers-cheque-leisure-travelTravelling abroad? Clueless about how much cash or travellers’ cheques (TCs) to carry? You might be surprised to know that you could actually stop worrying about such estimates, if you have some credit cards in your wallet. As of today, there are many card issuing banks that are willing to offer you a credit card with good credit limits.

Having a couple of them handy actually means doing away with the need to carry excess cash or more TCs. Then, the clincher, not many know that it is actually the cheapest mode too. The forex conversion rates on a credit/debit card are cheaper than buying forex through cash or opting for TCs.

Making a trip, be it for business or leisure, often involves making an estimation of the amount of dollars or euro one might need. Cash could get stolen.That’s why many travellers prefer some portion of the amount in the form of TCs. TCs are nothing but cheques, which come in various denominations, and like a credit card, is accepted at most merchant outlets worldwide.

When first purchased, TCs must be signed in the upper left-hand corner in order to be reimbursable if lost or stolen. When the cheques are cashed, the acceptor watches while you countersign the cheque in the lower left-hand corner and if satisfied with the matching of both the signatures, gives back the change, if any.

One of the major advantages of carrying TCs instead of cash is that it is much safer. That's because if somebody flicks your wallet, he wouldn't be able to do anything with your travellers’ cheque. But, in the case of TCs, you also pay a finance charge. Thomas Cook and its financial intermediaries, for instance, have a finance charge of 1% of the TC amount purchased.

Finance experts feel that the international credit or debit card is the best way to rein in forex conversion costs without compromising on safety issues. This is because you get the best forex rates on conversion (Note: credit card holders are billed in rupees) as compared to even the cash or TCs.

According to market sources, payment service providers such as Visa International, MasterCard International and American Express buy foreign currency at wholesale rates which are passed on to member banks at a small mark-up. Member banks pass this rate on to customers, giving them a currency rate that is far lower than what they might have paid had they opted for cash or TCs.

Secondly, it also happens to be the best mode to economise on forex conversion costs. The reason; you pay forex costs only to the extent of the buying you make through the card and nothing more. Here, it might be important to know that often travellers play safe and carry excess cash or TCs. This would result in unused cash or TCs that again results in unnecessary forex charges. That’s because a separate conversion cost is levied while returning the unused cash or TCs. Having said that, one must not put all their eggs in one basket. So, while you can maximise your purchases through a credit or debit card, you also have some reasonable amounts in the form of cash and TCs.

Possessing multiple cards might be prudent as it could take care of your worries on hitting credit limits. The newly evolved pre-filled global ATM or cash cards could also come in handy if you want to withdraw cash in local currency at the place of travel (especially during non-office hours). But then, here you must be aware of the withdrawal charges.

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