Is applying Card Over Cash Always More Expensive When Travelling Overseas? We Travel To Europe To Put This Theory Towards the Test

Everyone enjoys going on holiday. When we're overseas, we're seeking a rest from our worries rather than to put on more stress trying to plan the trip on the run. This is why planning flights, accommodation, basic itineraries, insurance and exchanging money beforehand is crucial.
This was exactly what I had been hoping to achieve after postponing my honeymoon for over 2 yrs trying to grow my start-up.
My “Belated” Honeymoon
My wife never really accepted the small outing we had to Krabi after our wedding because the “official” honeymoon. This is why we chose to finally jet off to Europe for our belated honeymoon.
Being inside a start-up, work still featured prominently as I chose to resolve an issue that lots of jet-setting Singaporeans might have probably asked themselves at one point or another: should we use our cards or cash when paying for purchases overseas?
Here's the obligatory tourist shot of we on holiday.
Exchanging Our Singapore Dollars
Our holiday destination is a vital consideration. If we're travelling to highly-developed, popular holiday destinations, like the US, UK, Australia, Germany, Hong Kong, or countries with a many Singaporean tourists for example neighbouring Malaysia, Indonesia and Thailand, then exchanging Singapore Dollars (SGD) in those countries should not be a problem.
My wife and I would be in Munich, Germany as well as other European cities. As Munich is a highly-developed, well-established tourist destination, we weren't concerned about exchanging our SGD beforehand once we were confident of exchanging our money at competitive rates on arrival.
Nevertheless, it certainly is a good idea to carry some local currencies, and that we chose to exchange nearly a third in our money into Euros before flying off.
Our next destination was Ljubljana, Slovenia, that also uses the Euro. Upon arrival, we quickly realised that exchanging our SGD there was a smaller amount compelling. Many of the money changers offered extremely poor rates for the SGD, when they even accepted our SGDs at all.
This was one of the costlier mistakes we made – thinking we'd get equally competitive rates in cities that weren't as established as Munich. On hindsight, we should have gotten our Euros in Munich.
Our second mistake was in Prague, Czech Republic. Unlike Slovenia, Czech Republic uses its very own currency, the Czech Koruna (CZK). This resulted in we couldn't use any of our remaining Euros in the city. Money changers in Prague offered similarly poor rates, again, when they accepted SGD whatsoever.
We eventually found one that looked reputable, but were hit by an unexpected commission control of 28%! Although it is not a scam, we should consider that in the Euro-zone as not every money changers charge a commission.
Another challenge with going to 'exotic' cities is the fact that we may not be able to obtain local currencies beforehand as many money changers in Singapore don't carry the currency. Similarly, after we get there, money changers there may not widely accept the SGD.
Life With A Multi-Currency Account (MCA)
Before flying removed from Singapore, I was encouraged to open an MCA by my colleague. As I already were built with a checking account under DBS, I opened the DBS MCA within A few minutes online and received debit cards associated with my MCA in a few days.
Having not used at all the DBS MCA just before my trip, I decided to just change EUR500. This exercised very favourably while I was in Ljubljana as I only were built with a small sum of Euros left after Germany. Better still, I was in a position to bypass the lousy forex rates offered by local money changers and could spend this money, which was exchanged at a fair rate. I was also able to withdraw the Euros directly from my DBS MCA, with a few service charges, which still exercised much better than exchanging my SGD.
For places that accepted payment via cards, I could directly make use of the Euros I'd in my DBS MCA account without worrying about any extra charges on my credit cards, suffering poor exchange rates on my SGDs or incurring rates for withdrawals.
Naturally, the Euros in my DBS MCA were quickly exhausted, and I decided to stock up more Euros. It was easily carried out by DBS' digibank mobile app whilst I had been overseas.
Lastly, it is worth noting that the DBS MCA currently supports 13 currencies, including the SGD along with the Euro along with other European currencies. I hope the dpi increases later on, which can make it an even more powerful tool.
Withdrawing From A Foreign ATM
In Munich and Ljubljana, I was able to withdraw my Euros directly from my DBS MCA, albeit with a lot more service charges.
While I had been in Prague, I made a decision to exchange only a fraction of my SGD in cash, again for emergencies or for vendors without a card payment option. I withdrew the rest of the money I required from the local ATM, which offered a far better exchange rate despite incurring service charges.
Should I Use My Credit Card?
Another common approach to purchase our overseas expenses is via a Singapore-issued credit card. Read some of the benefits and drawbacks for implementing a credit card on your travels in the following paragraphs here. Notably, you will probably incur foreign currency transaction fees and double conversions (or dynamic conversion charges (DCC)) on foreign exchanges.
Armed with the DBS MCA, I tended to make use of my credit card only if I had been inside a country that used a currency not based on the DBS MCA.
For an evaluation which payment option – cash or card – was superior, I'll use only my experiences with Euro-denominated expenses. Here are a few of my learnings.
Paying Via Cash
# 1 Cash We Exchanged In Singapore
For the majority of our expenses in Munich, we spent the Euros that we exchanged in Singapore. We've got an exchange rate of EUR1: $1.60 – which means that the majority of our expenses in Euros was at this exchange rate.
# 2 Cash Withdrawn From ATMs
We also realised we're able to withdraw Euros directly from my DBS MCA at foreign ATMs. We did this both in Munich and Ljubljana.
In Munich, we withdrew EUR100, but because depicted, i was charged EUR105.95 as a whole (including fees).
Obviously, this makes us worse off than using our DBS MCA debit card as there would be no additional charges past the EUR100. However, we sometimes can't escape from using cash.
With this method, our exchange rate pops up to approximately EUR1: $1.6966, or 5.95% more expensive for the EUR100 that we had already exchanged on our DBS MCA account (shown below). Obviously, the impacts from the service charges at ATMs, that are typically fixed, would diminish if we withdrew larger amounts.
Paying Via Cards
# 1 McDonald's Lunch Paid In Euros Via DBS MCA
We taken care of many things with this DBS MCA. One example was when we paid for our McDonald's lunch in the Munich airport. The bill emerged to EUR11.38.
Here's the statement from your DBS account, confirming that exactly EUR11.38 was deducted from your account.
Before the vacation, we exchanged our SGD for Euros at a conversion rate of EUR1: $1.6013002 on my DBS MCA.
The peace of mind of not having to carry a lot cash far outweighs the negligible improvement in forex rates between cash as well as on the DBS MCA. Another perk is receiving a 5% cashback whenever we spend $500 worth of foreign currency each month (Offer valid now till 31 August 2021). You can visit this link to find out more about the promotion.
# 2 Airport Transfer Paid Via Credit Card
With the DBS MCA, we didn't charge any Euro-denominated expenses on our charge cards. This was the one exception, for that benefit of our readers, to depict just how much i was ultimately billed.
We chose to make this transaction in Ljubljana, where we'd limited travel choices to get to the airport transfer for a very morning hours flight. It was when we needed to book a local taxi for EUR28.00.
On our bill, this amounted to $46.31, translating to an exchange rate of roughly EUR1:$1.6539. Unsurprisingly, this was a poorer conversion rate when compared to DBS MCA.
In summary, here's the forex rates we received using the different ways of converting our Singapore dollars into Euros, as well as the benefits of using both ways.
Plan For the Overseas Trip In Advance
When planning for an overseas holiday, ensure that you achieve this well ahead of time to avoid panicking in the last second or missing out on crucial items like the things we have to pack, buying travel insurance or exchanging money.
When you are looking at using cash or card, forex rates aren't the only thing we should be concerned about. In my experience in Europe, the forex rates for that Euro for cash as well as on DBS MCA was negligible.
Cash was extremely crucial as numerous small vendors and transport operators (trams, buses, and taxis) do not accept cards. However, we would just have a little volume of it as most of our expenses could be in locations that accept cards.
The other thing I realised is that the term card doesn't refer simply to charge cards when travelling. It may now make reference to our debit card linked to our DBS MCA account. Utilising the Euro in my DBS MCA, I possibly could bypass many charges and fees in addition to be fully aware of the conversion rate. This is unlike using charge cards.
However, we also enjoy many of the benefits we thought we're able to only get having a credit card. Including having greater convenience of carrying smaller wads of money in addition to enjoying superior security and peace of mind against fraud and theft.
If we take the time to plan ahead of time, we can also monitor currency fluctuations since they happen on a daily basis. Once we spot a favourable rate, we can make the exchange on our DBS MCA. The DBS digibank app also allows us to set FX rate alerts notifying us whenever a currency pair is trading at our target exchange rate.
Moreover, we are able to also make currency conversions at any time in time no matter where we are. Including just seconds before we must pay a bill or many months ahead of time before our overseas trip.
By benefiting from the DBS MCA, we can save quite a substantial sum while spending exactly the same amount in foreign currency overseas and continue to benefit from the benefits only charge cards traditionally offered.
*SGD deposits are insured up to S$50k by SDIC.