10 ques­tions an­swered

Currencies and card fees are not the only things to con­sider when you’re head­ing overseas

Money Magazine Australia - - CONTENTS -

The idea of mak­ing your dol­lar go fur­ther by lock­ing in the cur­rency in ad­vance is at­trac­tive but keep a level head about it

Q What are the main things I need to look for when com­par­ing travel cards?

Make sure you take a close look at fees. Travel credit cards in­volve pur­chas­ing fees, load­ing fees, reload­ing fees, in­ac­tiv­ity fees and even an ac­count clo­sure fee.

Pay at­ten­tion to ATM with­drawal lim­its as some cards re­strict how much money you can take out each day. If you need a lot of cash or your pre­paid travel card charges a fee per trans­ac­tion, it could quickly get very ex­pen­sive.

Con­sider your itin­er­ary and the card’s sup­ported currencies. Pre­paid travel cards usu­ally sup­port a num­ber of for­eign currencies, though the ex­act ones will de­pend on the in­di­vid­ual card. Check the card’s currencies, and make sure they match your des­ti­na­tion, oth­er­wise you’ll have to shell out cur­rency con­ver­sion fees each time you spend. BESSIE HAS­SAN

Q What fees do I need to be aware of?

Travel money cards come with a range of fees, from load­ing and reload­ing to ATM with­drawal and cur­rency con­ver­sion fees.

De­pend­ing on the card you choose, there can also be ini­tial pur­chase fees and an ac­count clo­sure fee. When choos­ing a card, con­sider the main ways you’ll be us­ing it and avoid fees that’ll mostly im­pact you.

For ex­am­ple, if you’re trav­el­ling to Ja­pan and know you’ll mainly use it like a credit card, you won’t need to worry about with­drawal fees. But if you’re vis­it­ing a coun­try where you’ll need cash for food carts and night mar­kets, look for one with lower ATM fees. BESSIE HAS­SAN

Q What is an ex­change rate mar­gin?

This is the amount you pay on top of the of­fi­cial ex­change rate. It is an in­vis­i­ble charge that is built into the ex­change rate by travel money card providers. This is one of the ways they make money. How much you pay dif­fers ac­cord­ing to the card provider and the cur­rency in ques­tion. Be­fore choos­ing a card, com­pare the ex­change rates as some may of­fer bet­ter value than oth­ers, which could equate to size­able sav­ings on your hol­i­day. Start mon­i­tor­ing ex­change rates well ahead of time and if you think the cur­rency in ques­tion is go­ing to worsen, you have the op­tion of lock­ing in a more favourable rate ear­lier.

KIRSTY LA­MONT

Q Who of­fers travel money cards and what are the best ones?

Most peo­ple will al­ready have a re­la­tion­ship with a travel money card provider, with the ma­jor banks, a num­ber of chal­lenger banks, the two ma­jor fre­quent flyer pro­gram providers in Australia and even Australia Post all play­ing in this space. In ad­di­tion, for­eign cur­rency ex­change brands such as Trav­elex and Cash Pass­port also of­fer cards.

The best card is the one that best suits your in­di­vid­ual needs. Im­por­tant things to con­sider when shop­ping for a card are en­sur­ing the cur­rency you need will be avail­able on the card, un­der­stand­ing how you will trans­act in your des­ti­na­tion and the fees that will be ap­pli­ca­ble, and find­ing a provider of­fer­ing com­pet­i­tive in­ter­est rates for your des­ti­na­tion.

It’s also worth keep­ing in mind that there are multi-cur­rency bank­ing ac­counts that could pro­vide an al­ter­na­tive to a travel money card. Both HSBC and Citi have re­cently re­freshed their ac­counts, which can pro­vide many of the same ben­e­fits of pre­paid travel money cards, such as al­low­ing you to lock in your ex­change rate be­fore de­part­ing.

JOSH SALE

Q How do I load/reload the card and how long will it take for the money to go in?

Usu­ally the quick­est and eas­i­est way to load and reload funds on your travel money card is via your card provider’s mo­bile app or online site. If you have opted for a travel money card with a bank, you should be able to load and reload via their in­ter­net bank­ing plat­form. There is also an op­tion of us­ing BPAY to man­age your funds and some card providers even have phys­i­cal branches where you’ll be able to load and reload – just re­mem­ber to bring your card and ID. Load times vary be­tween card providers but gen­er­ally it can take up to three days un­til the funds are avail­able for you to use. If you have com­pletely run out of money on your card, you could be left in a com­pro­mis­ing sit­u­a­tion so it’s im­por­tant to en­sure you have a backup pay­ment method with you. KIRSTY LA­MONT

Q Is it a good idea to save money in a travel card, ie drip-feed cur­rency be­fore you go on hol­i­days?

If you are plan­ning a hol­i­day a cou­ple of months out, it’s worth hav­ing a look at how the Aussie dol­lar is stack­ing up against the cur­rency of your des­ti­na­tion. The idea of mak­ing your Aussie dol­lar go fur­ther by lock­ing in the cur­rency in ad­vance is an at­trac­tive one but un­less you’re in the forex game, or even if you are, keep a level head about it. Ex­change rates can move quickly and what goes up will ul­ti­mately go down.

If you do de­cide to preload cur­rency, start by track­ing ex­change rates reg­u­larly to get an idea of what the Aussie dol­lar is worth. Also check the fees in­volved with drip-feed­ing money onto your card. Some card providers charge rel­a­tively high reload fees, which could make the ex­er­cise cost pro­hib­i­tive. SALLY TIN­DALL

Q Will the card be ac­cepted every­where?

Travel money cards will usu­ally be tied to ei­ther the Visa or Master­card pro­grams, mean­ing they should be ac­cepted by most

ATMs and mer­chant ter­mi­nals (POS) that ac­cept credit/debit cards. While there are some ex­am­ples of one of the ma­jor pro­grams not be­ing ac­cepted – the most fa­mous be­ing Costco in the US, which has an ex­clu­sive agree­ment with Visa – in most in­stances re­tail­ers that ac­cept one will ac­cept both.

Keep in mind that cer­tain trans­ac­tions – such as those with ho­tels or car rental com­pa­nies – will re­quire an ac­tual credit card. This will usu­ally be due to their de­posit poli­cies, where they want to make sure that if you do hap­pen to in­cur an ex­ten­sive bill they can charge your credit card. As travel money cards are pre­paid, you might be less likely to have an avail­able bal­ance large enough for them to charge in th­ese in­stances.

JOSH SALE

Q Can I earn re­ward points?

Some travel card com­pa­nies of­fer a raft of sweet­en­ers to make their card more at­trac­tive: ev­ery­thing from cash­back to fre­quent flyer points and com­pli­men­tary air­port lounge ac­cess. For ex­am­ple, the Qan­tas Travel Money card al­lows you to earn 1½ fre­quent flyer points for ev­ery $1 spent overseas and one point for ev­ery $4 spent in Australia. It’s di­rect com­peti­tor, the Ve­loc­ity Global Wal­let card, of­fers two Ve­loc­ity points per $1 spent overseas and one Ve­loc­ity point per $1 spent in Australia. How­ever, it’s im­por­tant not to choose a card based on perks alone. Be­fore sign­ing up look at your cir­cum­stances and ask your­self th­ese ques­tions: Am I likely to use the re­wards? Will they en­cour­age me to put more money on the card? And does the card come with ex­tra fees and charges?

SALLY TIN­DALL

Q What hap­pens if I lose the card?

Los­ing or hav­ing your travel card stolen while in some far-flung cor­ner of the world is some­thing ev­ery trav­eller wants to avoid. Some providers pre-empt this by is­su­ing a back-up card that you can ac­ti­vate if you lose your main one. So if you’re some­one who has a his­tory of leav­ing their hand­bag be­hind, pick a provider that is­sues an emer­gency card and store it in an­other part of your lug­gage. If you haven’t been is­sued with a back-up card, have your bank’s num­ber handy so it can place a tem­po­rary lock on your card and ad­vise you what to do next. Most banks will send you a re­place­ment. NAB’s Trav­eller card does this free of charge and it gen­er­ally takes be­tween three to seven busi­ness days, de­pend­ing on where you are. CBA’s Travel Money charges a $15 fee.

SALLY TIN­DALL

Q What should I do with the card when I re­turn from overseas?

This will de­pend on the type of card you chose. Some will al­low you to keep the funds loaded on the card into per­pe­tu­ity with­out fees, so if you find your­self plan­ning your next trip on your flight home, then keep­ing the money aside for your next trip could be an op­tion. How­ever, other cards will charge in­ac­tiv­ity fees on a monthly ba­sis if the card is not used for a pe­riod, so keep this in mind.

If you reg­u­larly shop online in the cur­rency you have on the card, us­ing the resid­ual bal­ance on your travel money card might be a good op­tion to avoid in­cur­ring fur­ther ex­change rate costs with th­ese trans­ac­tions.

Gen­er­ally, trans­fer­ring the cur­rency back to Aus­tralian dol­lars and then with­draw­ing the funds will be a costly ex­er­cise, as you’ll pay the for­eign ex­change rate mar­gin twice and po­ten­tially with­drawal fees. This high­lights that it’s im­por­tant to only load onto the card the amount you in­tend to use on your hol­i­day.

JOSH SALE

Visit mon­ey­mag.com.au/trav­el­money for the an­swers to more ques­tions in­clud­ing what are the ad­van­tages of us­ing a travel money card rather than your own debit/credit card, what are the dis­ad­van­tages, can you and your part­ner each have a card or do you need sep­a­rate ac­counts, and what hap­pens if you are go­ing to more than one coun­try.

Gen­er­ally, trans­fer­ring the money back to Aus­tralian dol­lars and then with­draw­ing the funds will be a costly ex­er­cise

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