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Travel Money Review


DECEMBER 2014:



What Is The Best Way to Get Money Whilst Overseas?

Here is a practical review of your Travel Money options…


THE OPTIONS:

Between commissions, Credit Card surcharges, ATM Fees and other expenses, you will almost always have to pay a little extra for the privilege of exchanging one currency for another.

When it comes to taking money overseas, the options are:

  • Cash
  • Traveller’s Cheques
  • Credit Card
  • ATM Card
  • Debit Card
  • Travel Card

MY SUMMARY:

There’s a lot of advice on the internet. CANSTAR do a pretty good job comparing both Credit Cards Per Se as well as NZ Rewards Cards.

I’ve had a good look and summarised my NZ-based findings (from the main NZ suppliers) in a Card Comparison Table:

  • General Information: The costs of 1st, 2nd, and Replacement Card Fees. The maximum $s that can be withdrawn from an ATM each day. The International (Foreign) Transaction Fee charged by the bank.
  • Debit Card Usage: The Fee charged by your bank each time you use the ATM (the Foreign Bank may charge their own fee as well but, if so, this will be the same for every card in the sheet). The likely amount (of a $34,000 total) that will be spent on the Debit Card. How many times the ATM will be used to withdraw that amount. The Total Amount that your bank will, therefore, charge you in ATM Fees. What the REAL % being charged is.
  • Credit Card Usage: The likely amount (of a $34,000 total) that will be spent on the Credit Card. The Total Amount that your bank will, therefore, charge you in Foreign Transaction Fees. What Cashback you will get from this expenditure (if you have a Cashback Card).
  • Yearly: The total yearly card costs.

My conclusions are as follows:

  • Cash: Always carry some ‘major currency’ folding notes (e.g. US$s); you will need these in emergencies.
  • Traveller’s Cheques: Are old hat; There are, now, better options. Don’t use them.
  • Credit Card: Take a “chip-and-PIN” Visa or Mastercard (or one of each). Try and get a card that doesn’t charge Foreign Transaction Fees if you can (in some countries, like NZ, you can’t get such cards and have to pay about 2.5% in Foreign Transaction Fees). You will not be putting enough on a Credit Card to warrant the extra fees associated with Cash Back or Reward Cards … just get a cheap, no frills one.
  • ATM Card: Upgrade it to a Debit Card (Debit Cards give you more options).
  • Debit Card: Take a “chip-and-PIN” Visa or Mastercard (or one of each). Try and get your bank to link your Debit Card to your savings account. If this can’t be done use the internet to transfer money between your Savings and Current account as and when required.  In that way, your money will earn interest until you need it.
  • Travel Card: Only use one IF the card holds the currency for the countries that you are going to, and you will be spending the majority of your travel money in those countries. If not, just take a Credit Card (for big ticket items) and a Debit Card (for ATM Cash). GRANDPAckers are unlikely to benefit from a Travel Card.
  • Stay with your own bank if you can and use the relationship that you have developed with them over the years. They will, usually, come to the party if it means keeping you as a customer.

Please note that I have under-valued ATM & Debit Cards in my Card Comparison Table – as I have not taken into account the interest that your money is earning whilst it sits in your Savings Account. ATM & Debit Cards are, actually, even better than they look in my Card Comparison Table.

Don’t “sweat the small stuff”… the difference between the various options is minimal (only a few NZ$100s out of a budget of $34,000). There are bigger fish to fry once you get out there… just make sure that you can always get access to money and that your provider will be there for you if you run into trouble.


MY REQUIREMENTS:

I will be on a personal annual budget of about NZ$30,000 / US$20,700 / €18,600 / £14,400 (exchange rates as of June 2016).

On top of this personal budget, I expect an additional NZ$4,000 / US$2,750 / €2,500 / £1,925 to be spent on “GRANDPAcking business venture overheads” (such as international travel between target locations).

As a GRANDPAcker, I would expect:

  • To pay for “big ticket items” (like flights) on a Credit Card;
  • To pay for the odd Hotel on Credit Card (when in major towns or when they take Credit Cards without a surcharge);
  • To pay for most of my costs in Cash.

I anticipate that only about NZ$10,000 of all of my expenditure will be on Credit Card; The remaining NZ$24,000 will be in Cash. Therefore, for me, the most important thing to sort out is how best to get Cash whilst I’m overseas.


GETTING THE BEST EXCHANGE RATE:

CREDIT, DEBIT & ATM CARDS

You will almost always get the best interbank exchange rate when buying foreign currency with either ATM Cards or Credit Cards or Debit Cards. The Card rate will usually be 2% – 7% better than the rates you will get when exchanging Cash or Traveller’s Cheques.

Visa and MasterCard payment networks impose a 1% fee on the banks that issue the Card. The banks then pass on this charge (plus an additional percentage) to the consumer by adding a Foreign Transaction Fee; in NZ, this Fee is typically about 2.5% (in total). Essentially, these Fees offset any Air-mile or Cash-back Rewards provided by your Credit Card provider.

TIPS:

  • Don’t exchange Cash or Travellers Cheques at the airport: This is, usually, the most expensive way to get foreign funds.
  • Beware of the “no commission fee” moneychangers: Both low commission fees and good exchange rates are necessary for cheap currency conversion. No Commission Fee moneychangers usually offer poor exchange rates.
  • Beware of dynamic currency conversion: Watch out for a scam called dynamic currency conversion which takes place when a merchant chooses the option for you to pay your bill in your home currency. By doing so, the merchant receives a kickback from its credit card processor while also providing you with a horrible exchange rate – often 10% worse than the current rates.

CREDIT CARDS:

Best for: Large purchases such as airline tickets, long-stay hotel bills, and car rentals.

PROS:

  • The biggest advantage to using Credit Cards while travelling overseas is that Credit Card purchases are exchanged at the interbank exchange rate, usually the best rate you can get for currency exchange.
  • While most Credit Card issuers charge currency conversion fees (Foreign Transaction Fees) each time you make a purchase in a foreign currency, these Fees are typically lower than those that you would pay to convert your own currency at a Bureau De Change.
  • And there are a few cards out there that do not charge any Foreign Transaction Fees at all (most typically cards from the USA), not even the on-charge of 1% from Visa or MasterCard.

CONS:

  • Some retailers on-charge their 3% Credit Card costs to you – if so, you get charge 3% at one end and 2.5% at the other end… this makes Credit Cards expensive… if the retailer wants to on-charge their % you are better offer paying by Debit Card or Cash
  • Some restaurants, stores and even hotels won’t take Credit Cards, so you’ll need to have Cash on hand at all times.

TIPS:

  • Don’t use Credit Cards to get Cash advances at ATMs: your Credit Card company will impose finance charges from the day of withdrawal until payment – these can add up very quickly.
  • Plus, if forget to pay the bill on time, these finance charges can continue for much longer than you want them to and become highly significant.

WHAT YOU NEED TO KNOW:

  • The first thing you should do if you are travelling abroad with a Credit Card, even if you only plan to use it in case of an emergency, is to call the issuer and ask which Fees will apply to your purchases, both in local currency and in your home currency.
  • Call before each trip, as these policies may change without notice.
  • Let your Credit Card issuer know when and where you will be travelling – that way the sudden international activity on your account won’t trigger your issuer’s fraud alert system.
  • As a precaution, bring two Credit Cards just in case one stops working.
  • Finally, get a phone number that you can use to call the company from overseas if your Card is lost or stolen.

ZERO FOREIGN TRANSACTION FEES:

  • Roughly 90% of all Credit Cards charge a 2% – 4% Foreign Transaction Fee for any purchase processed outside of your home country.
  • These costs can add up quickly, so it’s a good idea to consider the increasingly popular category of Cards that do not levy Foreign Fees.
  • Some banks have removed Foreign Transaction Fees from all of their cards.
  • Others have introduced a number of new Zero Fee Cards.
  • By using a Credit Card with no Foreign Transaction Fees, you will be minimizing the hassle associated with currency conversion as well as saving at least 6.73% per transaction.

CHIP-AND-PIN CARDS:

  • There is a growing prevalence of “chip-and-PIN” Credit Cards.
  • These cards rely on an embedded chip that transmits information to a merchant, which the consumer then verifies by entering a PIN.
  • These are designed to reduce fraud.
  • Travelex has introduced a prepaid chip-and-PIN MasterCard that works like a hybrid between a Credit Card and a Traveller’s Cheque called the “Cash Passport”. I do NOT recommend the Cash Passport to GRANDPAckers.

DYNAMIC CURRENCY CONVERSION:

  • Some merchants (particularly in Europe) offer what’s known as dynamic currency conversion, which means that they’ll charge you in your home currency rather than the local currency.
  • Because some card issuers will waive the currency conversion fee if your overseas purchase is made in your home currency, dynamic currency conversion could help you save money.
  • However, keep in mind that you will almost always get hit by a conversion fee from the foreign merchant instead – sometimes up to 5 percent – so you may end up losing out on the deal overall.
  • Be sure you know which fees apply to either option before deciding which currency to use.
  • I advise GRANDPAckers NOT to use Dynamic Currency Conversion.

HOLDS & DEPOSITS:

  • Some hotels and car rental companies may put holds on your Credit Card for the amount of your total expected bill.
  • This can use up your credit line before you’ve actually incurred and paid for the charges.
  • All merchants are supposed to inform you if they do put a hold or “deposit” on your Card.
  • If they do, make sure that you clarify with them that the hold has been removed when you’ve paid your bill in full.

PROTECTION:

  • You may not have as much protection overseas as you do at home when problems arise over inaccurate charges.
  • Incidents are always being reported of travellers being charged twice for the same item or for items they never purchased, and Credit Card companies have been unwilling or unable to intercede on their behalf.
  • Always watch merchants imprinting your Card and keep your receipts. Without a receipt, your bank can do nothing.
  • Always check your Credit Card statement.
  • If you see charges you didn’t make, call your Card supplier and ask them to dispute the charges.

ATM & DEBIT CARDS:

ATM Card: An ATM card is a PIN-based card. That means that in addition to using it at ATMs, you may also be able to use it to make purchases (by entering your Personal Identification Number) if the merchant is using one of the same electronic ATM networks that’s listed on the back of your Card.

Debit Card: A Debit Card looks just like a regular ATM card, and you can use it at ATMs. The difference is that a Debit Card has a Visa® or Mastercard® logo on its face. That means you can use a Debit Card wherever Visa® or Mastercard® Debit Cards are accepted, for example, department stores, restaurants, or online. A Debit Card is not a Credit Card. While MasterCard or Visa Debit Cards look (and can be used like) regular Credit Cards, they actually Debit your checking account the same way your ATM Card does.

ATM and Debit Cards allow you to use ATMs. There are millions of ATMs worldwide and you can use many ATMs 24 hours a day, 7 days week.

While the majority of ATM Cards function as Debit Cards, check with your bank before making any assumptions. A few banks continue to offer Cards that only work at an ATM or may give the customer a choice between an ATM Card and a Card that functions as both an ATM Card and a Debit Card.

Best for: Getting Cash in local currency. GRANDPAckers will use a Debit Card most of the time.

PROS:

  • You’ll get the same great interbank exchange rate when you make Cash withdrawals with your Debit or ATM Card as you do when you make a Credit Card purchase.
  • With ATMs available in major cities and airports all over the world, this is generally the cheapest and most convenient way to get Cash in the local currency.
  • If you need Cash, you will almost always get the best exchange rate at the lowest possible cost by using your Debit / ATM Card.

CONS:

  • Each Cash withdrawal you make will usually be subject to a currency conversion fee, a foreign ATM fee or other charges from your bank and/or the local bank that maintains the ATM. For example, it is ‘usual’ in South East Asia for the ATM provider to charge Foreign Cards a fee – this is typically PHP200 per withdrawal.
  • Debit Cards work pretty much the same as regular Credit Cards for purchases, but if your Card is lost or stolen you may not have the same protection. So, I recommend that GRANDPAckers use their Credit Card for purchases.
  • Usually (by law), as long as you report your Card missing immediately, your maximum liability for use of that Card will be $minimal – the same as for a Credit Card. However, if you wait any longer, you could be responsible for hundreds of dollars in unauthorized charges.
  • Your Debit Card may not work in all ATM machines at your destination, so you will need to bring a backup Debit or Credit Card (hence my suggestion that you carry a Visa Card AND a Mastercard).
  • In rural areas, finding an ATM that is part of your network might be difficult. You’ll need to plan ahead and withdraw enough Cash to meet your needs until you are back in a city or town.

WHAT YOU NEED TO KNOW:

  • Sometimes, your home bank ATM Card isn’t connected to the worldwide Cirrus or PLUS networks. This is one of the reasons why I recommend a Debit Card.
  • Each of to the PLUS, Cirrus and Maestro networks has more than a million ATMs worldwide.
  • The PLUS network is associated with Visa, so your Visa Card will usually work at those ATMs.
  • Likewise, the Cirrus and Maestro networks are associated with MasterCard, and so ATMs marked with these logos usually accept MasterCard for Cash advances.

WHAT FEES CAN YOU EXPECT?

  • At the very least, you will probably be charged the same transaction fee, if any, that your bank charges you when using another bank’s ATM.
  • However, many banks charge higher fees for international ATM withdrawals – either a flat rate (typically NZ$5 – NZ$8) or a set percentage of your total withdrawal (usually 1 – 3 percent).
  • Check with your bank before each trip abroad, as these fees can change often and without warning.
  • To add insult to injury, you may also be charged a fee by the owner of the foreign ATM.

MAKING CASH WITHDRAWALS:

  • Given the charges associated with each withdrawal, you are best to take out the maximum amount possible from the ATM.
  • Different foreign bank ATMs have different maxima; shop around and find the one that allows you to withdraw the most.
  • Your Home Bank usually imposes a maximum per ATM transaction (mine is NZ$500) and a maximum total value of ATM withdrawals per day (mine is NZ$2,000).
  • Some foreign bank ATMs allow you to withdraw more than your Home Bank transaction maximum (e.g. in The Philippines, one bank allowed me to withdraw nearly NZ$1,200 in a single ATM transaction).
  • The more money that you can withdraw in a single transaction, the cheaper the cost of that money.
  • Be sure to have a safe, well-concealed place to keep your Cash.
  • When deciding how much to withdraw, try to choose an uneven amount (e.g. PHP14,900 rather than PHP15,000) so you don’t wind up with huge bills that you’ll have trouble breaking.

HOLDS & DEPOSITS:

  • If you are renting a car, you should be aware that while you can use a Debit Card to pay for the rental charges, you might not be able to reserve the car with this type of Card.

TRAVEL MONEY CARDS:

I DO NOT RECOMMEND Travel Money Cards for GRANDPAckers.

Travel Cards, such as Visa’s TravelMoney and Mastercard’s Cash Passport, look like Credit Cards but function more like Traveller’s Cheques.

You “load” the Card with money from your bank account, and you use it like a Debit Card at ATMs and like a Credit Card at merchants and hotels.

Best for: A secure alternative to Cash.

PROS:

  • Provides the ability to lock in your exchange rate before travel: e.g. if the New Zealand dollar is currently strong, a Travel Card could be a great way to lock in the exchange rate ahead of time. It helps you to budget for your holiday by giving you certainty about just how much spending money you will have available.
  • Can load multiple foreign currencies in a single Travel Card: A Travel Card is a fantastic way to juggle multiple currencies. There are typically a range of currencies allowed on a Card. Make sure you check with your Card of choice though to ensure that it includes the currencies of the countries you are travelling to. they are, usually, limited to the ‘major currencies’ … currencies that GRANDPAckers won’t, actually, be using.
  • Can reload the Card via your smartphone / online banking: You can sometimes reload your Travel Card via your smartphone / online banking – provided you have the funds available in your bank account.
  • Provides Debit Card functionality without being linked to your bank accounts: In addition to security measures such as a PIN code access and the ability to block a Card if stolen, a significant benefit of Travel Cards is that they are a stand-alone Card not linked to your bank accounts. This helps to minimise the risk of financial loss due to fraud or theft.
  • Allows you to carry a minimal amount of Cash: Cash is the least-secure way to carry your holiday spending money. A five-second encounter with a pickpocket can leave you broke – and definitely not in a holiday mood! There will always be some instances where Cash is the only payment method accepted, but for most transactions a Travel Card does the job … but not in most 3rd world countries.
  • Provide more security than Cash: because they can be replaced (usually within 24 hours) if lost or stolen.
  • Work like Credit Cards: Can be used for purchases in-store and online or to withdraw Cash from international ATMs in local currency.
  • Travel Cards are a secure alternative for people who don’t have bank accounts or Credit Cards.

CONS:

  • Exchange Rate: By locking in a currency well ahead of time you also risk missing out on any improvements in the exchange rate.
  • Fees: Travel Cards give you better exchange rates than Travellers Cheques, but there are plenty of fees – look out for activation fees, charges for reloading the Card, ATM charges or inactivity fees.
  • You may pay high fees to activate and load your Card.
  • Fees for Foreign Currency Transactions are extremely high. Under some conditions, the Fees can be as much as 7% of your total transaction.
  • Travel Cards can be difficult to use abroad, especially at foreign bank ATM machines. When you are forced to use “private” ATMs, fees can be significantly higher than those at a bank.
  • Interest: If your money is sitting on a Travel Card, it is no longer in the bank earning interest. For long term travellers this can add up to a significant loss of interest totalling NZ$100s.
  • In most cases, you are probably better off using your own Debit Card.

ARE TRAVEL CARDS BETTER THAN DEBIT CARDS?

For GRANDPAckers, NO.

According to comparison site mytravelmoney.co.uk, Travel Cards beat airport currency exchange rates by 8% and those offered by Bureau De Changes and Travellers Cheques by 4%. BUT ONLY IF YOU HAVE THAT CURRENCY ON YOUR TRAVEL CARD!

The comparison with your bank is less easy. Most banks use the applicable Credit Card Wholesale Exchange Rate.

The main saving is not on purchasing but on withdrawing Cash at ATMs.

There are 3 main Travel Cards in New Zealand:

  • Kiwibank’s Loaded for Travel (Visa)
  • Multi-Currency Cash Passport (MasterCard) – offered by ANZ, ASB, BNZ, SBS Bank, TSB, several credit unions and major travel agents
  • Air New Zealand OneSmart (MasterCard).

Westpac also offers a Visa Travel Card but this doesn’t have foreign currency wallets. You can load only NZD on it – so we haven’t compared it with the other 3 cards.

Common strategies to get the most from your multi-currency Travel Card include:

  • Shop in advance: Shopping around for your Card well in advance of your trip will ensure that you can select a Card with the currencies and features that suit your needs.
  • Allocate currency amounts carefully: Think carefully about the allocation of currencies on your Card as any purchases you inadvertently make in the “non-native” currency can cost you a “hefty” currency conversion fee.
  • Pay attention to the reload fee: Some Cards have a load limit and charge each time you add further funds. Reload your Card when the fee is at its lowest.
  • Minimise your fees: Look for a Card that charges no fees on ATM withdrawals and EFTPOS transactions, as these small fees can accumulate incrementally.
  • Monitor your Card online: Get in the habit of checking your transaction list daily as you go, to both avoid fraud and accidental overspending.
  • Know your timeframe: Be mindful of the time it takes for an online transfer or BPAY to be credited to your Card. Make sure you are familiar with what these timeframes are so you’re not left high and dry without any money!

The ANZ MasterCard Cash Passport & Its Fees:

  • Accepted at over 35.9 million locations worldwide.
  • Access to 2.1 million ATMs.
  • It is supported by MasterCard with 24/7 assistance anywhere in the world
  • A second Card is issued as a backup in case the primary Card is lost.
  • Interestingly, at BNZ, ASB and other banks (ANZ???) offering the Cash Passport, the exchange rate offered for the Travel Card is not as good as the rates for cash!!!

Single Currency Card                     

  • Load Fee and In-Branch Reload Fee:                                                Upto 2% min NZ$15
  • Online reload Fee:                                                                              1% min NZ$10
  • International ATM or point of sale fees charged by ANZ:                   FREE
  • ATM Operators Fee:                                                                          (may charge their own fees)
  • ATM Fee per Withdrawal:                                                                   NZ$4
  • Cash Over-The-Counter:                                                                    NZ$12
  • Cash Out Fee:                                                                                    NZ$10
  • Currency Conversion Fee for Withdrawals in a non-card currency:    Wholesale Rate plus 3%
  • Monthly Inactivity Fee:                                                                        NZ$4 (after 12 months)
  • Maximum daily ATM Withdrawal:                                                        NZ$2,000
  • Maximum daily Purchases:                                                                 NZ$8,000
  • Maximum daily Over-The-Counter Withdrawal:                                  NZ$400
  • Maximum Load Amount / Balance On Card:                                       NZ$10,000
  • Maximum Online Reload Amount:                                                       NZ$10,000
  • Maximum Accumulative Amount Loaded / Reloaded in 12 Months:    NZ$51,000

Multi Currency Card

  • Load Fee and In-Branch Reload Fee:                                                 1% min NZ$10
  • Online reload Fee:                                                                               1% min NZ$10
  • International ATM or point of sale fees charged by ANZ:                     FREE
  • ATM Operators Fee:                                                                            (may charge their own fees)
  • ATM Fee per Withdrawal:                                                                     FREE
  • Cash Over-The-Counter:                                                                      NZ$10
  • Cash Out Fee: NZ$10                                                                          NZ$10
  • Currency Conversion Fee for Withdrawals in a non-card currency:     Wholesale Rate plus 5.95%
  • Monthly Inactivity Fee:                                                                          NZ$4 (after 12 months)
  • Maximum daily ATM Withdrawal:                                                          NZ$3,000
  • Maximum daily Purchases:                                                                   NZ$15,000
  • Maximum daily Over-The-Counter Withdrawal:                                    NZ$400
  • Maximum Load Amount / Balance On Card:                                         NZ$75,000
  • Maximum Online Reload Amount:                                                         NZ$25,000
  • Maximum Accumulative Amount Loaded / Reloaded in 12 Months:      NZ$75,000

A Card sourced direct from Travelex offers poorer load / reload exchange rates but charges lower fees and provides more flexible maxima. But, it probably works out the same in the end.


CASH & TRAVELLERS CHEQUES:

I DO NOT RECOMMEND Travellers Cheques for GRANDPAckers. I have over NZ$3,000 in US$ Travellers Cheques that I purchased years ago … in my 18 months in S.E.Asia, I haven’t managed to find a single bank or Bureau De Change that will take them.

I DO NOT RECOMMEND taking cash either. You only need a few $100s in folding notes for emergencies. Preferably in a ‘major currency’ – I always take US$s. The cash that you will carry will be ‘local currency’ withdrawn from ATMs.

In days of yore, Travellers Cheques were the most popular way to carry money overseas – but today’s travellers are much more likely to rely on Credit Cards and Debit Card ATM withdrawals, both of which usually offer better exchange rates and lower fees.

When exchanging Cash or Travellers Cheques, most of the time it is better to exchange your money in the country you’re going to.

You will usually get the best exchange rates at banks, post offices and American Express offices (particularly if using their cheques). Hotels are also worth a try.

Avoid the change bureaus you see everywhere in airports, train stations and touristy areas. They usually have the worst rates, though occasionally you’ll get lucky.

CASH:

Best for: Emergencies. You will almost always find an ATM at your port of arrival where you can get local currency with your Debit Card.

PROS:

  • It’s often a good idea to have ‘major currency’ cash on hand to handle emergency situations – like buying a meal at the airport.
  • This way you’re not stranded without Cash if the airport ATM isn’t working or you arrive after the local Bureau De Change has closed.

CONS:

  • You typically won’t get a great conversion rate from your home bank if you want something like US$s, and you may also have to pay fees or commissions. If your home country has a ‘major currency’ (like GBP, EURO, NZ$, AU$, CA$, etc) take that.
  • If you’re travelling to a major international airport in a large city, which will likely have multiple ATMs and change counters, getting currency beforehand probably isn’t necessary.
  • Local banks or money change bureaus will add on transaction fees, which can easily eat up another 2 percent of your money.

WHAT YOU NEED TO KNOW:

  • You can get foreign currency from your local bank, online or at the airport.
  • Try your local bank first, as they may waive fees for certain account holders.
  • I recommend bringing US$250 – US$500 in cash.

TRAVELLER’S CHEQUES:

Best for: Nothing. Don’t bring any.


MY CONCLUSION:

Cash: I will take a small amount of NZ$ and US$ folding cash. Otherwise, I will use Cards.

Travellers Cheques: I have some old TCs that I will take and spend (if I can find a bank that will change them!). I will not be buying any more.

Credit Card: I will get a simple Credit Card that has the lowest annual fees.

  • NZ Banks do not provide “No Foreign Transaction Fee” Credit Cards; I will just have to accept the fact that I have to pay these fees.
  • I will get a new Credit Card just before I go so that it lasts for a full 3 years before replacement.
  • Rewards Credit Cards are of minimal value to me:
    • I will be withdrawing Cash from ATMs to pay for most of my accommodation, food, and entertainment.
    • ATM withdrawals don’t qualify for rewards.
  • A Cashback Reward Card is of minimal value to me:
    • My annual Credit Card expenditure will only be between NZ$5,000 and NZ$10,000.
    • Which means that I should qualify for a Cashback but only at the minimum (0.5%) rate – which won’t amount to much.
  • An Air Miles Reward Card is of minimal benefit because:
    • I will just get the cheapest flights from A to B, I am unlikely to be able to do this with a single carrier or carrier alliance.
    • I am staying in each country for 3 months, so won’t be travelling very far nor very often.
  • Gold / Platinum Rewards Card are of minimal benefit because:
    • These can cost about NZ$125 or more a year in annual fees.
    • Which will require me to spend NZ$12,500 on the card to cover the fees (which I am unlikely to do).
    • The extras offered with these Cards (like Airline Club Membership Discounts) are no good to me because I will be travelling to countries with the wrong airport lounges and where my Airline has no flights.

Travel Card: I will not have one. It will be cheaper for me to use a Credit Card and a Debit Card.

  • I have missed the best exchange rates:
    • The main benefit of a Travel Card is to secure a favourable exchange rate on currencies that I will actually be using.
    • The favourable exchange rate helps to cover the costs and fees associated with the Card.
    • Over the past few months the NZ$ has fallen about 10% against the US$ and similarly against other currencies.
    • For me, the time to get US$s on a Travel Card has passed.
  • Travel Cards don’t hold the currencies that I need;
    • Multi Currency Cards can, typically, hold up to 9-12 different currencies.
    • These are the main currencies – like your home country currency (NZ$) and AUS$, US$, GBP, Euro, etc.
    • Of these, only the US$ and the Euro are of any use to me – and minimally so.
  • In most of the countries that I am going to I will, therefore, incur Currency Conversion rates:
    • If the currency that I need is one of the currencies that I have on your card, all is well and good.
    • However, most of the time this will not be the case.
    • Therefore, I will be charged the Wholesale Exchange Rate PLUS 5.95% on all Travel Card expenditure.
    • This is ON TOP OF the 1% Currency Conversion Fee that I paid when I put the money onto the Card in the first place.
  • Given the usage restrictions and other Travel Card fees (such as load / reload fees), I have decided that a simple Debit Card targeted at international travellers is a better option for me.
  • I conclude that Travel Cards are only worth it IF you are going to countries that have currencies supported by the Card.

Debit Card: This will be my main source of funds. I will get a Visa Debit Card from my bank.

  • Ideally, I need a Debit Card that is designed for overseas travellers (No International ATM Fees and No Foreign Transaction Fees); Alas, NZ Banks do not provide such a Card.
  • I will get a Debit Card from my own bank so that I can hold my funds in an Savings Account:
    • This means that my funds can earn interest until they’re needed.
    • This will help compensate for the Foreign Transaction Fees incurred when using the Debit Card.
    • I will talk to my bank about what they can provide and whether or not they can provide any sponsorship on the Card.

ATM Card: I will not use one. I need a Card that functions as a Debit Card as well as an ATM Card.


IN CONCLUSION:

I will take a Visa Credit Card and a Visa Debit Card in my own name. I will take exactly the same in my company’s name (which I will always keep in a different place so that they act as a backup).

I recommend that GRANDPAckers do the same: take a Credit Card and a Debit Card each. If one gets stolen, you will always have a backup.

There is not enough difference between NZ providers to warrant opening up a new relationship with a new bank. I am better staying with my existing bank and developing that relationship.


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