Cash and Traveler’s Checks incurred high breakage costs, the amounts spent converting unused foreign currency back into local currencies

Debit cards are emerging as the cheapest way to pay for purchases and withdraw cash abroad, a study said Monday. The study of the “real costs of foreign currency transactions” for outbound travelers in 12 markets in Asia, Africa and the Middle East by MasterCard found that debit cards had the lowest overall costs among the foreign currency products.

Cash and traveler’s checks incurred high breakage costs, the amounts spent converting unused foreign currency back into local currencies. For a US$500 transaction, the cost was typically 1.9%. Credit cards, traveler’s checks and cash averaged 2.5 to 2.6%.

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