Every chance taken to clip the traveller’s ticket
The small print in the travel arrangements can be very small, and the charges very big. Rob Stock reports.
You’re off on holiday. The tickets are paid for. You’ve got your travel insurance. Next question: How do you take spending money?
Chances are you will go for belt and braces. A bit of cash, your credit card, and a travel card.
But the banks and card companies take a big bite out of your money, and they aren’t all making it easy for people to shop around for the best deal.
Just how bad is illustrated by the case of one Kiwi off on a great OE to Britain and Europe.
Before heading overseas, he went to Mastercard for a Multicurrency Cash Passport, a prepaid debit card users load money on to in any of nine currencies before heading overseas.
But what happened next so infuriated him, he complained to Financial Services Complaints (FSCL), the official complaintshandling body Mastercard belongs to.
He transferred $19,350 on to the travel card and converted it to euros and pounds.
The exchange rates he got were worse than the ‘‘dashboard’’ rates advertised on the travel card’s website that day – $900 worse.
It turned out there were two different ways money could be loaded onto the travel card.
The better rates are for ‘‘online reloads’’ done through the Cash Passport website.
The worse rates were for loading the card through bank online banking transfers.
It’s one of the many traps for the unwary holidaymakers have to avoid when getting their foreign exchange sorted before heading overseas.
FSCL’S Susan Taylor said Mastercard’s ‘‘disclosure paragraph’’ was in ‘‘very small font, at the bottom of the website’’.
‘‘In our view, the warning about dashboard rates only being applicable for online reloads was important information that should be easily visible for cardholders.’’
She urged Mastercard to improve its disclosure, but it refused, although it did pay the man $500 back.
Travel cards such as Mastercard’s Cash Passport and Visa’s Loaded for Travel are a convenient way to take money overseas.
They have the safety and online spending features of credit cards, and can be easily replaced (at a cost), if lost.
There’s also fraud protection, which should mean that as long as travellers have taken sensible precautions with their card, they aren’t liable for any losses they sustain.
And many travel cards let users choose when to change their New Zealand dollars into the currencies they will need overseas, so exchange-rate watchers can pick their moment to swoop.
Kiwibank’s Loaded for Travel, for example, lets people load money in US dollars, British pounds, Canadian dollars, Japanese yen, Singaporean dollars, Hong Kong dollars, Australian dollars, Thai baht, euros and South African rand.
But, as the unhappy Cash Passport user found, exchange rates vary, and terms and conditions can be hard to understand.
There can also be high fees, including one-off application fees to get one, such as the $20 Westpac charges for its travel card.
Unlike the Cash Passport, the Westpac Travel Card is loaded up in New Zealand dollars, and when used overseas, there’s a 2.5 per cent fee for each transaction, and the exchange rate is set by Visa.
Westpac said to check on the Visa website for the current exchange rate.
The Visa website for the currency converter had a link to another page, but it had no currency converter on it. Searching that website revealed a calculator.
On Monday it showed A$1000 would cost NZ$1074, assuming the 2.5 per cent charge.
There can also be smaller bites taken along the way, such as the $3 charge for using the Westpac Travel Card to get money out at an overseas ATM that isn’t part of its global network.
Using a credit card at an ATM overseas to get cash brings similar ATM charges, and the 2.5 per cent currency conversion fee, and uses the Mastercard and Visa exchange rates.
But there’s a fourth layer of charging as well. Interest starts to be charged on a cash advance the instant the withdrawal is made.
Some people like to use their credit cards for spending as topend cards may include travel insurance, though the cover can be limited.
It’s important to warn your bank before you start using your credit card overseas, in case it triggers the bank’s anti-fraud systems.
Cash exchange rates are often better than on credit cards and travel cards, unless you are foolish enough to get your money from a high-cost currency changer.
These days foreign currency is best ordered online. Order online from Kiwibank to pick up in a branch and A$1000 would have cost you NZ$1066.33 yesterday.
ANZ’S calculator says A$1000 would have cost $1066.21, but there would also be a 1.1 per cent charge.
Beware though, there are pitfalls for the unwary.
If you pay Kiwibank by credit card, or a Visa or Westpac scheme debit card, there’s an 1.8 per cent card surcharge to pay, and you might find your credit card provider charges you a ‘‘cash advance’’ fee.
Do not leave it until arriving at the airport to buy your cash.
Buying A$1000 at Travelex at Auckland Airport would have cost NZ$1116 on Monday. A Travelex worker warned us to buy money online to get a better rate.
The relative cheapness of taking cash on holiday is attractive, but it is much less secure.
If you are carrying large sums of money, consider using a secret money belt.
And remember, if you lose it, your travel insurer is either likely to only replace a small amount, or not cover it at all.
Susan Taylor of Financial Services Complaints