Best way to travel with money overseas – for safety and less fees

So what I recommend, and do myself, is carry about AU$100 worth of the destination currency before I arrive. Sometimes airport money changers may not exist or have restricted opening hours.

Plus I carry about AU$300 in Australian cash, just in case ATMs close down for some reason. This habit has stemmed from when I was travelling in Argentina in 2002. The government closed down all banks due to a financial crises. I was so thankful that I had USD100 cash hidden in my walking shoes to enable me to buy a bus ticket back into Chile where I could withdraw money from their ATMs.

Credit Cards

My favourite and most preferred way to travel with money is with credit cards. Main reason being is that I can collect frequent flyer points/air miles on all purchases made. It helps me fly free once a year! I’m aware that not all banks offer such a benefit but it is quite common with Australian banks.

Some handy pointers I would like to share with you.

1. Use cash with your own money and not the banks credit. If you plan to withdraw cash from your credit card, ensure that you transfer YOUR money into the credit card account so that it has credit balance. You will avoid paying interest charges by withdrawing your OWN money instead of the BANKS money.
2. Check with your bank on their overseas ATM withdrawal fee. For Australian banks, this can range from AU$2.00 - $5.00 per transaction.
   Often you will find this fee is not as bad as it looks. Converting cash at money changers can sometimes charge commission of up to 10% (it was 19% in Rome in 2017). If I withdraw AU$500 cash from my own money in the credit card, I will be charged a $5.00 overseas withdrawal fee, which equates to 1%. Then I add my banks 3% foreign transaction fee, to give me a total of 4% in fees. For this reason, I’m always happy to withdraw $400-$500 worth of local currency at a time.
3. Check if your bank offers free ATM withdrawals from international banks that are a part of their global alliance network. For example, I was able to withdraw cash for free at Barclays Bank in London and Bank of America in USA.  
4. Always use ATMs that are attached to a bank or located inside the bank.
   
   Travelgroove Tip: In Europe, don’t use the Euronet ATMs that sit randomly in kiosks, shops and sometimes in a building right next to a bank. These ATMs don’t belong to a bank and therefore will charge you extra hidden fees.
5. Amex cards restrictions. I don’t travel with American Express simply because there are lot of businesses that don’t accept those cards. Therefore I don’t want the hassle of travelling with two credit cards.
6. Let your bank know. Always let your credit card bank know your dates of travel and destinations so they can monitor the security of your account while you’re travelling.

Travel Money Card

Are Travel Money Cards really fee-free?

There could possibly be one more disadvantage to using travel money cards. It is a theory only at this stage. The fact that travel money cards don’t charge fees ( load/reload fees, foreign exchange fees etc) it makes me wonder how else do they recoup their expenses. One way I can think of is that the exchange rate is lower than the exchange rate used for credit cards.

There is no way of knowing for sure without further investigative research. I contacted my bank and was advised that they can’t tell me what exchange rate is used for credit card transactions because it is determined by Visa/MasterCard/Amex at the time of transaction. The bank has no control over the rates used, nor do they see the conversion rates. I guess, how does one access wholesale exchange rates by large interbank exchanges! However, for travel money cards, most banks display the rates on their website because you need to know the rates before you lock it in.

My scepticism on exchange rates was reinforced when I was reading the T&C’s of Qantas Cash travel money card. Even though they state there is “no currency conversion fee”, however further down the fine print I read that a margin is added to exchange rates. Therefore we’re not getting the best exchange rate for our money.

If you still want to use travellers cheques, best bet is to use globally recognised brands like American Express or Visa. 

Conclusion - So what is the best way to travel with money?

So many options, what to do? In my opinion, the best way is with a combination of three, as suggested below:

1. Convert about AU$100 worth of local currency cash before you leave.
   Saves the hassle of looking for money changers at the airport while lugging your bags. Also they may be closed if you have a late arrival. The exchange rates are usually lower at the airport than in city centres.
   Plus it makes life easier to pay for small incidentals upon arrival – food, drinks, taxi etc.
2. Optional: Bring about AU$300 cash (or your local currency) and store in a safe, secure area in your luggage. This is a backup plan in the event you are left stranded without access to credit/debit money, such as bank closures, no ATMs at destination, card eaten by ATM machine etc.
3. Choose either a credit card or travel money card, based on what is more important to you as per the reasons discussed above. There is no easy answer because each provider has different fees and rules. Use the comparison table below to give you a quick overview of the differences between each type of card.