How to Get the Most out of your Travel Money

Do you like to travel?

We tend to travel abroad every few years to experience new cultures and visit amazing natural wonders. And I normally travel to Australia to attend conferences or training courses every year.

I know, travel is counterproductive towards our goal of becoming financially independent. You might say that travel is our spending vice. Even though spending money on travel will increase the time it will take to become financially independent I still think it’s worthwhile.

Travel adds value to our lives.

Every time we travel overseas we run into the same problem. What is the easiest and cheapest way of accessing the money we need?

Previously, we have avoided using a credit or debit card to avoid the exchange rate fee. Rather, we would withdraw an amount of foreign currency that we figured we would need.

The problem with this is that you are carrying around a lot of money. And depending on where you go this isn’t always the best option.

Then, there is also the problem of figuring out exactly how much you need- too much cash and you will have to pay another exchange fee to convert it back to NZ, take too little cash, and you may need to use your credit card and pay more fees.

You can’t win!

So, since we are planning on going away next year, I decided to do some research to see if anything had changed since 2017- the last time we travelled.

Travel Cash from the Big Banks

One of the easiest ways to travel is with cash- after all- if you are going off the beaten track you won’t always be able to pay with a credit card or debit card.

The problem with cash is that there are fees involved- often in the order of several % of the total amount. The fees you pay are two-fold. There is a currency conversion fee, a spread on the exchange rate.

Currency Conversion Fees from Major Banks

The currency conversion fee is quite simple to understand. A bank will normally charge a dollar amount of a percentage of the transaction as a fee to exchange your money to the foreign currency.

BankCurrency Conversion Fee

The spread on the exchange rate

The spread on the exchange rate is not as simple to see or understand.

When you google the exchange rate for a set of currencies you will see the true exchange rate of the currencies. But when you buy or sell foreign currency at a bank they will normally add a margin to the exchange rate.

This can sometimes be quite alot- to show you lets use the major bank’s exchange rate calculators to exchange 100NZD to AUD and compare to the true exchange rate.

The current exchange rate is 1NZD= 0.9384AUD. So for $100NZD, you should theoretically get $93.84 AUD. Let’s see how much you would get from the Banks.

Exchange rate margins compared to the true exchange rate for major NZ banks and Transferwise

So many of the banks charge around 2% in margins.

Combining that with the roughly 1% fee of echanging cash- you’re looking at losing 3% of your cash before you even set foot in the airport.

How to get the best out of using a travel card

I’ve always heard about travel cards such as the Cash passport and the Travelex cards. But which offers the lowest fee- and possibly one that offers rewards- although having low fees is more important.

I’ve never used a travel card before- but the web has some great tips for me in terms of how to find the best travel card for me. Here are a few tips that I have found during my research.

  • Like everything in life, you want to shop around for the best travel money card- preferably a while before you go as you don’t know how long it will take to get your new card and load it up.
  • Figure out how much you need in each currency, so you don’t run out of one. You will get charged a fee if you run out of a particular currency and have to use another currency to complete the transaction.
  • Know how long it will take for an online transfer to be credited to the card, so if you see that you are running low you will know when you need to top up and how long it will take.
  • It’s always a good idea to bring a credit card just in case! Or even some local physical currency. You don’t want to get without any money because your were slightly off in your budgeting.

Not all Cards are the Same

While researching numerous different travel cards I also discovered that not all of them will allow you to load every currency out there. Sure- all of them will allow you to load the British pound, Euro, and the US dollar.

But for more other currencies like the Thai Bhat, or the South African Rhan- many of the traditional travel cards offered to New Zealanders would allow you to load them.

Finding out that most of the cards don’t alow currency loading of more obscure currencies was disappointing. We want to travel to South-east Asia, or South America someday- which makes some of the standard travel cards seem limited.

That was until I found out about TransferWise’s recent launch into NZ.

TransferWise announced it’s bringing its zero-fees debit card to New Zealand.

TransferWise just launched their TransferWise Platinum debit Mastercard in Australia and New Zealand! And they offer 40+ different currencies! And let you spend in more than 150 currencies.

And it’s has a free app and debit card so you can easily send, spend and receive money around the world.

They say that it’s up to 11x cheaper than a regular travel card- I’ll let you know more about that in an upcoming post about travel cards and their fees.

TransferWise Have the Best Deal

After looking at many of the options out there- transfers seem to be the best deal- they say they charge no margin on the exchange rate- and when I compared it is pretty close to zero- sometimes +0.1% and sometimes -0.1%. Which is pretty close to 0% and much better than the 2% from the banks.

They also have account fees.

I’ve just signed up for a TranserWise debit card– even if we don’t end up using it in South America, I will save 3% on exchange fees when travelling to Australia.

If anyone already has a TransferWise card I would love to hear from you!

And remember to add yourself to my mailing list if you are interested in my follow up post about TransferWise!

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5 thoughts on “How to Get the Most out of your Travel Money”

  1. I’ve used Trasnferwise to send money overseas before, but this card is a gamechanger. Hopefully my card will arrive soon. 🙂


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