Keep in mind that as of now AMEX wont be feeing us for transactions overseas that are in US$. VISA is already and MC is to start by Oct if your particular bank hasnt done so already. MBNA MC is set for an Oct launch.

AMEX also charges 2% for FEX instead of 3% like MC and VISA

The bottom line, I think, is that credit card, ATM debit and cash are all needed to cover the unpredictabilities in foreign travel. The question for each trip is which is to be the main resource and which is for backup.

1. Credit cards: Necessary for high-ticket business travel and expense accounts, but best considered a backup for most vacations and some business. A card with realistic conversion terms is getting harder and harder to find, and might jack up the cost at any time, as reported in other posts here. Further, shopping around for cards has the downside that you�re playing around with your credit record -- signing up for another card (whether or not you drop the first one) will cost your FICO a few points.

2. ATM debits: Invariably better than CCs these days and could be the best money-saving choice in the Euro zone and other developed countries having plenty of ATMS. But you�ll need to withdraw multiple times because exact cash costs can�t be known in advance. For this reason, it�s crucial to know any conversion and transaction fees at your home bank, and move the account or start a new one at a bank with better terms if needed for frequent travel.

3. Cash: Will get the best deal of all at some destinations. Earlier in this thread I mentioned the quirk that American Express branches in London have cash-exchange terms much better than any electronic access. In the less-developed countries (think much of Latin America and Eastern Europe) cash is king because many places don�t take credit cards, and ATMs may well be sparse and not safe to use at odd hours. Further, many places catering to travellers actually like dollars better than their own currency and will give the same or better than official rates with no fees.

And the safety of carrying cash for the best rates, with plastic as backup? Depends on your comfort level, and not with an amount in the thousands that would be catastrophic to lose. But for a shorter vacation or business trip with land expense under a thousand, I see no concern in carrying enough $100 bills folded over tightly in a thin packet that will stay with you at all times, in some variation of the traditional money belt. (Plus a few twenties in your wallet or purse that a thief in a hurry would take to be your main stash.)

Several of these points are illustrated by a recent 4-day trip to Montego Bay, around the �hip strip� plus some excursions and time downtown, with plastic to cover it all. Credit cards weren�t taken at many places frequented by Jamaicans; I needed five trips to ATMs at conversion and transaction costs of $30 or more. Downtown Mo�bay is a special case, very delightful and colorful during the day, but not comfortable for an obvious tourist target when a different set of characters comes out at night. There appear to be only two ATMs in this good-size town that are outside the closed banks at night. I had to use one amidst onlookers that I didn�t want to meet, and walk fast to the refuge of a nearby Kentucky Fried Chicken. The lesson of this trip? U.S. dollars are accepted everywhere in Jamaica at a fair rate with no fees, and I could have avoided all the above problems simply by tucking a few wrapped-up cash bills in a well-obscured pocket.

Visa and MC both charge 1% (MC will charge a little less than 1% for USD transactions conducted outside the USA). Some banks (Citi, Chase, BoA, etc.) choose to tack on an additional 2%.

The goal is to find the most rewarding card that charges only 1%. Right now it seems Capital One and Target are the leading contenders for ForEx purchases, and AmEx for USD transactions overseas.

Agreed on the above. However, let me add a caveat. A few banks and credit unions will charge an additional fee for "declined" ATM transactions. Your daily limit in the States is pretty straightforward. If you try to withdraw funds you don't have or if you know your limit is $500 and you try to withdraw $600, you probably deserve a "declined" charge, if for nothing else but sheer stupidity.

But overseas, you're withdrawing in a foreign currency while your limit is in American dollars. So if your withdrawal is anywhere close to your limit, you have to guess at the current exchange rate. If you guess wrong, it seems kinna unfair to penalize you for guessing wrong. I just cancelled one of my ATM cards for this specific reason.

Using cash may work well in Carribean countries where USD are readily accepted. However, elsewhere the Thomas Cooks and Travelexs will kill you with conversion costs! Overall, the cheapest way to convert is to use a low rate (1%) CC for major purchases and ATMs for smaller purchases.

If you travel to one specific country repeatedly, it might be worthwhile to set up a bank account there, and have funds transferred in via a Currency Broker like XEtrade. It can be done all online, and their conversion rates will undercut ANY conversion rate you can get from any bank, and absolutely blow Thomas Cook/Travelex right outta the water!!!

got 0.28 a couple of months ago.

No offense, but this is pretty horrid advice. There is NO reason to carry a debit card if you have (1) An ATM (non-debit) card, (2) a VI or MC, and (3) a backup VI/MC or Visa bux card or Trav Cheques.

If your debit card is stolen, you will have to fight with the bank to restore the $$ to your account, and you may not have access to your funds for (at a minimum) several days. By contrast, if your credit card number is stolen, you can cancel it immediately and have zero liability. At worst you go to your backup card for the rest of the trip.

I don't know where you come up with the idea that a debit card gives a better exchange rate. If you use it as an ATM card, you will get the same rate as you do at an ATM machine. If you use it as a VI/MC debit, you willl get dinged for the same 1-3% "conversion fee" or whatever your bank charges.

I don't have a debit card, but if I did I would never travel with it. Your best bet is still:

(1) ATM card with low/no fee for using foreign ATMs (e.g. some internet banks which rebate fees), or

(2) VI/MC card with low "exchange" fee, e.g. only Capital One, State Farm, USAA, and perhaps some credit unions.

Do you really not have a debit card? If you have an ATM card with a Visa or MC logo on it, I'm pretty sure you have a debit card. And if your ATM card doesn't have a Visa or MC logo on it, I'm not quite sure how you use it overseas, since most non-Visa/MC ATM cards are essentially useless once you leave North America.

That said, you're correct that credit cards are much safer to use in terms of liability (domestically or overseas).

Huh? I have three ATM cards from different banks. None of them has a Visa nor Mastercard logo on the front; I request ATM cards without these logos, so that a thief can't get at my cash by just scribbling a signature no one ever checks.

However, each card has the Cirrus and NYCE logos on the back, and I have used them in ATMs all over Europe without a problem.

Cirrus = Mastercard, Plus = Visa. If you've got one of these logos on your ATM card, you can use it in ATMs pretty much everywhere.

thanks for the info.
How about the STAR??

You do not need a debit card to use the worldwide ATM system; however, you will probably want to carry an ATM card that is affiliated with the two major ATM networks: Plus and Cirrus. Citi ATMs are part of the Cirrus network, and I have never had any difficulty withdrawing currency from ATMs in EU countries as most ATMs are affiliated with Cirrus, Plus or both. I believe that all VI and MC cards are automatically linked to Plus or Cirrus, respectively, so debit card holders need not worry about whether they can find ATMs outside the US.

BTW, I do not have a debit card. Citi sent me one a few years ago and it was promptly incinerated. I have no desire or incentive to carry an MC linked to my checking account which could be quickly drained if the card number falls into the wrong hands.

STAR is another debit/ATM network run by First Data (formerly known as FDR). They handle a lot of transaction processing under contract to banks.

I have an ATM card from JPMorgan Chase in New York. It has the Master Card logo on it plus NYCE,Cirrus and Maestro. Using it in banks outisde the US I have been getting exchange rates about 3.4% worse than the oanda.com central rate. In all cases I am withdrawing funds from my checking account.

Chase swears that they don't charge me any fees since I am a Select customer. I can't understand why the effective rate is so bad.

On my Amex cards I get rates as low as 2% difference up to a maximum of over 3% and I cannot figure out why the variance. On a recent trip to Australia I had 4 charges from Qantas' web site for flights and hotels. 2 were at 2% while the other two were at 2.8% difference - all within a few days, same country, same charging party.

Any ideas?

Does STAR exist outside the USA? I don't think I've ever seen a supporting ATM, but then again I've never really looked that hard.

STAR is US only.