Do not use travel money cards. It’s the gold nugget with advice from Travelers’ “Tripologist”, Michael Gebicki, when it comes to managing your money abroad. Do not walk near one.
“I hate them,” Gebicki told the Flight of Fancy, the Traveler podcast, in this week’s money-themed episode. “I can not understand why any intelligent person would ever use a travel money card.”
To clean up, a “travel money card” is different from a standard credit or debit card. These are products offered by a number of institutions now – from Australia Post to Qantas to CommBank – that allow travelers to buy a certain amount of foreign currency and load it onto a card, which can then be used as a standard debit or credit card with local currency when traveling abroad.
Sounds good at face value, but there are some issues, as Gebicki explains.
“Exchange rates, to begin with, are pretty lousy,” he says. “And then there’s the fee structure. For example, if you have your euro [on your card], and you go to the UK and want British pounds, you can withdraw those euros as pounds, but the fee for it can be as high as 8 percent. And you also pay for two currency exchanges.
“So when you come back to Australia and you may have some of the money left on your card and you want to convert it back to Australian dollars – if you do not, if you leave it there, some of the financial institutions will charge you a” inactivity fee “, which constantly pulls away your money. And when you convert them back to Australian dollars, there is another charge for it. And they give you another bad exchange rate too.”
Money management is a difficult beast for travelers, even those with a lot of experience. Is cash king, or is it about cards? Do you use debit or credit? How do you avoid paying too much in fees?
As another Flight of Fancy guest, Germany-based travel writer Flip Byrnes, tells us this week, we may be rethinking this.
“What I do is I have a credit card, I go to a vending machine, and I get money out,” laughs Byrnes. “This is the funny thing, when people say ‘How do you get money abroad?’, It’s like we’re talking about how you can get money out on Mars or something. it’s pretty much the same. But there are some tricks. “
The secret to success, says Gebicki, is to have a wallet full of different financial options. And the value of these options will depend on where you travel to and how you want to spend your money.
“You don’t just travel with one card,” Gebicki tells Flight of Fancy. “You really have to have a combination of cards.
“Let’s talk about debit and credit cards: there is a bit of a risk with debit cards, in the sense that you can lose everything. [if they’re stolen, or you’re the victim of fraud], and the financial institution will not necessarily give you your money back. They probably will not. But they are very useful for keeping track of your expenses.
“With a credit card, it’s quite easy to go over your limit, and then you pay 20 or 25 percent interest. But credit cards are great for paying down hotel bills, etc. as long as you do not incur foreign conversion fees.”
There are cards that allow you to travel without being affected by these fees. It’s even a travel money card – just one, mind you – that Gebicki says many financially savvy travelers now turn to.
To find out which one, listen to this week’s episode: