Credit cards are the safest way to pay for your vacation. If they are stolen you have limited liability and they are easily replaced. The ability to dispute the charges with the credit card company give you protection against poor merchandise or service.
Many transactions such as hotel reservations and car rentals are impossible without a credit card. When traveling overseas you can usually get the best exchange rates using your plastic but beware. The credit card companies have been charging high fees for the privilege and usually don't tell you ahead of time.
The downside to credit cards is they can be unreliable, especially overseas. You can be in for a real hassle if your card is declined by the merchant or a foreign ATM machine. The chances of this happening are real and increase dramatically when traveling to second and third world countries.
When you use your credit card, don't let it out of your sight even if it means following your waiter to the register. Before you put the card back in your wallet make sure that it belongs to you.
Cash is the most reliable way to carry money but of course, it is the least safe. American cash is accepted everywhere and you can often haggle for better prices with cash.
But there are many dangers when carrying cash. The most obvious is that it makes you a target for thieves. Don't flash it around.
Hide your cash on your person but not in a waist money belt. Find or make a pocket on the inside of your clothing where it is difficult to get at. Then keep a small amount in a spare wallet for your walking around cash. You can keep one credit card in with the cash and it doesn't hurt to throw in some other expendable junk to make it look good. This is what you hand over if you are robbed.
Don't keep all your cash on your person. Hide some in your personal belongings. Be inventive about finding good hiding places. The hotel safe is a good place to stash a portion. If you spread it around then you won't be cleaned out in one shot.
Travelers checks are arguably the best way form of money for your vacation with. You can use them almost as readily as cash and they can be easily replaced.
The best way to handle your vacation money is with a combination of all three methods. )
