One of the most important things to consider when planning your trip, is how you will access your money overseas. There are a range of options available, so you need to look into what is going to work best for you.
When travelling we use a “mixed money” wallet, which we find has always worked very well for us.
- A little cash in local currency – don’t be tempted to take cash only. If you lose your wallet, it’s gone.
- Credit card – most hotels and hire car companies will require a credit card and will “reserve” an amount on the card to cover any damage. A credit card is also a good backup for unseen emergencies.
- Travel money card – to withdraw local currency at ATM’s and make eftpos purchases
- Debit mastercard – as an emergency backup if we do need to access more cash from our Australian bank accounts.
Most places will charge you an international transaction fee of around 3% every time you use your card, so this can be an expensive way to access your money.
However, most hotels, accommodation providers and car hire firms will require you to pay with a credit card. On top of your bill, they will also place a “hold” on a portion of your available balance in case you have raided the mini bar or trashed the room.
With car hire firms in particular, it is a good idea to check how much this hold will be up front, as it can be several weeks until this hold is lifted. The amount is not actually charged to your card, but you will be unable to access these funds until the hold is lifted.
Most banks now provide either a debit Mastercard or Visa card with a chip. These can be used at ATM’s and to make purchases overseas, but as with credit cards there will be an international transaction fee, and an ATM fee of around $5 per transaction, so they can be an expensive way to access your money.
Some hotels and car hire providers will accept these cards, however as with the credit card, a hold will be placed on your available funds, sometimes for several weeks.
Debit cards that do not contain a chip are no longer widely accepted around Europe.
They can still be used in ATMs, but most Eftpos machines will require a chip, so it is best to check with your bank several weeks before you go.
Travel money cards
There are a wide range of travel money cards available through banks, airlines, Australia Post and other providers. These allow you to load a number of currencies onto your card, locking in the exchange rate available on that day.
These can be used at ATM’s and for Eftpos purchases in many places. The benefits of a travel card is that they do not attract the international transaction fees, as you are paying in the local currency, and ATM fees are often much lower. You are also not affected by fluctuating exchange rates.
Do be aware when using ATM’s overseas to select “without conversion” and also “local currency” if asked, otherwise you will incur additional unnecessary fees on your transaction.
It is worth shopping around and doing your research, as with anything, the cheapest may not be the best.
Important questions to ask about any of these cards include:
- What are the full fees?
- Can I transfer unused funds to my account when I return?
- Is there 24/7 support if I have trouble overseas?
- Is there a duplicate card in case I lose one overseas?
- What did you use when you travelled?
The last one might seem like a fairly odd question, but the sales person may never have travelled outside their hometown and could be just telling you what is in the sales brochure. It may not be correct information. For example, when working in the finance industry, I often heard colleagues telling people they could use their debit card without a chip overseas. Well yes, you can, and the brochure says so, but not everywhere and they can become a problem – I knew this as I have travelled.
It’s a good idea to have enough of the local currency to buy a coffee and take a taxi when you arrive.
Before you leave, purchase a little local currency from your local bank. If possible, try to avoid the Cash Exchanges at the airports which are much more expensive – they know you have no other option so charge top rate.
If you need to exchange currency overseas, go to a bank. Do not be tempted to use “currency vendors” on the street – they are often a scam and you will not get a good rate.
Also check what currencies are best for each destination. You will often find one currency will be accepted in multiple locations, For example, Czech Krona are the official currency in Prague, but Euro are also accepted. US dollars may be a better option in countries in Asia and Africa.
What you lose in paying slightly more by using these currencies, you will often gain in exchange rates, so it is worth researching.
Yes, they still exist, but they are not widely accepted, and can be quite costly to change in a local bank. The person being paid the commission to sell them to you will tell you they are widely accepted, but do some research into travellers’ cheques in the area you will be visiting first. Not an option I would recommend.
Many people are still wary of online banking, but it is the safest and most convenient means of accessing your funds overseas. Either from a secure wifi in your hotel, or from your phone, you can transfer funds between your accounts, reload your travel cards and it makes it much easier to contact your bank if you do have problems overseas.
As with all travel plans, it is well worth researching your options for accessing your money overseas. This will ensure that you have the right products to meet your needs and call also save you money to spend on more important things.
Read also: How we afford to travel