We’re in the process of planning an over 3 month trip along the Silk Road. I needed to update my options and work out what was the best way to convert currency for international travel in 2017.
Starting from New Zealand certainly limits our options- all those wonderful cards which not only give free ATM withdrawals but also give give you useful amounts of points for free flights. The New Zealand market is just too small – both Air New Zealand and Qantas have travel cards – but their fees outweigh their advantages.
So our options came down to:
- using a pre-paid cash card for travel
- using a normal credit or debit card
- using cash
The solution is a of course to use a mixture: but let’s start with the pre-paid cash cards.
Best Prepaid Card
Heavily promoted in New Zealand as the “best” way to spend money overseas – I wanted to like them – but I was underwhelmed. The concept is great – a multi currency card which you can pre-load with a number of currencies. But are currency cards worth it?
Advantages of Travel Cards
- you can lock in an exchange rate before travel
- you can budget in s supported foreign currency
- you can average your exchange rate over a period of time by adding currency some months before travel
- you can pre-purchase a range of currencies
- some cards will give you airlines rewards
Disadvantages of Travel Cards
- if you are travelling to countries that don’t use the available currencies their conversion margins are high compared to a normal debit or credit card.
- its easy to end up paying double conversion fees if you inadvertently overspend an unsupported or supported currency
- the exchange rate may improve after you buy a foreign currency
- money can take up to 3 days to appear on your card from your bank account
- don’t use them for pre-authorizations for rental cars and some hotels – your funds maybe unavailable for up to 30 days after you check out.
Should you travel with a Travel Card?
It depends. If you travelling somewhere where every one takes plastic ie Australia – a credit card will give you one of the best rates and none of the extra fees of a travel card.
If you are travelling to the rest of the developed world who don’t use cards quite as much as we do, and do use a currency typically supported by travel cards e.g. UK, US, Western Europe – then having the exchange rate locked in for you – they may appeal.
If, like us, you are a little further off the beaten track (or going to the Pacific) then these cards aren’t of great use because you can’t load the relevant currency, and there are cheaper options than just loading New Zealand dollars onto them.
Multi Currency Cards Comparison.
To make this comparison I compared exchange rates on a random date – the actual rate doesn’t matter – it’s the differences between the various cards which were interesting.
Travelex Cash Passport
Mastercard
Initial fee 1% with a $10 minimum.
Monthly inactivity fee: $4 after 12 months of inactivity
Closure fee: $10
Overseas ATMs – free withdrawal
NZ ATMs – free withdrawal
Currency conversion
Supported currencies: AUD, USD,CAD, GBP, EUR, SGD, HKD, JPY
Good conversion rate if loading into foreign currency.NZ$ can not be loaded or reloaded online.
If withdrawing from an unsupported currency then 4% margin.
Exchange rate:
To buy A$100 NZ$107.71
To buy US$100 NZ$145.29
Overall I thought this card was the best option in terms of good exchange rates and fair fees – but there is a HUGE CAVEAT. You can only load it with NZ$ if you are in the country and can visit a branch. Otherwise you MUST buy a foreign currency – given the rather short list of supported currencies this is very limiting.
Onesmart – Air New Zealand
Mastercard issued by Travelex
Initial fee – nil
Reload fee – nil
Monthly fee – $1
Overseas ATMs – 3 free/calendar month then NZ$3 per a withdrawal
NZ ATMs – $2
Supported currencies: AUD, USD, CAD, GBP, EUR, HKD, SGD, JPY
Currency conversion rate 2.5%
Exchange rate:
To buy A$100 NZ$109.93
To buy US$100 NZ$147.81
You earn 1 NZ Airpoint dollar per NZ$100 spent overseas – but you are paying for these in the poorer exchange rate.
The exchange rate is poor and the ATM fees are pretty unacceptable for a travel card! But not as bad as the next one!
Loaded for Travel – Kiwibank
Visa
Initial fee – nil
Monthly fee – nil
Setup fee – $20
Closure fee – nil
Overseas ATMs $6
NZ ATMs $2
Supported currencies: AUD, USD, CAD, GBP, EUR, HKD, SGD, JPY, Thai Baht, SA Rand
Currency conversion fee: 2.5%
Exchange rate:
To buy A$100 NZ$109.47
To buy US$100 NZ$146.97
The overseas ATM fee is pretty much what a standard debit card charges plus you don’t have to pay the other fees. The exchange rate is bad too. At least is supports Thai Baht and South African Rand.
Cash Passport various banks including ANZ
Mastercard – issued by Travelex
Initial fee 1% with a $10 minimum.
Reload fee – $1
Monthly inactivity fee: $4 after 12 months of inactivity
Closure fee: $10
Overseas ATMs – free withdrawal
NZ ATMS – $4
Currency conversion
Supported currencies: AUD, USD,CAD, GBP, EUR, SGD, HKD, JPY
If withdrawing from an unsupported currency then 5.95% margin.
Exchange rate:
To buy A$100 NZ$109.88
To buy US$100 NZ$147.14
Worst exchange rate of the lot – and nearly 6% margin if using an unsupported currency – avoid would be my advice.
Qantas Cash
Mastercard issued by Qantas
Initial fee nil
Reload fee – nil
Monthly inactivity fee: nil
Closure fee: nil
Overseas ATMs – NZ$2.50
NZ ATMS – nil
Currency conversion
Supported currencies: AUD, USD,CAD, GBP, EUR, SGD, HKD, JPY
Earn 1 Qantas point for $2 spend.
If withdrawing from an unsupported currency then 2.5% margin.
Exchange rate:
To buy A$100 NZ$109.81
To buy US$100 NZ$147.75
I really do have a problem with paying fees for a travel card and then paying for overseas ATM withdrawals! Otherwise fewer fees than some and a worse exchange rate.
So what is the best cash card for international travel? Well nothing has changed for about 15 years – I’m back to using my trusty:
Bankdirect Visa
Visa issued by Bankdirect – owned by ASB.
Initial fee – nil
Reload fee- nil
Monthly fee – $1.60 ($10/6 months)
Second card – $0.80 $5/6 months)
Monthly inactivity fee: nil
Closure fee: nil
Overseas ATMs – nil (if using your own funds)
NZ ATMs – nil (if using your own funds)
Note: To avoid high cash advance interest rates – I put the card into credit using my own money. In effect I use the card as a Debit card using my own funds. I don’t therefore use the card for actual credit card transactions – I use a different card for that and use this card cash advances only.
Using Visa’s published rates and adding the 1.8% bank fee
To buy A$100 – NZ$108.58
To buy US$100 – NZ$145.12
So one of the cheapest ways to withdrawal cash overseas (Travelex is minimally cheaper but you have to lock in the exchange rate and there are more fees). Another advantage is that in many countries using a “foreign” card in an ATM fee will cost you a few extra dollars as the ATM charges a fee on top of the charge for ATM withdrawals charged by the entity issuing your card. In Australia every bank we tried wanted A$2 or A$3 – except for Commonwealth – the bank that owns ASB and Bankdirect – free withdrawal from this card.
So Are Currency Cards Worth It?
Unless you want to lock away your currency purchases to help your saving programme, in the same way I used to buy Traveller’s Cheques, I don’t think so. They have a lot of fees and restrictions, they can take days for the money to appear on them. Unless you are playing with large amounts of money your wins or losses on exchange rate swings are eaten up in the currency fees.
I’ll be taking my Bankdirect loaded up with money I’m going to withdraw from ATMs, but it won’t be my only source of funds.