Why you shouldn't use a travel cash card

Travel cash cards sound great, but there are a few key issues to watch out for. Photo: iStock

Do not use a travel cash card. That’s the golden nugget of advice from Traveler “Tripologist” Michael Gebicki when it comes to managing your money abroad. Don’t approach one of them.

“I hate them,” Gebicki told Flight of Fancy, the Traveler podcast, on this week’s money-themed episode. “I don’t understand why any intelligent person would ever use a travel cash card.”

To clarify, a “travel cash card” is different from a standard credit or debit card. It is a product offered by many institutions today – from Australia Post to Qantas to CommBank – that allows travelers to buy amounts of foreign currency and put it in a card, which can then be used like a standard debit or credit card with local currency when they travel. abroad.

Sounds great at face value, but there are a few issues, as Gebicki explains.

“The exchange rate, to begin with, is pretty bad,” he said. “And then there is the fee structure. For example, if you have your euros [on your card], and you then go to the UK and you want British pounds, you can withdraw those euros as pounds, but the cost for that can be up to 8 percent. And you also pay for two currency exchanges.

“Then when you return to Australia and you may have some of the money left on your card and you want to convert it back into Australian dollars – otherwise, if you leave it there, some financial institutions will charge you an ‘inactivity fee’, which keeps draining you. And when you convert it back into Australian dollars, there’s another charge for it. And they give you a bad exchange rate too.”

Money management is a difficult thing for travelers, even those with a lot of experience. Is cash king, or is it all about cards? Do you use debit, or credit? How do you avoid paying too much?

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As another Flight of Fancy guest, Germany-based travel writer Flip Byrnes told us this week, maybe we’re overthinking this.

“What I do is, I have a credit card, I go to the machine, and I get the money,” Byrnes laughs. “It’s funny, when people say, ‘How do you earn money abroad?’, it’s like we’re talking about how to earn money on Mars or something. Think about your daily life at home, how you earn money. , and it’s pretty much the same. But there are a few tricks.”

The secret to success, says Gebicki, is to have a wallet full of various financial options. And the value of those options will depend on where you’re traveling, and how you want to spend your money.

“You don’t just travel with one card,” Gebicki told Flight of Fancy. “You really have to have a combination of cards.

“Let’s talk about debit cards and credit cards: there’s less risk with debit cards, in the sense that you could lose everything. [if they’re stolen, or you’re the victim of fraud], and financial institutions do not immediately return your money. They probably won’t. But they are very useful for controlling your spending.

“With a credit card, it’s pretty easy to go over your limit, and then you pay 20 or 25 percent interest. But credit cards are great for paying off your hotel bills, and so on. As long as you don’t incur foreign conversion fees.”

There are cards that allow you to travel free of charge. There are even travel cash cards – just one, mind you – which Gebicki says are now turning to many financially savvy travelers.

To find out which one, listen to this week’s episode:

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