Considering how much we travel, it’s crazy how often students get duped when it comes to accessing money overseas. Take note of these tips and you’ll save heaps.

What to Look Out For

Reloadable prepaid travel cards have grown in popularity in recent years, with banks lauding their lower fees than your regular card. The catch? When you load money on, the bank gets to set the rate – always 4-8% worse than the wholesale rate. You’ll also pay ATM fees (~$2.50) and subsequent reload fees of around 1%. You’ll face equally poor rates converting back to Australian dollars if you have money left over.

(There are two benefits to travel cards: you exchange funds upon loading up the card, so aren’t susceptible to exchange rate changes; and you get two cards in case you lose one)

Taking physical cash isn’t much better – you still bear the poor exchange rates, even with “no commission” money changers. Instead, exchange Australian dollars in Asia where the market is a lot more competitive. Note that some developing countries (for example Burma) require unmarked or new large-denomination U.S. dollar bills, often with particular serial numbers.

Your Best Options

There are two products on the market which represent good value, the reason being that MasterCard/Visa performs the conversion rather than your bank – their rates are within 1.5% (Visa) and 0.05% (MC) of the wholesale rate. There are no other charges on these products.

The first is the Citibank Plus Transaction Account, a standard account with Visa debit card.

The second is the GE Money 28 Degrees MasterCard. Because this is a credit card, you need to apply and be approved. You can use it as a credit card, paying off the outstanding balance each month – although any cash withdrawals do not qualify for the 55 day interest-free period. A smarter way is to deposit money onto the card before use so that the balance is always in credit. This allows you to use it like a debit card and not worry about interest charges.

Alternatively, your standard Australian debit/credit card is actually a decent alternative if simplicity is important. You’ll have to pay around 3% in international transaction fees and $5 for each ATM use – but thanks to the MasterCard/Visa conversion, you’ll still save in the end as long as you try to minimise ATM use.

Other Notes

References to ATM fees above are to those charged by the Australian bank. ATM owners overseas are free to charge their own fees as well, which are almost unavoidable regardless of what card you’re using. Look for smaller banks and credit unions, which seem to charge less. If using an Australian debit/credit card, also see if your bank has any discount arrangements overseas.

Always take a back-up option, and make sure someone back home is able to forward a replacement card should you lose yours, as many banks will not mail cards overseas. If you use internet banking with SMS security, you can get a security token before you go so you can do banking without your phone. Also, banks monitor where cards are being used and may cancel them if they suspect abnormal activity – tell your bank where you are going.

Lastly, some shops and restaurants might offer to bill you in Australian dollars while overseas (called “Dynamic Currency Conversion”). Don’t agree to this – the merchant makes a commission, the rate is poor, and your home bank usually still charges an international transaction fee.

What will AUD1000 convert to?*

	EUR	USD
CBA Travel Money Card	722.8	985.2
ANZ Travel Card	727.5	987.8
Travelex Cash Passport	722.6	983.2
Cash (exchanged at Australia Post)	730.9	995.0
CBA Debit Mastercard	740.3	986.9
28 Degrees Card	774.4	1032.4
Citibank Plus	769.0	1028.4

*Assumptions: transactions made on 19/2/12; withdraw AUD600 cash equivalent in AUD200 increment from ATMs; spend AUD400 equivalent on card; overseas ATM owners do not charge fees; funds loaded onto card when opened.