How the travel money card you pick could save you hundreds of dollars overseas

If you’re gearing up for overseas travel to escape the Australian winter, adding a payment method to your daypack is essential. 

From booking last-minute accommodation in the local currency, paying for public transport, and finding an ATM to get cash out (especially in countries like Germany, where cash is often the only way to pay), being away from home gets expensive. 

While it’s common for Aussies to get a prepaid travel card before they hop on a plane, new Mozo research shows you could save hundreds of dollars by opting for a travel money card instead.

As the cost of living crisis continues to be a pain in the behind, there’s never been a better time to make informed decisions about the type of card you use on your trip, according to Mozo personal finance expert, Rachel Wastell. 

“If you’re booking international flights and planning for a year-long Summer, it pays to look at how you’ll convert your Aussie dollars into local currencies, and your spending and saving habits,” she says.

What payment options do you have when travelling overseas? 

For Australians travelling overseas, your main spending options (aside from cash) include a credit card (especially if it comes with free credit card travel insurance), the debit card attached to your bank account, a travel money card, or a prepaid travel card. 

“Each of these cards will give you access to your money overseas, but there are surprising differences that, if you don’t plan ahead, could cost you hundreds of dollars more,” Wastell said.

How travel money cards help keep costs low overseas 

Mozo found that travellers planning to travel to the United States, the United Kingdom, or Europe could save hundreds of dollars using a travel money card (aka foreign currency accounts) instead of a prepaid travel card with a locked-in exchange rate. 

Based on currency conversions completed by Mozo experts, Mozo found that foreign currency accounts charged exchange rates roughly 5% less than those on prepaid travel cards. 

When looking at USD (4.71%) GBP (5.23%) and EUR (5.16%) on a balance of $10,000 (AUD), that equates to a saving of $311 (USD), £273 (GBP) or €314 (EUR).

Aside from cheaper exchange rates, travel money cards provide easy access to multiple currencies. 

A good foreign currency account will also make it simple to change not just AUD to GBP or EUR, but also exchange foreign currencies between one another. 

So, if you’re heading over to Europe and the UK, where you might need Euros one week and Pounds another, that’s an important feature to consider.

A real-life example of how foreign currency accounts come in handy 

When I went on a three-month Euro trip late last year, I used Wise as my foreign currency account for pretty much everything. 

When I went from Berlin to Prague, I didn’t have to worry about exchanging my Euros for Czech Koruna because it was basically an instant transfer through the Wise app. 

However, my mate who I was travelling with still had his Euros in cash and got a shock when the currency exchange office near our AirBnB handed him a 5,000 CKZ note. Needless to say, he had a hard time finding a cafe that would happily split the note for a coffee and a croissant. 

The thing I really liked about Wise was the debit card you get with an account. 

Aside from its fluro-green colour, I could use it to get cash from an ATM (with no withdrawal fees up to $350/month), tap on for the London Underground, book hotels, hostels, and AirBnBs, and generally just use it like I would with any other debit card. 

Wise kept things simple for me while I was overseas. So, I recommend looking into it and seeing if it fits your needs. Read the Wise international money transfer review for more info on this provider, or compare travel money cards to see more options.

Can I just use my debit card overseas? 

You absolutely can. 

If you don’t want to open a dedicated foreign currency account or use a prepaid travel card, debit cards can still provide competitive exchange rates. 

In fact, Mozo found that debit card exchange rates were almost on par with foreign currency accounts. Foreign currency accounts were just 0.77% to 1.13% cheaper than debit cards, amounting to savings on an $10,000 (AUD) balance of $74 (USD), £40 (GBP) and €46 (EUR).

If you opt to use a debit card, find an account without fees 

Something else to be mindful of is the fees that may be charged on your bank account. These include monthly account fees, currency conversion fees, or overseas ATM fees. 

"Where travellers get burned is on high currency conversion fees and overseas ATM fees charges, which really add up over the course of a holiday. This is why it's so important to compare in advance," says Wastell. 

According to the research, someone with a $10,000 (AUD) balance could expect to pay $262 on average in conversion fees and $3.16 on average for ATM withdrawals, if they don’t have a fee-free transaction account.

But don’t fret, there are a fair few options to compare when it comes to fee-free travel debit cards.

The Mozo experts awarded the best of these, as part of the 2024 Mozo Experts Choice Awards^, to help travellers avoid these pesky, extra costs. Winners include:

• Bankwest Easy Transaction Account & Qantas Transaction Account
• Great Southern Bank Everyday Edge Account
• Macquarie Transaction Account 
• ME SpendME Transaction Account
• Suncorp Everyday Options & Carbon Insights Account
• Ubank Spend Account
• Up Everyday Account.

To help you weigh up your options, make sure you compare travel debit cards with both travel money cards and prepaid travel cards. Happy travels!