01.Dodging fees
Being stung by high ATM and other transaction fees is one of the modern-day perils of overseas travel. In recent years financial institutions have attempted to dull the pain with travel money cards.
Unfortunately, these snappy little products have some sneaky fees of their own.
In this article we look at:
For more information about travel money, see our Banking section.
Developing market
The travel card market has expanded since our 2009 review, and there are better products now than there were then. But the fees can still sting.
There’s also a point of confusion that has cropped up since our earlier story: the difference between prepaid travel money cards and debit cards set up for overseas travel that are connected to a bank account.
The prepaid category is where the fees come in. Debit cards fleece you less, but you need to have an account at that bank.
Then there’s a third category that may turn out to be the way of the future – credit cards specifically designed for overseas travel. The potential trendsetter at the moment is the GE Money 28 Degrees MasterCard, our CHOICE Award winner for Best Travel Money Card.
If you pay off the balance in time (within 55 days) you stand to enjoy fee-free access to credit around the world and can make fee-free withdrawals of cash loaded on your card. As far as we’re concerned, this is what a travel money card should do; however, not everyone wants, or can qualify for, a new credit card.
Do you need one?
Prepaid travel money cards may not do you much good if you spend less than about $3000 overseas. That’s because the fees you’ll pay for having and using the card will likely outweigh any overseas ATM or transaction costs you’d incur if you used your regular bank-issued debit or credit card.
Another thing to get straight is that no two cards are alike, but some are certainly better than others.
Of the current market offerings, we like the Commonwealth Bank Travel Money Card because it has no initial load fee or monthly inactivity fee, and has the lowest currency conversion fee (two per cent) for currencies not already loaded on your card.
If, for instance, you decide to dash up to Montreal from Boston and haven’t loaded Canadian dollars, CBA will charge you two per cent per transaction for converting your preloaded US dollars to Canadian currency.
The ample opportunities to limit fees are the main reasons we named the CBA card the CHOICE Award runner-up. The strongest points in favour of prepaid cards are that you can lock in the exchange rate and be sitting pretty should the Aussie dollar nosedive, and you don’t need to open a bank account or fill out a credit card application.
The drawback is you’ll have to keep your fee-avoidance radar on at all times because, depending on the card, you could be hit up when you buy the card, use an ATM, reload, close the account, use a currency not loaded on the card or don’t use the card at all.
Doing the maths
One seemingly impressive newcomer to the prepaid category is the MasterCard Multi-Currency Cash Passport.
It’s the first of its kind available to Australians that offers free ATM use overseas, and can hold up to $100,000 in a single load.
But the downside underscores the problem with prepaid cards in general: the 1.1% initial loading fee will cost you $275 if you load $25,000, and you’ll get hit with a 5.95% charge if you use currencies not loaded.
Take a look at our comparison table, to see what kind of costs you'll face from each travel money card.
CHOICE verdict
The ideal set-up for your next overseas trip is to have a prepaid and a travel-worthy debit or credit card and use either depending on the transaction.
But if you’re keen to avoid fees and can pay off your balance on time, the GE Money 28 Degrees MasterCard is the best single way we’ve found to prevent sneaky fees from nibbling away at your travel budget.