Mozo experts analyse six travel cards and 175 debit cards to reveal the impact of fees and exchange rates on your bottom dollar when travelling overseas.
New research from leading financial comparison site Mozo has revealed that travel money cards marketed as “fee-free” may not always offer the best value. In fact, some cards that charge fees actually deliver a stronger return once exchange rates are taken into account.
“A travel card can be a smart way to lock in your exchange rate, manage your travel budget, and is safer than carrying a lot of cash,” says Rachel Wastell, Mozo’s personal finance expert.
“But our analysis shows when it comes to travel cards, checking the fine print can really pay off, as the cheapest looking option isn’t always the one that gets you the best deal.”
How do Prepaid Travel Cards Stack Up?
Mozo compared six popular prepaid travel money cards to find out how many US dollars Aussies would receive from a $1,000 AUD transfer. Despite all cards being assessed on equal terms, there was a $31 difference between the highest and lowest amounts received.
“Mozo’s comparison focused on USD conversions using a weekday bank transfer scenario, but fees can stack up fast in other scenarios, depending on how and when you use the travel money card,” Wastell explains.
“A lot of Aussies assume ‘no fee’ means best value, but when you look at the exchange rate being offered, that’s not always the case. You could be losing money through the rate instead of an obvious upfront charge, and unless you do the maths, you might not even realise.”
Revolut offered the best value for money with no conversion fee and a competitive exchange rate, however there is a 1% fee for any transfers that occur on the weekend between Saturday 7am and Monday 8am, so for those travellers looking to sort out travel admin on the weekend, the second place card could actually end up being the best value option for you.
Wise was the card in second place, despite having the only fee for conversion, as they have a much higher exchange rate than the other cards analysed. Surprisingly, some of the cards advertising no fees, including Qantas Pay and Commonwealth Bank, delivered the least value due to less favourable exchange rates.
“Some cards charge extra for converting on weekends. Others hit you with BPAY reload fees, or sting you if you top up your card in-store with cash,” said Wastell.
“There are also ATM withdrawal limits, inactivity fees, and even closure fees to consider. The more you swipe or switch currencies, the more these little charges can erode your spending power.”
Are debit cards a good alternative?
For travellers who would prefer to use their everyday debit card instead of loading money onto a prepaid travel card, Mozo’s analysis of 175 fee-free debit accounts from 74 providers as part of the Mozo Experts Choice Awards reveals just nine debit cards charging no international purchase, ATM or foreign exchange (forex) fees.
“A travel card can be a smart way to lock in your exchange rate and stick to a budget, but there are some excellent debit cards that offer real value too,” says Wastell.
“While debit cards often have less favourable exchange rates, if you’re looking for convenience, you’ll want to be sure your debit card is not charging you any unnecessary fees.”
Looking at the 175 cards Mozo analysed, most debit cards apply a forex fee averaging 2.67%, with the highest forex fee coming in at 3.65%.
This may not seem like much but can quickly add up, and Aussies paying the average forex fee could save as much as $133.50 on a $5,000 spend or $267 on a $10,000 spend by opting for a card that does not charge these fees.
In addition to forex fees, many debit cards can also charge international ATM withdrawal fees, which range from $0 to $5 per transaction, with an average international ATM fee of $2.91.
“Avoid foreign exchange fees, any charges for international ATM fees and of course, monthly account keeping fees if you are opting to use a debit card while travelling,” says Wastell.
“Mozo winners can provide Aussie travellers opting for convenience an easy way to check if their current debit card is competitive, or if it might be worth opening a new account before they hop on the plane.”
