Flight of Fancy podcast: Why you should never use a travel money card

Travel money cards sounds great, but there are some major issues to be aware of.Credit: iStock

Don't use a travel money card. That's the gold nugget of advice from Traveller's "Tripologist", Michael Gebicki, when it comes to managing your money overseas. Don't go anywhere near one.

"I hate them," Gebicki tells Flight of Fancy, the Traveller podcast, on this week's money-themed episode. "I can't understand why any intelligent person would ever use a travel money card."

To clear things up, a "travel money card" is different to a standard credit or debit card. These are products offered by numerous institutions now – from Australia Post to Qantas to CommBank – that allow travellers to buy a certain amount of foreign currency and load it onto a card, which can then be used like a standard debit or credit card with local currency when they travel overseas.

Sounds great on face value, but there are some issues, as Gebicki explains.

"The exchange rates, to start off with, are pretty lousy," he says. "And then there's the fee structure. For example, if you have your euros [on your card], and you then go to the UK and you want British pounds, you can withdraw those euros as pounds, but the fee for that can be as high as 8 per cent. And you're also paying for two currency exchanges.

"Then when you get back to Australia and you might have some of that money left on your card and you want to convert it back to Australian dollars – if you don't, if you leave it there, some of financial institutions will charge you an 'inactivity fee', which keeps whittling away your funds. And when you do convert it back to Australian dollars, there's another fee for that. And they give you another bad exchange rate, too."

Money management is a tricky beast for travellers, even those with plenty of experience. Is cash king, or is it all about cards? Do you use debit, or credit? How do you avoid paying too much in fees?

As another Flight of Fancy guest, Germany-based travel writer Flip Byrnes, tells us this week, it's possible we might be overthinking this.

"What I do is, I have a credit card, I go to a machine, and I get money out," Byrnes laughs. "This is the funny thing, when people go, 'How do you get money out overseas?', it's like we're talking about how to get money out on Mars or something. Think about your daily life at home, how you get money, and it's pretty much the same. But there are a few tricks."

The secret to success, Gebicki says, is to have a wallet full of diverse financial options. And the value of those options will depend on where you travel to, and how you want to spend your money.

"You don't just travel with one card," Gebicki tells Flight of Fancy. "You really need to have a combination of cards.

"Let's talk about debit and credit cards: there's a bit of a risk with debit cards, in the sense that you can lose everything [if they're stolen, or you're the victim of fraud], and the financial institution won't necessarily give you your money back. They probably won't. But they're very useful for keeping control of your spending.

"With a credit card it's pretty easy to go over your limit, and then you're paying 20 or 25 per cent interest. But credit cards are great for paying off your hotel bills, etcetera. As long as you're not incurring foreign conversion fees."

There are cards that will allow you to travel without being hit with those fees. There's even a travel money card – just one, mind you – that Gebicki says many financially savvy travellers are now turning to.

To find out which one, listen in to this week's episode: