In fact, the margins that some travel cards add onto the exchange rate can mean cards charging fees can end up offering higher value than ‘fee-free’ cards.
Experts from leading financial comparison site Mozo analysed six travel cards and 175 debit cards to reveal the impact of fees and exchange rates on your bottom dollar when travelling overseas.
“A travel card can be a smart way to lock in your exchange rate, manage your travel budget and is safer than carrying a lot of cash,” said Rachel Wastell, Mozo’s personal finance expert.
“But our analysis shows when it comes to travel cards, checking the fine print can really pay off, as the cheapest looking option isn’t always the one that gets you the best deal.”
Mozo compared six popular prepaid travel money cards to find out how many U.S. dollars Aussies would receive from a $AU1,000 transfer. Despite all cards being assessed on equal terms, there was a $31 difference between the highest and lowest amounts received.
“Mozo’s comparison focused on USD conversions using a weekday bank transfer scenario, but fees can stack up fast in other scenarios, depending on how and when you use the travel money card,” added Ms Wastell.
“A lot of Aussies assume ‘no fee’ means best value, but when you look at the exchange rate being offered, that’s not always the case.
“You could be losing money through the rate instead of an obvious upfront charge and unless you do the maths, you might not even realise.”
Looking at the 175 debit cards Mozo analysed, most apply a forex fee averaging 2.67%, with the highest forex fee coming in at 3.65%.
This may not seem like much but can quickly add up and Aussies paying the average forex fee could save as much as $133.50 on a $5,000 spend or $267 on a $10,000 spend by opting for a card that does not charge these fees.
In addition to forex fees, many debit cards can also charge international ATM withdrawal fees, which range from $0 to $5 per transaction, with an average international ATM fee of $2.91.
“Avoid foreign exchange fees, any charges for international ATM fees and of course, monthly account keeping fees if you are opting to use a debit card while travelling,” said Ms Wastell.
“Mozo winners can provide Aussie travellers opting for convenience an easy way to check if their current debit card is competitive, or if it might be worth opening a new account before they hop on the plane.”
