For first time travellers choosing the right way to access your money abroad can prove difficult. Twenty years ago it was much easier as travellers cheques were the only way to transport large sums of cash as there was no access to cash machines or internet banking. While some older travellers still insist on using travellers cheques the increase of fraudulent use and alternative methods of accessing money abroad have all but rendered these items a relic of a bygone era, much like disposable cameras and barbed wire tattoos.
In place of travellers cheques banks and card companies such as Visa and MasterCard have created an electronic version, the Travel Card. While each version has its own unique name they all offer essentially the same services. Before you travel you buy a prepaid card and load it up with the currencies and amounts of your choosing. The exchange rate is fixed at the time of purchase and any additional top ups are done at the current exchange rate at the time of topping up. You can then withdraw or spend this money at cash machines, stores, restaurants and anywhere else that accepts debit card transactions. When you return from your trip you can convert the remaining funds to your local currency and dispose of the card.
It all sounds so straightforward, so why aren’t Travel Cards more popular with backpackers? Like most things sold by banks and card companies there is often a catch. The exchange rate is often quite poor and losing the card abroad can be a nightmare if it’s your only way to access cash. There are fees just about every step of the way and, depending on your card provider, these can include a fee to purchase the card, a fee to top up, a fee for a replacement card if yours is lost and a fee to convert the remaining funds to cash when you arrive home. Additional fine print often stipulates that the card issuer is not responsible for any fraudulent use in the event your card is lost or stolen, effectively absolving them from reimbursing your for any fraudulent transactions. To put it simply, unless you have a real need or desire to use a travel card there are plenty of better ways to access your cash abroad.
An alternative option is to purchase currency before you leave home which ensures that, upon arrival at your destination, you’re able to make purchases straight away. Banks and foreign exchange stores offer competitive rates and an easy way to access foreign currency before you travel. Not only does this lock in the current exchange rate it also gives you a chance to familiarise yourself with the currency, thereby minimising your risk of accidently overpaying for things or being short changed by scammers. It is, however, not a good idea to arrive at your destination with several hundred dollars’ worth of foreign currency as you are more vulnerable to theft, loss or spending your cash too quickly. As such it’s often best to purchase just enough cash for two to four days’ worth of anticipated expenses and obtaining more from a cash machine at your destination.
It should be noted that not every currency is available for purchase and, asides from staple currencies such as the Pound, US Dollar and Euro, the range of currencies offered can vary quite significantly. In some cases, such as the ‘Dirham’ in Morocco, it is illegal to take currency out of the country and you will not be able to purchase it prior to arrive. Additionally some other currencies, such as the Argentine ‘Peso’ are deemed too high risk and as such you will struggle to find them available for purchase outside of neighbouring countries. When comparing rates be sure to take into consideration any applicable fees that currency exchanges may charge and, if possible, get a quote from several different outlets before making your purchase to ensure the best price.
Another option is to apply for a travel friendly credit card, such as the 28 Degrees Card (http://www.28degreescard.com.au/). These types of cards are specifically designed for travellers and often have no currency conversion fees, no international transaction fees and low or no annual fees. Having access to a credit card not only allows you to access emergency cash if required, it also allows you to track your spending abroad and adjust your budget accordingly. Ensure that you read the terms and conditions and compare cards before making any purchases, as some cards have certain restrictions or fees for services. If you do decide to apply for a credit card make sure you pay the card off in full before the due date to avoid paying interest on payments and purchases.
The final, and most popular, option is to access funds abroad from your local bank account with a debit card. Not only is it easier than the options listed above using your debit card enables you to withdraw cash as you need rather than carrying around large amounts of cash. While this option is popular and easy be sure to check what kinds of fees you may incur if making cash withdrawals abroad and how good the exchange rates are. Examine your own account and determine its suitability for travelling. If the fees prove to be too high, or the exchange rate too low, consider opening an account elsewhere specifically for travelling. Ensure that you notify your bank of your intended destinations and the dates of your travels to prevent them from blocking your card when you use it abroad.