Why Are Travel Money Cards Finer Than Conventional Debit/Credit Cards?

Posted by Paul Baker

December 14, 2009

Because of the terrible foreign exchange rates, a lot us in the UK have been postponing any plans for travelling to the States or the Eurozone, however there is now something available that will help minimize the potential damage to your budget: travel money cards.

What’s a travel money card?

These cards were lately introduced to the card market and will provide the option of uploading whatever currency you choose to a plastic card, at whatever the existing rate of exchange is, and is your travel money for whatever destination you’ve chosen to go to.

Travel money TV ad

You can apply via the Internet, and send funds to your card online, via phone, or even (on some cards) by sending a text message. At the moment travel money cards support pounds, dollars, and euros.

How are travel money cards greater] than traditional credit cards?

One major advantage is that you will be given an exchange rate that is much more favourable than if you went to High Street and use the services of the bureaux de change. Another plus is that the exchange rate of the uploaded funds is fixed, so there will be no shocks after you use it. Traditional credit cards and debit cards typically use the exchange rate that applies at the moment of the transaction, so you never know what you have spent until you see your bill.

Is that all there is to it?

Not at all. When you use a traditional credit card or debit card to make a purchase abroad, you are typically charged around 2.75% of the transaction as a fee for the foreign currency exchange.

If you didn’t know, debit and credit cards might also elicit an additional “till charge” when used in restaurants or shops, but the currency exchange card doesn’t have this charge. Be aware that debit and credit cards have high rates for any ATM withdrawals, but the money on the currency card have been prepaid, not borrowed, so it’s not applicable.

Anyway… Is there a catch?

Since you are uploading currency onto the card prior your trip, your vacation is paid for up front, not with credit, so you must save for your trip. But, that may not be a disadvantage in the current economy. Currency cards do have fees for taking cash from ATMs, but the associated fees are much lower that those incurred with credit or debit cards.

One instance of this is that, when this article was written, NatWest and RBS both had a withdrawal fee of two percent, which amounts to about 6 each time you withdraw the sum of 300. Currency exchange cards, however, have a flat fee that amounts to as little as 1.50 no matter how much your ATM withdrawal is.

The real disadvantage for you is the cost you’re charged for using your card to pay for something in a currency other than one fixed - and FX convert fee; using the example of a dollar transaction which is made with a euro currency card, you could be charged a fee of up to 2.75%. However, there are a number of cards that don’t charge this fee (see list below).

Aren’t there some good companies offering credit cards intended for use abroad?

Yes, there are such cards (Post Office classic, Nationwide Gold, and Abbey Zero), but the first two — even though they’re good deals, and include no conversion charges — still have large withdrawal fees (3 minimum, 2.5% of withdrawal) and this doesn’t compare favourably with travel money cards — unless you absolutely need credit while travelling.

There are no cash withdrawal or FX fees attached with the Abbey card, however, which makes it the favoured credit card. Cash withdrawals do carry very high interests rates, though, which are at 25.9%; the cash withdrawal interest rates with Post Office and Nationwide are 20.83% and 22.9%, respectively.

Tell me more. So which travel money cards are the best?

The FairFX Euro Currency card is considered the best among the euro cards at this time due to having the lowest ATM cost at 1.50 with a 0% convert fee, with excellent exchange rates. While the Indigo Travelcard Euro has a fairly low ATM fee at 1.95, it also has a higher convert fee of 2.75%. Then there is the ICE Travellers CashCard Euro which has a high 3, but you have no convert fee.

When taking into consideration dollar cards, again, FairFX is the best deal, as the currency card charges just $2 for ATM transactions, and it doesn’t have a convert charge. Another bargain for dollar cards is the ICE Travellers CashCard, because it does not have a convert cost, and the fee for ATM transactions is just $3. Bare in mind that when there is no convert charge, the cards can be used for any available currency.

What’s the best travel money card for world travel?

An ‘Anywhere Card’ has just been lauched by FairFX as a new global travellers card - an ideal card to take everywhere in the world.

One of the brilliant things about the Anywhere Card is that there are no ATM charges, and no loading fees either! A 1.5% transaction fee is the only charge you’ll receive - and that’s at the time of the transaction, so you don’t need to worry about exchange rates.

At this time, FairFX is offering a free dollar, euro or sterling ‘Anywhere Travel Card’, which usually costs 9.95, for a very small initial load. Why are you dragging your heels? Save money buy getting a travel money card from FairFX exchange travel money services today!

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