There are multiple methods and modes to travel money these days. The most seasoned nomads will share that they mix it up with some cash, a pre-paid travel card or a travel credit card. This provides multiple options when you are on the road whilst also minimising the risk of being stranded with no money should your wallet be stolen or lost. Travellers cheques are still around and sometimes the currency of choice if travelling somewhere high risk, but they are becoming less and less common.
Which ever travel money option/s you take, try to avoid the last minute scramble at the airport bureau de change where you indiscriminately purchase your foreign currency and end up paying the most for your foreign cash.
Below we summarise our top 5 travel money options.
Cash
Carrying some local currency is always a good idea for the convenience of making immediate small payments such as your taxi/bus fare from the airport to your accomodation. Also bear in mind that the more remote your destination, the more likely that cash will be the most widely accepted currency. The longer your stay, the more cash you will need and the more important it becomes to compare travel money exchange rates from various providers.
Your options for providers will include your bank, travel agents, local Post Office or specialist online providers. These days, if you can be organised and order on-line, you can even have your cash delivered to your home or workplace. Travelex and post offices are particularly good at providing these services with better than average exchange rates. It's worth noting that an on-line exchange rate is usually better than in-branch, even with the same provider, which is handy as you can also avoid the queues.
As you would expect, the closer you get to a transport hub the worse the exchange rate. The bureaux de change at the airport, train station or ferry ports are best avoided if possible. We would also recommend erring on the side of caution by splitting your cash across a few places - e.g. wallet, bag and back at the accommodation.
Travel Money Cards
These are a good alternative or complement to cash as you can pre-load the card with the currency of your destination at a fixed rate (in much the same way you do with cash). Widely accepted (generally wherever respective MasterCard, Visa or Amex signs are seen) plus with many travel cards you can also add multiple currencies. Anything you don't spend, remains on your card until you next need it. This is a bonus if your international currency jar is already full!
On the other end of the spectrum, if the temptations at your destination are too good to resist and result in you running out of money on your travel card, you can reload via SMS, online or phone whilst overseas and often this is fee free (check with the card issuer). Be cognisant of load times as this varies between cards. Some can take up to 3 days which can leave you stranded if it's your only payment method.
Another anomaly to be aware of with travel cards is how it treats 'Pre-authorisations'. Hotels, cruise lines and car rentals often ask for a card to guarantee the final costs of the service they are providing. This will place a hold on funds that can last up to 30 days, thus eliminating that cash for you to spend whilst you're travelling as you'll most likely be home or in a different country by then! We would recommend you use a credit card for any pre-authorisations and then settle your bill with your travel card.
Travelex and bank issued cards are generally better when it comes to ATM fees on withdrawals as they are more likely to have partnerships with ATM providers.
Overall, travel money cards offer a locked in rate, the convenience of pre-loaded multi-currencies, and less risk than carrying around cash. The added peace of mind they offer is that travel cards are independent of your bank account (unlike say a debit card) which means if your card is stolen, your salary and savings are safe.
If this sounds compatible with your favourite way of travelling, compare travel cards here.
Travel Money Credit Cards
Like standard credit cards, most travel credit cards have an annual fee and offer additional services such as interest free periods, concierge, rewards schemes, balance transfers etc. Some also offer $0 fees on overseas purchases which is handy but make sure you check how their conversion rates compare with other cards. Margins can vary between from 0% - 4% on the exchange rate, the lower the percentage the more you have to spend on your travels.
Travel credit cards are beneficial as you have funds available to use up to your credit limit and then have up to your interest free limit period before you need to pay it back. For pre-authorisations, the credit card also comes to the fore, as unlike the travel money card which holds funds for up to 30 days, funds are only tied up for a day or a week, at which point the credit amount will be free for you to use again.
Revolut is a new breed of travel credit card and /or prepaid travel money card which is worth considering, especially if you travel frequently to multiple destinations. The card (which can be digital on your phone) claims to allow you free international money transfers, fee-free global spending, the ability to access over 90 currencies at the inter bank rate, and free ATM withdrawals up to a certain amount. It's worth bearing in mind that it is a relative newcomer to the market and with that comes teething problems. Many people have reported issues with using the Revolut card to withdraw from ATMs from not working to it being swallowed up.
Travellers Cheques
Pre-printed, fixed amount cheques that you sign when making a purchase. Your receipt will include a print out of all the serial numbers on the cheques so if they are lost or stolen they are easily cancelled and replaced. Travellers cheques are treated like local currency so any change will be given in the regular local money.
Remember to compare exchange rates
Whichever option you decide is best for your particular adventure, it's also a very good idea to compare exchange rates so that you optimise on how much travel money you take with you. See our comparison table below:
BER articles that mention Cards:
Disruptors Challenging Australian Banks in Forex Price and Service: ACCC Report
Key Takeaways from the ACCC inquiry into currency conversion services. BestExchangeRates referenced among comparison sites playing an important role in customer awareness of the excessive currency margins charged by banks.
Further reading on Cards - Guides, Reviews & News from our research team.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.