Travel Money Cards – Better Exchange Rates Than Debit/Credit Cards?
December 18th, 2009 by Nicholas Jones, under Travel and Leisure. No Comments
Low foreign exchange rates have put many of us off from taking a trip abroad to the United States or the Eurozone, but there’s a well-kept secret that’s becoming favourable from a financial and practical perspective: travel money cards.
How do travel money cards work?
These cards were recently introduced to the card market and will give the option of uploading whatever currency you choose to a plastic card, at whatever the present rate of exchange is, and is your spending money for whatever destination you’ve chosen to visit.
You can purchase via the Internet, and send funds to your card online, via phone, or even (on some cards) by sending a text message. At the moment travel money cards support pounds, dollars, and euros.
How are travel money cards better than traditional credit cards?
Importantly, the rate of exchange is usually higher than you’ll find in a local foreign currency exchange office. Also, the exchange rate is confirmed at the time you upload money to the card — so when you spend while travelling, you already know what it’s costing you. This is vigorously different than credit and debit cards, which use an exchange rate that’s dynamic — whatever the going rate is at the moment you use the card.
Is there more?
Not at all. When you use a traditional credit card or debit card to make a purchase abroad, you are typically charged around 2.75% of the transaction as a fee for the foreign currency exchange.
Not like credit and debit cards, a travel money card has no similar “till charge” when used in shops and restaurants abroad. And, since you prepay to fund your currency card (as opposed to borrowing, with your credit card), there are no high rates for cash advances.
Anyway… Is there a catch?
Since you are uploading currency onto the card before your trip, your trip is paid for up front, not with credit, so you must save for your trip. But, that may not be a disadvantage in the current economy. Currency cards do have fees for withdrawing cash from ATMs, but the associated fees are much reduced that those incurred with credit or debit cards.
To give you an example, when this is being written, RBS and NatWest have a 2% withdrawal fee, which translates to a 6 fee for every 300 you pull out. The comparison is currency exchange cards fees could be as little as 1.50 for whichever amount you pull out from an ATM.
The real drawback for you is the fee you’re charged for using your card to pay for something in a currency other than one issued – and FX convert fee; using the example of a dollar transaction which is made with a euro currency card, you could be charged a fee of up to 2.75%. However, there are a number of cards that don’t charge this fee (see list below).
Aren’t there some good companies offering credit cards intended for use abroad?
These classic credit cards are: the Abbey Zero, Nationwide Gold, and the Post Office. The problem that still exists (i.e. the last two) is that even though they’re a super deal (no foreign exchange fees), they have cash withdrawal costs of 2.5% at the time of this writing (minimum 3), and don’t measure up with travel money cards (unless you’re thinking about credit for your holiday).
The Abbey card is an great best-buy – no cash withdrawal expenses or foreign exchange, however there is a rather high interest rate of 25.9% on cash withdrawals! (Note: currently the rate is 22.9% for Nationwide and 20.83% for the Post Office).
That’s me, convinced — tell me more. Who has the best deal on travel money cards?
The finest card available for euros is the FairFX Euro Currency card, because its ATM fee is the least at 1.50; it has no foreign currency exchange costs and has fantastic exchange rates. Another euro card, the Indigo Travelcard Euro has just a slightly higher ATM fee of 1.95, but its convert fee is high at 2.75%. There is no convert payment associated with the ICE Travellers CashCard Euro, but the ATM fee is a costly 3.
FairFX also leads the pack on cards where the Dollar is the specific currency. It has no conversion fee, and an ATM charge of only $2. No conversion fee and $3 ATM withdrawals brings the ICE Travellers CashCard Dollar in at a close second. No conversion fee means you can use the cards anywhere.
What’s the best travel money card for world travel?
An ‘Anywhere Card’ has just been lauched by FairFX as a new global travellers card – an ideal card to take anywhere in the world.
One of the great things about the Anywhere Card is that there are no ATM costs, and no loading fees either! A 1.5% transaction fee is the only cost you’ll receive – and that’s at the time of the transaction, so you don’t need to worry about exchange rates.
There’s a fantastic offer right now with travel money card FairFX where you can get a free euro card, free dollar card or free sterling global travellers card and save the normal 9.95 setup fee (Subject to a very small initial load). Start saving on exchange rates with a travel money card from FairFX exchange travel money services today!!
