Today, there are many more ways to buy a train ticket in Japan, a dinner in Mexico City or a museum pass in London.

Should you use an ATM card to obtain cash? How about using a credit card? Should you stick with travelers checks? Or maybe use a combination?

With so many options, finding the best way to manage money while traveling abroad can be complicated and confusing.

Currency-exchange rates change daily, plus the differing fees on credit cards, automated teller machine (ATM) cash withdrawals and travelers checks make it harder than ever to figure bottom-line costs.

However you play the currency game, the various fees aren't likely to put you in the poorhouse. But they can add up.

A difference of 5 or 10 percent in financial fees on a $4,000 trip can add up to $200 to $400 - enough for an extra few nights in a hotel, several nice dinners, or special gifts for those back home.

And while everyone wants the most for their money, convenience can be just as important.

Just ask Don De Santis, a Seattle aerospace-industry executive.

When De Santis traveled with his family in Italy, Austria and Germany two years ago, he took his ATM card, a couple of credit cards and about $1,250 in travelers checks.

He used only $150 worth of the travelers checks, relying instead on ATM and credit cards for cash and charges. He did the same last year on a trip to Paris and London.

"My experience both times was that, like in the United States, there was an ATM every couple of blocks. I was able to use the card without problems."

But one night, he and his son were out late after a musical performance.

"We needed cash for a taxi, and travelers checks wouldn't have done any good," he recalled.

"There were no (money) exchange places open. It was easy to walk to the corner and withdraw cash from the ATM machine."

Michelle Rigual, from Champaign, Ill., who travels frequently for the Army Corps of Engineers, had a different experience.

"I've had pretty good luck with ATMs generally," she said. Then, when she was in Turkey last year, a massive earthquake hit.

"Everything stopped working," she remembered, including the ATM machines.

"People would still cash my travelers checks," she said, "but the exchange rates were not as good as at the ATMs; in fact the difference was sizeable - sometimes as much as $5 on $50."

Rigual learned her lesson. She now travels with a small stash of U.S. dollars, two ATM cards, a credit card and travelers checks.

"I wouldn't rely on any one method," she said. "I always carry something as a back-up."

Handling the finances

When deciding how to handle finances while traveling, it helps to know the ins and outs of using cash, travelers checks, credit cards and ATM cards.

In some remote places, cash may be the only option. Some places will take your U.S. dollars at face value, using official published exchange rates with no extra fees or surcharges. That's great, but remember there are security concerns with cash - a big reason why many people still use travelers checks.

Where credit cards are accepted, they can be a convenient way to pay for everything from hotels to train tickets and meals. But some smaller mom-and-pop establishments don't take them. And keep in mind that credit cards are a good deal only if you pay your balance in time to avoid high interest charges.

ATM cards are used to withdraw cash directly from your bank account. While the number of ATMs is increasing worldwide, there may not be a machine in every town you visit.

Exchange rates, fees

An important thing to understand is that the cost of using any method of payment (cash, ATM card, etc.) is affected by two basic things: the exchange rate, and surcharges, commissions and fees.

The exchange rate - the amount of francs, pesos or pounds you get for $1 - is based on the rate banks give each other on transactions of $1 million or more. Called the interbank or wholesale rate, it's at or very close to the official rates published each day in newspapers here and abroad.

Travelers will get something less than that wholesale rate; how much less depends on where and how the exchange is made.

"Typically, ATMs and credit cards are the least expensive way to get money while traveling," says Steve Dengler of Xenon Laboratories, a Toronto-based financial-services company that publishes online currency-conversion tools which allow travelers to calculate how bank fees and surcharges affect their bottom-line costs.

The two major credit-card companies, Visa and Mastercard, process foreign purchases at interbank rates, plus a 1 percent conversion charge.

For example, a dinner for two in Paris that cost 1,000 francs would cost $143.27 at the rate of 6.98 francs to the dollar. With a 1 percent conversion charge, your dinner costs go up to $144.70.

Most ATM cash transactions are also processed within 1 percent of the big-bank rate. The catch with credit cards and ATM withdrawals is that individual banks are starting to impose additional surcharges and fees beyond the 1 percent Visa and Mastercard charge.

This is where it pays to know your bank's policies.

Bank of America, which issues the REI Visa card, the Alaska Airlines Visa and other credit cards in Washington, added a 2 percent conversion charge on credit-card transactions as of April, for a combined total of 3 percent.

First USA, one of the nation's largest issuers of bank credit cards, also adds 2 percent.

"It's still a good deal," says Robert McKinley of CardWeb.com, a firm that follows the credit-card industry for consumers and companies. "It's just that they're taking a little bit off for themselves. They justify it by noting that fraud rates are higher on foreign transactions."

When it comes to ATMs, withdrawal fees can vary. Many credit unions charge no fee. That's the case at the Washington School Employees Credit Union, where Seattle executive De Santis does his banking.

Washington Mutual charges $3 for each withdrawal from an ATM in another country, compared with $1.50 at nonbranch ATMs here. Bank of America charges $1.50 for international ATM withdrawals, the same as it does at nonbranch ATMs here.

Even with the fees, foreign transactions using credit cards and ATMs usually are less expensive than cashing travelers checks or U.S. dollars at street-corner exchange windows or foreign banks. Exchange rates at these places are lower, just as they are for obtaining foreign currency here before you go. Service fees - usually in the range of $3-$5 per transaction - add to the costs.

Consumer Reports Magazine recently estimated that travelers can lose 5 to 10 percent to administrative fees and poor exchange rates when using travelers checks instead of credit cards.

The trade-off is safety: "Cash is cash," said Melinda Mulcahey of American Express. "Once it's gone, it's gone."