If you’re planning an overseas vacay in the coming months, to ensure you get the most bang for your buck, you’ll need to be thinking about your travel money. But should you just pack the current plastic in your pocket – your credit card or debit card – or should you load some cash onto a prepaid card while the Aussie dollar is high?
Well the answer largely comes down to how the AU is performing at the moment.
Today, it’s currently trading at 76.34 US cents, which is significantly higher than when it was at just 69 US cents at the beginning of the year.
While the Aussie dollar has been consistently over the 75 US cent mark for some time now, after a slight dip last week, Westpac senior market market strategist Imre Speizer told news.com.au that the Aussie dollar remains “vulnerable to further downside.”
Rather than risking a drop in the Aussie dollar, this makes locking in your rate on a prepaid card a tempting proposition. If you think you might like to take advantage of the high Aussie dollar, before it potentially takes a tumble, here are some tips to keep in mind:
1. Look for a card with no or low purchase fees.
Think of a prepaid card just like a gift card you buy at stores like Myer and Woolies, where you may have to pay a purchase fee at the checkout. Typically speaking, prepaid cards have purchase fees from $10-$15 but the good news is there are a range of cards that come with $0 purchase fees, like the Key To The World Currency Card.
2. Watch out for high reload fees.
Apart from an upfront fee, you may also be charged a fee every time you top up your card, which can become a nuisance if you’re travelling for an extended period and want to use the card on an ongoing basis like you do with your credit card or debit card. So look out for prepaid cards with low reload fees when you’re comparing deals.
3. Check the ATM fee for overseas withdrawals.
Even if you lock in a great exchange rate, what can soon outweigh the value of that deal is hefty ATM withdrawal fees overseas. A competitive prepaid travel card, should allow you to withdraw cash from an ATM overseas with a fee of no more than $2.50AUD.
4. Avoid spending in a currency that isn’t loaded on the card.
If you’re travelling to multiple countries, keep in mind that any currency that isn’t loaded on the card will be hit with a cross currency conversion fee, which usually ranges from 3-4% of the purchase amount. So only spend in currencies that are loaded on the card and if you will be travelling to a country with a currency that isn’t on the card, have an alternative payment method at hand (e.g cash, travel credit card or debit card).
5. Use any leftover balance when you return from holiday.
Last but not least, if you come back from your holiday and still have a balance on the card it’s a wise idea to see when the card expires and use it up before it does, to ensure that you’re not forfeiting your hard earned cash to the bank. Another thing that could eat away at the remaining balance is an inactivity fee, charged by some providers if you don’t use the card for a certain period (usually 3-4 months).
For a snapshot of some of the most competitive prepaid cards around, check out Mozo’s comparison table.