How to pick the best travel money options

MANY travellers will be jetting overseas for their mid-year break, but working out the best way to pay while away can be tricky.

MANY travellers will be jetting overseas for their mid-year break but working out the best way to pay while away can be tricky.

There are so many travel payment options available on the market but two popular choices are to head off armed with a pre-loaded travel card in your destination’s currency or simply to use your own credit card while abroad.
The Currency Shop’s director Justin Rampono says the advantage of a prepaid travel card is that you can lock in a currency at a certain rate.

The Currency Shop’s director Justin Rampono warns travellers to be wary of fees when using cards.

“But these cards often come with a purchase fee and a load fee, unlike a credit card,’’ he says.

“And, also unlike a credit card, prepaid travel cards have inactivity fees that slowly erode the balance if you don’t use it.”

If exchange rates improve against the Australian dollar while you’re away Rampono says it might be better to use your credit card.

However this does leave uncertainty as to exactly what exchange rate you are getting when using your plastic.

Travellers should plan ahead with their card options before they leave the country to ensure they are getting the best deal.

Canstar’s senior research analyst James Slack says card users also have to be wary of hefty fees if they do choose to whip out their own plastic.

“Credit cards are very expensive to use at ATMs because you generally will be hit for a fee for using them overseas,’’ he says.

“There could be a percentage currency fee also involved and you will also be charged a cash advance fee on top of that for drawing cash from your credit card.

“Doing this means you will be charged interest from the moment you withdraw the cash from the card.”

For example, if you are charged a two to three per cent conversion rate on your card, that means you will pay between $20 to $30 on every $1000 withdrawn.

Slack suggests packing multiple payments before leaving to make sure they have a backup plan in case something goes wrong with their primary payment source.

@sophieelsworth