Do you have cash on you? I rarely do these days. The supermarket, the gas station, the cafe – it’s all tap and go, and I’m not alone. Going out for a meal with friends means cards and cash transfers to whoever pays the bill. It’s rare for anyone to have cash on them. So does this apply abroad?
Do I still need cash abroad?
Yes, probably less than you would have needed a few years ago, but how much less depends on where you go. In most parts of Western Europe or North America, a few hundred dollars of local currency could easily last a week. In southern Europe, morning coffee with a croissant in a cafe or bar, cash is king. Same thing with taxi fares, tips and shopping in markets. Hotel bills, meals and just about anything else you can usually pay with a card in towns and tourist areas, but in more isolated areas that don’t see many tourists the local currency is always d news. In other parts of the world, especially developing countries, you are likely to find more cash-only vendors.
Traveling almost cashless is a great idea. You don’t have to carry around a wad of cash, spend time finding an ATM, and worry about getting the right change. Better yet, pay your hotel bill, meals and all other major expenses with the right card and you get a better exchange rate than cash. “And remember, money is easy to lose and hard to insure,” says Taylor Blackburn, personal finance specialist at Finder.
To make your travel payments with ease, you need a chip and PIN card, which appears to have a built-in SIM card, as well as a card that allows contactless payments. Look for the contactless indicator on your map, four curved lines similar to the signal strength indicator on your phone. You must also inform your financial institution that you are going abroad.
Card choice is crucial when traveling cashless, according to Blackburn.
“In Bali, my partner accidentally used another bank card with one of the big four to withdraw money and was hit with ATM fees, transfer fees and conversion fees that amounted to almost 25% of the withdrawal amount!definitely less complicated to use a card abroad, unless your debit or credit card offers zero percent international transaction fees, you may have to pay currency conversion or foreign transaction fees.”
An example is the Latitude 28 Degree Global Platinum Mastercard. It is a credit card while most others such as ING Orange Everyday Visa card, Citibank Mastercard are debit cards, and debit cards have a security issue.
“Credit cards are usually the way to go when traveling because of fraud protection,” says Blackburn. “It’s their money and not yours if the card is pinched. A good friend of mine had her debit card skimmed when she was in Africa and ended up out of pocket for weeks. If had it been a credit card, she could have claimed fraud before it reached her account.”
One way to protect your debit card from fraud is to keep the balance low and only top up funds from your bank account when you need them, and most cards let you do this through an app or through their website.
There is also a difference between how you use credit and debit cards. When placing a deposit on a rental car or when a hotel asks for your card for pre-authorization, use a credit card. Use a debit card and the funds are frozen, and it may take a week after your rental car has left or returned before these funds are released.
When driving in Europe, it is common to insert your card into the central terminal at a gas station before filling up, but in addition to deducting the fuel payment, the system can also lock in an additional amount. This happened to me twice in Italy recently and each time the system froze €100 from my debit card. This was listed as a “pending” charge, but remained so for a full month after the transaction, reducing my available funds by €200. Lesson learned – I should have used a credit card.
Is this the optimal travel card?
Many travelers sing the praises of the Wise debit card, which charges low fees for foreign currency transactions even if you keep your credit in Australian dollars. Most travel money cards require you to exchange your Australian dollars to buy other major world currencies, which you use to pay for goods and services overseas. Deposit funds and you buy Euros, Swiss Francs or whatever the local currency is. You can also do this with a Wise debit card, or you can keep your deposit in Australian currency. If you have the local currency on your account, the Wise card will use it. If not, it will automatically convert your Australian dollars at the current exchange rate, minus a small fee. This gives more flexibility if you are hopping from country to country. If there are Australian dollars left on your Wise card when you return from abroad, you can transfer them to another bank account for a small fee. On a $1,000 transfer, the fee is only 57 cents. Other travel cards charge you high fees if you convert your foreign currency back to Australian dollars.
So how is it on the pitch?
On the morning of June 22, a $1,000 credit on the Wise debit card was worth €657.81, £564.90 or US$692.86 at a point-of-sale (POS) terminal overseas. On each of these transactions, Wise charges a currency conversion fee of $4.38. It’s a modest sum, and it compares well to other travel money cards.
For comparison, if you were using a Qantas Travel Money card at a POS terminal on the same date, that $1,000 is worth either €31.84 less, £27.95 less or US$26.31 less than on the Wise map.
The Travelex Travel Money card gave you more bang for your buck than the Qantas card, while the Citibank debit Mastercard I use was better. But Wise still came out on top.
See also: $60,000 round trip: cost of flights skyrocketing, booking with points difficult
See also: Countries that still make it difficult (if not impossible) for Australians to visit