Prepaid travel cards: Should you lock in a foreign exchange rate now?

It’s no secret that the Aussie dollar has continued to take hit after hit over the last 12 months, whether it’s the trade tensions between the US and China, the recent bushfires or RBA cuts.

One of the latest blows comes from the recent outbreak of the Coronavirus (COVID-19), pushing it to the lowest it’s been in 11 years - with 1 AUD currently sitting at 65.05 US cents. 

And the unfortunate truth is, as the crisis continues to develop, there’s no knowing when the dollar is going to bounce back. 

(Source: RBA website - screenshot taken 12 March 2020)

So if you have plans to travel and are considering a prepaid travel card, you may want to think about locking in an exchange rate incase the dollar drops even further. 

And according to the Reserve Bank of Australia’s (RBA) data a lot can happen in a short period of time, even in six months. 

In fact, check out our full rundown of 10 popular currencies and the changes over half a year: 

(Data taken from RBA's spreadsheet 12 March 2020)

How do prepaid travel cards work? 

Prepaid travel cards can be a convenient way for travellers to exchange and access their money overseas. 

It works just like a debit card where you can pay electronically or make cash withdrawals, however you load the card with particular or multiple currencies before you leave and while you are travelling as well. 

A handy feature of these cards is that often you can lock in an exchange rate for foreign currencies on the day you load the card. This means that if you need to load more money on the card later on, you’ll receive the same rate as you did the first time around. 

And while you can take your regular debit card overseas,, the downfall is that you can’t lock in an exchange rate. Instead, you are subject to whatever the exchange rate is on the day you make a purchase with the card - which may be higher or lower than the day before. 

Just bear in mind though, prepaid travel cards do come with a range of fees from purchase, reload, cross currency and closure fees, so it’s worth weighing up whether it’s suited for the type of travel you are doing. 

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Want to find out how prepaid travel cards stack up against each other? Head over to our prepaid travel card comparison table or jump across to our travel money hub for more options!