Deciding how to take your money when travelling overseas can be as challenging as packing your luggage.
Low fee debit and credit cards are among the cheapest options but cash, travel cards, and even out-dated travellers cheques, also have their place.
Rather than having one single solution which is cheap, safe and convenient, Michelle Hutchison, from comparison service finder.com, says the most sensible approach is to spread it around.
“There’s pros and cons to every option and our best recommendation is to generally take a few combinations and not rely on just one.”
She says cash is still a great option that should be used for going to remote places where electronic options aren’t available.
Ms Hutchison says using some credit and debit cards overseas can be cheaper than buying a travel card, where consumers are charged a hefty exchange rate to load it with the foreign currency of their choice.
She listed Bankwest’s Zero MasterCard and the 28 Degrees MasterCard as the cheapest options on the market, both having no annual fees and no foreign currency conversion fees.
She also recommended the Citibank Plus Visa debit card with .
“That’s also one of the best value transaction accounts for overseas travel.
“It offers a superior exchange rate of credit/debit cards without any of the international transaction or ATM fees.”
While Ms Hutchison says low fee debit and credit cards can offer better value, the growing popularity in travel cards shouldn’t be ruled out.
“A few years ago there were hardly any products on the market and now we’ve got about ten,” she said.
“People obviously feel safe with them and find them convenient. Competition is increasing and hopefully the cost will come down with that as well.”
Travellers should work out the best option for them depending on their circumstances, including how many countries they are visiting and whether cash is a more appropriate form of payment, she added.
“The benefit of travel cards is if there’s a really good exchange rate you can lock in that rate when you load the card, where you can’t do that when you use a debit or credit card.
She says on other cards some people might also have a credit limit they are not comfortable travelling with or might have issues on relying on a transaction account linked to their income.
The nitty gritty
ABC television program The Checkout compared the merits of credit and debit cards versus travel cards, finding the former offers a slightly cheaper option, around a two per cent difference.
Presenter Scott Abbot suggested many travellers get caught out by focusing on the low transaction fees of travel cards and not considering the cost of the upfront exchange rate.
“The exchange rate travel cards offer are on average between four and five per cent worse than standard credit or debit cards,” Mr Abbot said.
Other costs include some outlets charging for the purchase of the card, a fee for reloading the card, and being slugged for an inactive card once your travelling is over.
However, the program also stated travel cards charge between $2 and $4 for ATM withdrawals, while credit and debit cards charge around $4 and $5.
The death of traveller’s cheques
Associate Professor Suk-Joong Kim, of the University of Sydney Business School says traveller’s cheques are becoming “less and less important”.
“It’s all about technology, which is changing rapidly,” he says.