How do you manage your money whilst travelling?



Whilst there are many ways of taking your money with you on your travels, some of them do cost quite a bit more than others.

This recent article which is blatant advertising for Mastercard Cash Passport and House of Travel, prompted me to mention the options currently available for travellers.

The most obvious choice is to take some cash in the currency of your destination.  Banks hold the most common currencies and will charge you 1.0 – 1.1% commission to convert your New Zealand dollars to another currency.  There is a minimum charge ranging from $6 – $12 depending on the bank.  Be aware that retail banks convert the funds at the retail rate, not the wholesale rate that you see on television news programmes.  If you’re calculating how much money you’ll get by using the rates on the TV, you could be quite disappointed.  Check out the bank’s own website for their foreign exchange rates and fees.  Be aware though, that there is a maximum amount that a bank is able to sell you if you are not one of their customers.  If you are after funds for more than about a week, then you’ll probably need to go to your own bank so that there is a paper trail to fulfill the requirements of the recent Anti Money Laundering Act.

Travellers cheques are not really used anymore but you can still get them.  Travelex appears to be the best place to do this.

Travellers cheques have been pretty much superceded by “cash passports” as the preferred method of carrying travel money.  A cash passport is a prepaid card which you can load in multiple different currencies.  This enables you to load the card in the currency of your destination (when the exchange rate is favourable) before you leave home. When you arrive overseas, your funds are already in the correct currency for spending and you don’t endure currency conversion charges when you make purchases or withdrawals.

I’ve been investigating cash passports (also called foreign currency cards) lately in preparation for a trip to the USA next year.  As far as I’ve discovered, the fees associated with loading and using the card, as well as the ability to load the card with foreign cash, puts the product offered by the ANZ in first place at the current time.  Fees are still quite high, but not as high as many of the other options.

The ability to load US cash onto the card – without having to convert to New Zealand dollars first – is a huge advantage for those of us who have already bought USD at a good rate.

In these modern times, you don’t need to prepare at all if you are happy to incur fees.  Your current credit or debit card will work overseas at ATMs with the correct logo on them and you’ll be withdrawing your money in the local currency.  You do pay quite a price for this convenience though.  The currency conversion charge is likely to be at least 2.5% of the New Zealand dollar amount.  You may also incur an ATM charge of around $8 each time you make a withdrawal.

On top of the currency conversion and ATM withdrawal fees, if you are withdrawing cash from your credit card then you are making a cash advance and will be charged a high interest rate from the time you make the withdrawal.  This is the most expensive (absolute last resort!) way to access funds whilst overseas.  DON’T DO IT!

A debit card, (or a credit card with a positive balance), will only incur the fees, but at least is using your own money, so not incurring interest charges on top.

My recommendation… carry some cash (split it between your travelling companions; keep some at hand and some hidden on your person, as well as an emergency stash in your hotel room safe) in the local currency and load up a prepaid foreign currency card before you go.

Don’t travel using debt.  Only take what you can afford to spend.


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