Travellers encouraged to cash in before dollar drops further
Australians with overseas holiday plans in 2014 could possibly see their overseas buying power shrink if predictions of further drops in the Australian dollar become a reality.
According to an article on Business Spectator, John Edwards, an external Reserve Bank Board Member, said, "there is a risk that [the currency] is going to fall further. I don't think we should dismiss that."
The Australian dollar has dropped 15 percent from its peak in 2013. The RBA has been talking down the local currency in a bid to help exporters sell their merchandise overseas.
The Australian dollar is currently trading at around $US0.89. The dollar has also weakened against the Pound and NZ dollar.
If the Australian dollar was to fall to $US.80, someone travelling to the US and converting $5000 dollars would be $450 worse off than today.
While there is never any guarantee that rates will drop, some savvy travellers are hedging their bets and purchasing prepaid travel cards to lock in today's exchange rate, even though they plan to travel later in the year.
This is a good tactic advises Mozo.com.au as it can help spread out the cost of the holiday as well, but warns consumers to be watchful of prepaid cards that have monthly inactivity fees. These fees can be around $3 a month and can add up if you get a card now will not be travelling until later in the year. In some instances you can avoid this fee by making a balance enquiry at an ATM. To compare prepaid travel card features and rates of major banks and prepaid travel card providers head to Mozo.