Ask Credit Card Finder: Can I preload a credit card when travelling?

Ask Credit Card Finder: Can I preload a credit card when travelling?

Posted: 24 October 2018 10:02 am

Adding extra money to your credit card could help you avoid interest charges, but other fees may still apply when you’re travelling – especially if you withdraw cash.

I’m about to go travelling overseas and am looking at getting a credit card for security purposes. I want to avoid fees as much as possible, but I’m not sure how that works with cash advances. If I loaded, say, the 28 Degrees card with cash, would I be charged a cash advance fee when I withdraw money?
Credit card traveller

This is a strategy some travellers use to minimise credit card charges overseas, but it only works up to a point. In the example you’ve given, loading money onto the 28 Degrees Platinum Mastercard would give you a way to avoid cash advance interest charges as long as the amount of money you transferred to the card was greater than or equal to the amount you withdrew.

However, you would still be charged a cash advance fee of $4 or 3% of the transaction amount (whichever is greater). This is the case regardless of the credit card you’re using and applies every time you use a credit card for a cash advance transaction, including withdrawing money or buying foreign currency through your card.

If you know you will need to withdraw money when you’re overseas, you should try to estimate the cost of the cash advance fee before choosing a card. The simplest way to do this is to multiply the amount you're planning to withdraw by the cash advance fee (usually the percentage). For example, if you had $2,000 loaded on a credit card that charges a 3% cash advance fee, you'd be charged $60 to withdraw it. If you didn't load that additional $60 onto your card, you would be charged interest on this fee.

It’s also worth keeping in mind that some credit cards have daily withdrawal limits that are lower than your credit limit. This would apply even if you had loaded extra money onto the account to create a surplus. Keeping track of your balance can also be tricky when you’re spending in foreign currencies because you won’t always know what exchange rate applies until the transaction shows up on your account.

Other travel money options

If you already have your spending money, which it sounds like you do in this case, you may be better off getting a prepaid travel card.

These cards offer a similar level of security to credit cards and give you control over how much money you put on the card. This limits your potential losses if the card is lost or stolen. Prepaid travel cards also let you load funds in multiple currencies, which means you’ll know how much you have to spend in each country you visit and can avoid foreign transaction fees. In comparison to 0% foreign fee credit cards, there is no risk of interest or cash advance charges (although some do have hefty ATM fees).

Choosing how to take money overseas often comes down to where you’re travelling and what options you feel the most comfortable carrying with you. Once you’ve figured that out, you can compare different options to find the right mix of cards (and cash) for your trip.

Ask Credit Card Finder is a weekly column written by finder’s credit card experts Amy Bradney-George and Sally McMullen. All rates and fees are correct at time of publication and we only give general advice.

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