Prepaid travel cards: beat up or bargain?

June 6, 2013 16 Comments »
Prepaid travel cards: beat up or bargain?

If you’re planning an overseas trip you’ve probably noticed that everyone from travel agents, airlines, banks and even the post office are touting a new must-have travel accessory, the prepaid travel card. But do these cards offer any real value for travellers or are they just another way for banks and travel organisations to cash in on the lucrative travel money market?

There are now over 10 prepaid travel cards available to choose from and with the recent news that both Qantas and Virgin will soon be combining a prepaid travel money feature with their frequent flyer cards we felt it was a good time to review the key travel cards to see how they compare with one another on features and price.

First, let’s cover off some of the basics.

What is a prepaid travel card?

A good way to think of a prepaid travel card is as an updated version of the travellers cheque. Just as you would go to a bank to purchase travellers cheques, a prepaid card enables you to purchase foreign currency at a set rate before going overseas. Instead of getting travellers cheques you get issued with a Prepaid Visa, Prepaid MasterCard or Prepaid American Express, which allows you to make purchases or withdraw cash at ATMs while you are overseas.

Prepaid travel cards work in much the same way as credit cards and debit cards. The only difference is that the credit limit of a prepaid card is the amount of money you put (prepay) on the card and the exchange rate is fixed.

Types of prepaid cards

There are two main types of prepaid travel cards. Single currency cards and multicurrency cards. Multicurrency cards allow you to preload several currencies onto the one card so if you are travelling to more than one country you only have to carry one card.

Prepaid cards will be connected to either the American Express, Visa or Mastercard networks so you will be able to use the card wherever these cards are accepted.

Types of fees

  • Purchase fee. There is generally a set fee to purchase the prepaid card and fees can range from $0 – $15. Sometimes this fee can be a percentage of the initial load amount.

  • Reload fee. This is a fee charged by the bank or provider if during the trip you want to add extra money to the card. The standard fee for this is between 1-1.1% of the reload amount but some cards do not charge for this.

  • Cross currency conversion fee. This is a fee charged when you make a purchase in a currency other than one that is on your card, and this can sting. It can be high as 8.45% per transaction.

  • ATM fees: You can withdraw cash using a prepaid card but some cards will charge you a fee for the privilege.

  • Account fee: Some cards will charge a monthly inactivity fee and others will charge a fee to close the account once you come back from your trip.

How travel card exchange rates compare

To show an example of how prepaid travel cards can differ in price we have used a typical travel scenario of a trip to Europe with a stopover in Hong Kong. Our traveller purchases a multicurrency card, and preloads the card with Hong Kong Dollars ($10,000) and Euro (3,000). Our task was simple, which card offers the best exchange rate value?

Here is how much Australian dollars we would have paid for each prepaid card based on our initial load amount at the time of our analysis (05/06/13).

Provider

AUD exchange for $10K HKD

AUD exchange for 3500 Euro

Purchase Fee

Total Cost AUD

OzForex:

$1,379.23

$4,896.47

$15

$6,290.71

NAB:

$1,403.61

$5,016.48

$0 (until June 22 then 1% of load amount)

$6,420.09

ANZ:

$1,402.13

$5,007.15

$11

$6,420.

Amex

$1,398.76

$5,020.80

$15

$6,434.56

Cash Passport:

$1,422.01

$5,020.80

$5

$6,447.81

CommBank:

$1,414.77

$5,040.32

$15

$6,470.09

Aust Post Load&Go:

not available

$4,982.21

0

As you can see exchange rates varied between providers and in our scenario there was a massive $179.38 difference between the cheapest (OzForex) and most expensive (CBA) cards.  It’s also important to note that while the NAB Traveller Card currently has a $0 purchase fee, it would have been $64.20 if it was calculated as a percentage of the load amount. This would have made it the most expensive choice, so the more money you are planning on taking away with you the more important it is to go with a set purchase fee.

Also the Australia Post Load & Go Travel card doesn’t take Hong Kong Dollars so if you were to use this card in Hong Kong you would get charged a 3% cross currency conversion fee on all your purchases which we wouldn’t recommended.

Another thing our analysis highlights is how different exchange rates can be between providers. Some travel cards have better rates for particular currencies. You might find the ANZ travel card is great for Thai Baht but the Commonwealth Bank card has a better rate for USD so it is important to shop around depending on where you are going.

On the road

In addition to the initial card costs and exchange rates, when comparing travel cards it is good to first think about how you’ll be using the card overseas. Because each card has different features you’ll want to choose a card that will give you the best value when you are travelling.

Some of the key things to look out for:

  • ATMs fees. All prepaid travel cards will allow you to withdraw cash from overseas ATMs but the Cash Passport Card and the NAB Traveller Card are the only two prepaid cards that don’t charge you for ATM withdrawals. In our traveller’s situation they could be up for as much as $20 HKD (ANZ card) and 2.20 Euro (CBA Travel Card) for each ATM transaction. To limit ATM fees while overseas it is best to make larger withdrawals so that you need to use the ATM less often.

  • Cross currency conversion fees. These range from 0% (CBA travel card) to a whopping 8.45% for the Cash Passport and are only charged when you purchase something in a currency that is not loaded on your card. Let’s use our scenario to explain how this works as it is one of the biggest ways that travellers get caught out with these cards. Our traveller leaves Hong Kong and stops over at Heathrow on their way to Europe. They splurge 150 pounds at the duty free. Now, because our traveller doesn’t have pounds preloaded on their prepaid card, the pounds will first be converted (at the Mastercard or Visa exchange rate) into an available currency (HKD or Euro), and the cross conversion fee will be added on top of the transaction. The best advice is not to use the card in any currency other than what’s loaded on the card.

  • Reloads. One of the great things about prepaid travel cards is that you can reload the card while you are away if you find that shopping a bit too good. Most cards charge a fee based on 1-1.1% percent of the load amount (OzForex don’t charge this fee). You can use BPAY or internet banking to reload more cash but it can take up to three business days to process so just beware you won’t get instant access to your funds. Also BPAY may use a different exchange rate compared with your bank.

  • Default currency. With multicurrency reloads you also need to be really diligent and have your currency defaults set up correctly (prior to buying the currency and reloading), otherwise you could be stung with cross currency conversion charges or additional exchange rate costs. Multicurrency prepaid cards have what is called a default currency order and each bank / provider’s default list is different. For instance,  with the Commonwealth Bank’s Travel Card’s Euro is higher in the default currency order. So if our traveller had this travel card, and they want to buy an extra AUD2,000 worth of HKD while travelling. If they hadn’t changed their default currency to HKD before reload, they would automatically buy Euro, as this currency is higher in the default currency order. They would then need to exchange the money to HKD or keep it in EUR but then be at the whim of whatever the exchange rate is on the day of the transaction.

  • Excess funds and fees. Like foreign cash and travellers cheques one of the pitfalls of a prepaid card is coming back home with foreign funds still on the card. If you travel frequently you might want to keep the funds on the card until your next trip but if that isn’t you, you’ll need to convert them back into Aussie dollars which means, yes, you’ll lose out on the exchange rate again. Some cards like OzForex and Cash Passport will also charge you a closure fee of $10 and some charge a monthly inactivity fee but you can get around this by doing a balance enquiry at an ATM.

Head to head fee comparison

ANZ Travel Card

CBA Travel Card

Australia Post Load & Go Travel

Cash Passport

OzForex

Travel Card

NAB Traveller Card

AMEX Global

Travel Card

Purchase Fee

$11

$15

$0

$5

$15

1% of initial load

$15

ATM fee

Yes

Yes

Yes

No

Yes

No

Yes

Transaction fee for purchases

No

No

$0.09 per transaction, max $0.99 per 30 days

no

no

no

no

Reload fee

Yes

Yes

No

Yes

No

Yes

Yes

Cross currency conversion

3%

0%

3%

8.45%

5.45% (AUD)

3%

4%

3%

Close fee / inactivity

$3 monthly inactivity

$0 close fee

$0 monthly inactivity

$0 close fee

$0 monthly inactivity

$15 close fee

$4 monthly inactivity

$10 close fee

$0 monthly inactivity

$10 close fee

$4 monthly inactivity

$0 close fee

$0 monthly inactivity

$0 close fee

#1 Default currency

$AUD

$USD

AUD

$AUD

$AUD

$AUD

$USD

Minimum load amount

$200

$0

$100

$0

$100

$50

USD $200, $100 GBP, $150 EURO

The verdict

Prepaid travel cards can be a handy travel companion if you want to lock in your exchange rate before you travel so that you know how much you’re spending or if you’re really that concerned about credit card fraud.

They are best avoided if you are travelling to countries where you can’t preload the currency on the card. In these instances you would be better off choosing a regular credit card which doesn’t charge high international fees or a debit card.

But for the well-known travel routes, prepaid travel cards are definitely more convenient than carrying around foreign cash or travellers cheques. Just be sure to do your homework beforehand so that the cash saved by shopping around goes towards a poolside pina colada rather than the bank’s balance sheet.

Compare Prepaid Travel Cards on Mozo here.

Kylie Moss

Kylie Moss

Kylie is Mozo’s content and community director. She works closely with everyone (and we really do mean everybody) at Mozo HQ to ensure that we continually develop new products and produce great content to help you navigate the money maze just that little bit easier.
KylieMoss

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16 Comments

  1. PGS June 19, 2013 at 5:01 pm - Reply

    In the final table, the row for close/inactivity fee is inconsistant. For ANZ the inactivity fee is first, for Cash Passport it’s 2nd, for the others which one is shown isn’t listed. Could the row be re-done with something like “$10 Close / $0 Inactive” for each. Just saves confusion.

  2. Mozo
    Mozo June 19, 2013 at 6:00 pm - Reply

    Hi PGS,

    Sorry for the confusion! We’ve taken your advice and have updated our Head to head fee comparison table accordingly. Hope it helps!

  3. Claire M July 22, 2013 at 11:54 pm - Reply

    Prepaid travel cards are a great way to keep your money safe while abroad. Another added bonus is that they usually don’t come with an overdraft facility meaning that budgeting is important.

    ps. Nice tip about getting round inactive card fees by performing a balance enquiry at an ATM

  4. Rigs August 27, 2013 at 4:17 pm - Reply

    Found this in CBA Travel card disclosure page 13

    “This may occur even when the currency being dispensed is the same as that of your Card. The amount debited to your Card may be greater than the amount which is dispensed by the ATM. Not all ATM operators advise of the amount to be debited to your Card before you withdraw money from their ATM.”

  5. lachlan B November 8, 2013 at 12:33 am - Reply

    hi, just wondering if many shops in europe will allow you to get cashout with a purchase? If so would this eliminate the atm fees?

    • admin
      Mozo November 8, 2013 at 1:46 pm - Reply

      Hi Lachlan,

      Great question! After some careful digging, we found that prepaid travel cards cannot be used for over-the-counter cash withdrawals so we’re unfortunately stuck with those pesky ATM fees!

      Team Mozo

  6. tanya roy January 28, 2014 at 9:31 pm - Reply

    Well I travel a lot from India and use Travelex India to check the rates and book currency online as they provide the best accurate rates and best service

  7. Judy February 19, 2014 at 11:00 pm - Reply

    I’ve got a NAB traveller card so the NAB don’t charge ATM fees which is great. But I’m told that some ATMs will charge a fee for using their machine. My question is…is there any way to find out beforehand which ATMs (in my case, in the UK or Ireland) are the ones that don’t charge a fee?

    • admin
      Mozo February 20, 2014 at 1:36 pm - Reply

      Hi Judy,

      Great question! The NAB operates as Clydesdale Bank and Yorkshire Bank in the UK so you should be safe from nasty fees if you withdraw money at ATMs belonging to these banks. Bon voyage!

      Team Mozo

  8. Judy February 21, 2014 at 10:58 pm - Reply

    Thanks so much for the quick response Team Mozo – that’s excellent news! I actually went to a NAB branch today (before checking for a response from you) and asked them about ATMs. The girl said that all rediATMs are exempt from ATM fees for the NAB Traveller card. But she said they’re not branded as rediATM in the UK/Ireland. She said they’re ATMs with a plus sign (a red cross) on them. But I won’t be able to confirm this until I get over there in May.

  9. Lorraine March 8, 2014 at 12:55 pm - Reply

    Hi
    I am so confused with what to chose in money management when travelling for the first time to China. I don’t have credit card, and I don’t want one, I have viss and mastercard debit cards. I am reading about the load and go travel cards, but can’t find any informatisn as to whether the CNY is loadable on any, is it?

    • admin
      Mozo March 10, 2014 at 10:22 am - Reply

      Great question Lorraine!

      The Australia Post Load & Go Travel only supports five currencies and the Chinese Yuan (CNY) is not one of them. In fact, there are barely any travel cards in the market that support CNY but there is one exception – the Commonwealth Bank Travel Card . Although our comparison shows that Commonwealth Bank’s exchange rates aren’t particularly competitive, it is the only card on the market that supports CNY which means you can save a small fortune by not paying any cross-currency conversion fees on your holiday.

      Bon Voyage!

      Team Mozo

  10. Nicholas April 7, 2014 at 1:56 pm - Reply

    Hi,
    I am having real trouble with my NAB Traveller Card and I was hoping you could help…
    I load Thai baht on the card and then withdraw at an ATM.
    The Thai ATM’s will charge a 180 baht fee to use them.
    So if I have loaded 1180 baht on the card one would expect I can withdraw 1000 baht.
    Instead a currency conversion fee is being charged, and on top of that the dispense amount + 180 ATM fee + a DCC fee.
    Card services advise me some Thai ATM’s will see the card as an Australian Card – they said if the screen shows a currency rate from AUD to THB then don’t use them – but often nothing is shown on the screen, only on the ATM.
    I have also tried using some ATM’s that say do you want to use AUD rate or THB rate and I select THB but still get charged these fees. I then need to ring card services to get them reversed.
    Recent example – 873 baht on the card – 600 dispensed + 180 fee BUT 33 baht charged as a purse currency fee and transaction fee was 808 baht (600 + 180 +28 DCC).
    HOW CAN I GET THIS CARD TO WORK???
    Does anyone know for a fact WHICH thai ATM’s will not charge these fees and misinterpret the card as an Australian card?
    Can anyone recommend the best card for use in Thailand?
    Any further information on the QANTAS CASH card???
    Thanks so much for any help…

  11. Liz July 25, 2014 at 11:12 am - Reply

    My daughter has been stranded in Japan with a serious medical condition due to the NAB Traveller Card freezing her funds. I have called 6 times, my daughter 4 times, written letters, emails etc. to seek a resolution. The NAB Traveller Card customer service simply “do not care” and are obstructive in trying to resolve problems. My daughter arrived in Osaka on 17/7/14 and tried to use her NAB Traveller Card to pay for accommodation. The hotel returned her card declaring that the card was not working and they could not process the transaction. Her travelling companion processed the transaction on her card. My daughter went to use her card after a few days and noticed that her funds were not there. After contacting NAB Traveller Card customer service (as you cannot view holds online) she was told the hotel had placed a hold on her card for $US 978. The hotel have contacted me 8 times now to assure me that they did not process any pre authorisation as they require full up front payment. My daughter and myself have called continously to seek assistance with the NAB. They have demanded information from the hotel that they cannot produce. ie. transaction number, amount etc. They do not have these details. The NAB are holding my daughters funds for 30 days minimum as the hotel cannot provide these details. The NAB have not contacted us once. I have resorted to the financial ombudsman. My daughter has been left stranded in Japan whilst the NAB are not interested at all in providing any assistance to release her own funds to her. Another weekend passes and the NAB have informed me after I called today 25/7/14 that there is nothing they can do to instantly reverse the hold as they do not have access to the traveller card. Please be warned when you need assistance you will get none.

  12. Greg August 13, 2014 at 8:28 am - Reply

    Exactly! the NAB traveller card steels your money for 30 days whenever you swipe your card through an eftpos machine, even if it is a hold, a decline or you change your mind about how you want to pay.
    Avoid it like the plague or maybe Ebola! you will only experience terrible holiday pain as who on earth waits 30 days with their own money in a banks holding deposit for fun?

  13. Michael November 30, 2014 at 7:26 am - Reply

    Further to the above two comments we have experienced nothing but continuous problems with the NAB traveller card. There is currently over $2,500USD on holds that have been released already by the hotels and cruise ship company but NAB have not release these funds back to the card yet. It’s a nightmare. The very reason that we got the card in the first place was to lock in the currency at a certain rate. I’ve now had to transfer over $3,000AUD onto my standard VISA card because NAB still have the hold. When we contacted NAB via secure message from the USA they emailed back a generic USA number to call. Really helpful NAB!

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