Australians are turning to travel cards for their next trip. Read on to find out why they're the plastic of choice for travellers.
Travel cards are becoming increasingly popular for Aussies heading overseas. In the lead up to the peak summer holiday season for 2013, finder.com.au saw five times more traffic from Australians comparing travel cards on the site compared with January of the same year and the number of those applying for travel cards during this time also doubled.
The growing popularity of travel cards has caused more of these type of cards to hit the market, increasing the need for traditional credit cards to be more competitive with overseas transaction fees and rates. In 2010 there were only three travel money cards available. There are now ten cards currently available for comparison and more expected.
Credit card companies make serious money from people using their cards overseas. When we travel we are less likely to stick to our usual budgeting restrictions and it is not as easy to constantly check our accounts and go over interest fees and charges. According to the Reserve Bank of Australia, banks generated $1.3 billion from personal credit card fees in 2012. With eight million Australians travelling on short term holidays each year, a good proportion of this debt would be from charges incurred when travelling.
Travel money card comparison
People often don't check the charges associated with foreign spending. Many credit cards charge a range of fees for international transactions, including foreign currency conversion fees and ATM withdrawal fees. Withdrawing cash from an ATM while overseas using a credit card could cost up to 3% for a cash advance fee plus up to 3.5% for foreign currency conversion fees. That means a withdrawal of $1,000 could cost up to $65 in fees, not including the possible ATM operator charge.
Extra spending, interest charges and fees can then lead to 'debt-lag', which is when your holiday spending takes a lengthy period to pay off after you return.
The convenience and savings offered by travel money cards has seen credit cards altering or abolishing their international fees. For instance, Bankwest has a range of platinum credit cards with no foreign transaction fees, as well as Aussie's Platinum Low Rate Credit Card. Previously, there was only one card with no foreign transaction fee – GE Money's 28 Degrees card.
Another convenience offered by travel cards is flexibility. If you are planning a trip to several countries with more than one currency, travel cards allow up to 10 different currencies to be loaded onto the cards, which can save travellers on currency conversion fees. And once loaded, the exchange rate is locked in. Some travel cards also offer rewards points including the Velocity Global Wallet and Qantas Cash. Travel money cards are posing some serious competition to traditional credit cards, offering the same benefits but without the high international fees.
However, some fees and charges still apply to most travel cards such as reload fees, international ATM withdrawal fees, replacement card fees if yours is lost or stolen and currency conversion fees if you switch currencies on the card. Also, the rewards points on travel cards might be outweighed by finding a cheaper card with lower fees in the first place.
If you're planning an overseas holiday, make sure you take advantage of the travel money options available. Take a look at the travel money cards currently on the market and compare them today.