The concept of taking a leisure tour is an old one. Whereas mediaeval pilgrims walking from Lyons to Jerusalem were purportedly doing it for spiritual reasons rather than for reasons of personal gratification. Still, it’s fair to say they probably still had some fun along the way. Then, the romantic poets and artists of the 18th century popularised “The Grand Tour” of classical Italy – a route that remains well trodden by tourists right to this very day.
If you are headed on some kind of tour yourself (whether it be a bus tour across America or a modern take on the Grand Tour) then you need to figure out what is the best way to pay for it. You may need to pay some kind of travel agent or tour organisation a chunky lump sum to handle the logistics. Or you may have to buy a load of train, bus and tuk-tuk tickets yourself along the way.
Wherever you are going and however you are doing it, the fact remains that paying for foreign travel carries a lot of costs. In this post we will examine the unwanted costs of travel – foreign transaction fees and foreign currency mark-ups. And examine how you can mitigate them. Also, we will look at some of the safest way to make payment for tours that you plan to take.
Table of Contents
Bank Transfer
Of course, if you are standing in a bus station in Rome trying to get a ticket to Florence then the desk attendant is not going to let you pay for a ticket by transfer. But, if you need to pay for an entire package tour, then the tour provider will offer this option. And using bank a payment method may be a suitable one. We ourselves have paid through bank transfer for some of our very initial trips. We hardly take a packaged travel tour now a days. But when we do, we make sure to do it via a reputed agency. And, we make bank transfer to the agency’s bank account. I will say, it is one of the safest way to make payment for tours. Because there is a record of the transaction made. And it cannot be denied at any point of time.
However, If you need to send money from your bank account internationally then your bank will levy a transaction fee. This can range from $2.75 to $50 in the US. The recipient bank will also charge a fee and you will be expected to pay for this (in Europe the ballpark is around €12). So, when booking tours with foreign agencies, if you are planning to pay via bank transfer, you will have to bear it in mind. On top of this your bank will also apply a “marked up” exchange rate which means that those euros or pesos end up costing you 2% – 4% than you were perhaps anticipating.
Money Remittance Services
If you are paying for an entire tour (such as an organised Iceland tour) then you will have to pay over a sizeable sum of money and send it to a foreign bank account. One option here is to use the services of a money transfer company instead of making a straight bank transfer. Using a money transfer service is quite simple. You open an account with them (registered in your own country) and then pay your money into it. They then convert it in the currency you need to send, and they send it off to the recipient’s bank account. Of course, they do charge fees for this but as a rule of thumb they are usually around 1.5% which is not bad for a foreign transfer as we shall see.
There are many different money transfer services out there and one the most prominent ones right now is Wise – an app based money transfer specialist who even offer a debit card linked to accounts.While money transfer services might be the cheapest way to pay for travels, they are not necessarily one of the safest way to make payment for tour. As, once the money is sent, you have almost no way to reclaim it. Should something go wrong or if you send it to the wrong account!
Credit Cards
Paying for travel by credit card is a very popular option. Since networks such as Visa and Mastercard are accepted almost everywhere. Many credit cards also come with courtesy travel insurance. And also have a host of security and payment protection measures in place. If something goes wrong with your tour then claiming a refund by credit card is a lot easier than doing it any other way.
That said, using a credit card internationally such as to pay for a whole tour or one single train ticket does carry some costs. Most credit card issuers charge foreign transaction fees. And that also every time the card is used abroad. Or when used to pay for something in a foreign currency. These charges are usually levied as a percentage. And American credit companies typically charge around 2.75% – 2.99% on top of any transaction.
However, one big drawback with credit cards is that it is easy to forget to clear the balance before the due date. Especially if you are travelling. As credit card interest rates can vary from 15% upwards. So, failure to clear the balance will mean that that tour suddenly becomes a lot more expensive. Still, they are a very useful way to pay for day to day expenses. And definitely one of the safest way to make payment for your tour.
When we book our accommodation through agoda.com and booking.com on our travel, then we pay using our credit card almost all the time. Also, when booking our flight tickets, we prefer to use our credit card. For added safety, I make sure never to store my credit card details on the websites which I transact with. So, make sure to un-ckeck that tiny checkbox which says “save my credit card details” when you entering the details.
Cash
When it comes to paying for day to day tour expenses, cash is hard to beat. People all over the world love cash. Wherever you go you will be able to find a currency exchange who will be happy to take your US dollars in exchange for whatever local currency you need and they often offer the best exchange rates with mark-ups of 1% – 2% (you can normally haggle it down to 0.5% in India by the way). On our own 5 days trip to Singapore, 2 weeks trip to Thailand and 2 weeks trip to Europe, we carried enough cash in US dollars to cover our expenses. It is definitely one of the most convenient way of payments. Since, there are no hidden charges, extra charges or due dates to be remembered as with some of the other mode of payment discussed above.
But, the downside is that carrying a stash of USD is risky. If your bag is lost or stolen then it is gone. And your travel insurance is unlikely to cover it. For this reason it is not wise to bring too much cash. And you should always split it up. Also hide it well amongst your bags. Particularly when traveling in Italy and doing tour of Paris, we were warned of pickpocketing. So, I will not say that cash is one of the safest way to make payment for your tour. But it is definitely indispensable at times. As many food outlets and souvenir shops insist on cash payments.
Digital Payment Methods
Thankfully, digital payment methods have gained so much popularity in India in past one or two years. And have emerged as a great alternative to cash payment. The digital payment methods combined with availability of internet in the remotest areas has made it a breeze to travel everywhere in India without carrying any cash or very minimal cash. On our recent road trip across Kerala, I was really surprised when a small stall vendor near the majestic Athirapally Waterfalls in the middle of the jungle offered to accept digital payment when we forgot our wallet in the car! And not just that, he even helped us connect to the internet using the hotspot on his mobile wifi!!
No doubt that digital payment is emerging as one of the safest way to make payment for your tour. And I will not be surprised if cash usage on your trips in India becomes minimal to non existent in the near future. With several players like paytm, google pay, phone pay etc. you are spoilt by choices.
Prepaid Travel Debit cards
An addition or an alternate to a credit card is a pre-loaded debit card. It works once you load a predetermined amount of money into the card and then use that money to make purchases or cash withdrawals when on the tour. Prepaid debit cards will work as long as your specific card allows foreign transactions, but the costs of them vary. Some offer zero-fee overseas card transactions whereas others charge load fees (i.e. you have to pay just to activate it). The main advantage of prepaid travel debit cards is safety – you can carefully budget, and your money is protected in the event that your card is lost or stolen. However, to be honest, debit cards are often our last resorts when paying for our travel.
Conclusion
After going through each of these payment methods, you will see that no single one is perfect. Each has their positive and negative aspects. And which methods you use will come down to your personal circumstances. Also, the intricacies of the tour you are taking. Ultimately it is best to use a combination of different payment methods for the safest way to make payment for tour. Large bookings are best left to bank transfer or credit card. And pay for day to day expenditure by cash, debit or credit card or digital mode of payment.
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