Guide To Travel Money & Currency Conversion – Save On Your Next Overseas Trip

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If you know how to find the right bargain in travel money conversions you can potentially save hundreds of dollars per trip.

It is important you do their research ahead of time, and apply for their currency in advance because let’s face it- every saved dollar is welcome, especially when emergencies arise in the middle of your across-the-border travels.

Possible Travel Money Currencies

Sadly, overseas travel has become a much grimmer hobby than it once was because of the way travel money has been handled over the years. As an example, a year ending in April of 2009 saw a gradual decrease of the Australian dollar compared to the euro (a ten percent drop) and the American dollar (twenty five percent). On the upside, its value actually increased (though only by a little) compared to the currencies found in New Zealand and Great Britain. This results in your dollar going a much shorter distance if you travel to the wrong places. This could mean that if you decide to postpone buying foreign cash until you reach the airport, you will most likely end up losing money because of commissions and margins found in the exchange rates.

It is recommended that you take with you a multitude of cash types and cards so that you can effectively use that travel money to cover said expenses- also keep a back-up plan handy. Do research closely and determine which companies will bring you the best rates and products.

Is it a good idea to use physical currency as travel money?

The convenience of paying with credit cards is not always available in all locations. Part of a backup plan is to have a sufficient amount of cash to cover taxis, meals, and hotel rooms, for several days in case a flight gets hold over because of inclement weather or a meeting is postponed. A certain place to stop by for those methods of cash retrieval are most certainly banks, but they do not all offer the same exchange rates- as such, it is wise to shop around for the most competitive rate even at other providers that give travel money. Most places usually charge around two-and-a-half percent margin exchange rate above the market average.

It is always a good idea to plane any possible currency transfer requests well in advance (at least a week, even longer if the currency is more exotic), simply because some currencies are harder to get ahold of than others. Certain travel money currencies also must be ordered from another source, which could add on an extra bill if the rate changes any in between processing.

Some people though just choose to wait until they reach the airport to exchange travel money in currencies, which is seldom a good idea. Why? Simply put, the airport does not specialise in mass currency exchange, so they may charge as much as an eight percent premium! This means that you could spend an extra eighty dollars when you try to exchange one thousand dollars of foreign notes. Not all airports do this though- ordering in advance (at least two days) from Travelex will net you a similar deal as offered by banks. If you buy at the airport though, and use your credit card as well, the travel money will cost much more.

Traveller’s Checks

Considering that many individuals currently have cards that function for both debit and credit, traveller’s checks may seem a tad bit outdated. They serve as a nice backup though since they can be replaced by the provider (usually banks) if they are lost and stolen- this can’t be done with cash. Certain foreign exchange providers will even refund these checks for free, if the travel money is not used. In the even of a loss or theft, it is a good idea to keep the serial numbers in a safe (yet separate) place from the checks, so you can reclaim them if need be.

Again, just as with any other form of currency, be sure to check if any additional commissions or feed exist. Certain providers will charge for the “element of insurance”. Overseas banks and exchanges may also cost you additional money in fees, so check this as well, in addition to where exactly the exchanges may be made.

Dynamic currency conversion (DCC):

While it may sound catchy and intriguing, this course of action is actually one of the less preferable methods of exchange available. All it means is that an independent exchanger in a foreign country will charge you in your native currency. This poses many problems though. Exchange rates offered by independent agencies or hotels will most likely include a higher margin of profit for them, which results in loss of money for you. This rate will not be as competitive as a credit card provider or bank. Also, keep in mind that if you use any form of plastic card, your company may also charge an additional fee for overseas purchase (or cross-border), despite whatever the currency is. Pay in the foreign currency, despite the inconvenience, and let the more competitive rates that are charged by your card provider apply.

Comparison on Cards:

Prepaid cards are often offered from banks such as ANZ, HSBC, and Travelex. Before leaving the airport for your destination, an amount of money is paid into the account of the card and is then used for cash withdrawals and purchases, much like a credit card or debit card. This type of travel money is good for foreign currencies because the exchange rate (and also the margin) can be “locked in” when money is loaded onto the card. Even better, if the card is lost or stolen, they can often be replaced.

Fees are often times the main difference between debit/credit cards and prepaid cards used for travel money. Margins build into the exchange is a cost that is not immediately noticeable, so do some background research. For example, though there are no annual interest rates or fees, you may end up paying exchange rate margins on any action of the card, such as loading or closing (these fees can change each and every day). Loading the card can cost an additional flat fee of fifteen dollars, or 1.1 percent. Also keep an eye out for both the ATM withdrawal fees, and the conversation fee for exchange rates, which varies between card providers. Further fees (up to ten dollars) may possibly apply for closing or reloading the account. Finally, some cards have in-built fees that you are not aware of, so be sure to reach the terms and conditions, keeping an eye out for any possible unconventional fees.

Cash withdrawals and purchases made almost anywhere can be done with credit cards, which leaves them to be a promising option indeed. Keep in mind though, that the median credit card hauls in an extra 2.95% fee for currency conversion, in addition to a $4 or 1.5% cash advance fee for withdrawals (whichever amount happens to be higher, of course). Not all of them cost this though, as more costly providers have been known to add on a fee for cash advances that can get as high as 5%, and provide a charge of 3.4% for any possible currency conversions. Also, check your card provider. Some companies simply do not charge interest if enough money is pre-loaded to your account.<

Credit unions, building societies, and most banks across the globe offer numerous ATM cards that are specifically made for cash withdrawals and purchases done internationally. While the interest-free days of credit cards may be a promising aspect, transactions made by debit cards have the bonus of being deducted directly from your bank account. In fact, unless you account is overdrawn, you will never be charged interest, which leads to more saved money in the long run.

The main problem with this option though is that the larger banks in the industry also tend to charge fees. Currency conversion can, on average, cost around 2%-3% for any and all debit card transactions made overseas. Foreign ATM owners have also been known to apply fees to their machines, and some withdrawals can cost you around five dollars. Because of these small fees, it is best to make a smaller number of larger withdrawals than you would normally make. Certain credit unions, banks, and building societies though offer certain accounts with no fees attached, such as the NAB Gold Banking. Ask about these possible money-saving accounts.

Conclusion:

Overall, travel money is a commodity that cannot be done without, and underbudgeting your alloted costs can end up costing you even more in the long haul. Because of this alarming trend, it is best to not only overbudget, but also make extensive planning based on thorough research to get the best credit/debit card, traveller’s check, or conversion rates possible. Do beforehand research on the conversions yourself though to ensure that you are being given a fair deal, and then hunt for bargains however possible. Attempt your conversions in advance (at least a week), pick a service provider that has a history of providing good deals, and stick to your choice. Loyalty is often rewarded among higher-grade companies, and those that provide good deals on travel money in the past and more likely to provide good deals at the present.

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Popular Credit Card Offers

			Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
	Westpac Low Rate Card - 0% Offer	A credit card with a low rate offer on both balance transfers and purchases, plus a low annual fee.	0% for 6 months (reverts to 13.49% )	0% for 6 months	$45	21.49%
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	ANZ Platinum Credit Card	An introductory interest rate offer on balance transfers and purchases, plus a $0 first year annual fee.	0% for 6 months (reverts to 19.24% )	0% for 6 months	$0 annual fee for the first year( $87 thereafter)	20.99%