Whatever your holiday haunt, along with your passport you’ll probably need to pack some plastic. There are 3 main options for paying your way overseas: credit, debit or travel card. If you want the best bang for your holiday buck, our calculations found a debit card can work out to be an attractive choice. See how the options stack up in our scenarios for a European getaway and an adventure in Oz.

Credit vs debit

Credit and debit cards are convenient. Most of us have them and they’re easy to set up for foreign travel. But let your bank know you’re heading abroad so they don’t mistake your spending for fraud and freeze your account.

You’ll find it hard to travel without at least some cash in many countries. The main downside to using your card for ATM withdrawals are the fees — between $3 and $7.50 a pop on top of the banks’ currency conversion charges.

Some banks have reciprocal deals with offshore banks that mean you avoid overseas ATM charges. For example, Westpac customers can use ATMs of banks in the Global Alliance (such as Barclays or Deutsche Bank) or Westpac machines in Australia without paying an ATM fee.

With credit cards, you’ll also face interest on cash advances, an eye-watering 22.95% on the 5 cards we looked at. Interest starts accruing from the day you withdraw funds.

After adding interest, the most expensive card in our Europe and UK holiday scenario was BNZ’s Advantage Classic Visa.

Debit cards have the advantage here. You’re using your own money so you don’t get stung with interest.

Travel cards

Travel cards let you load a set amount of money on to the card to spend abroad.

Westpac’s Travel Card works like a pre-loaded debit card, calculating the foreign currency exchange rate after you make the charge.

The other 3 cards we looked at (Air New Zealand’s OneSmart, Kiwibank’s Loaded For Travel and Travelex’s Cash Passport) allow you to convert your dollars into a range of currencies before you leave.

Excluding OneSmart, you’ll pay between $10 and $20 to set up a card. These charges made travel cards the least economical option for our Australian stopover scenario, though they can be more competitive for longer excursions.

If you keep an eye on currency fluctuations as your trip approaches, you can try to land a favourable rate. But we found exchange rates on travel cards are frequently higher than those the banks charge for debit and credit card transactions.

Another downside of travel cards is the time lag when reloading currency. There can be delays of anywhere from a few hours to several business days, making them a less attractive proposition if you need to get money in a hurry.

Travellers who plan on using Travelex’s Cash Passport for multiple trips should be aware of inactivity fees, even if you have a nil balance. OneSmart also charges a monthly fee of $1.

Foreign currency

For larger amounts of cash — such as the bulk of your spending money for a 3-week holiday — you’ll usually get the best deal by buying foreign currency. Minimum fees of $10 to $12 per transaction are charged by the banks so this option is less economical for smaller amounts.

Even if you plan on spending nothing but cash, we recommend having a back-up option in case the worst happens. While this could mean pricey ATM withdrawals, it’s a better option than being stranded on the other side of the world not being able to pay for a cab back to your hotel room.

Options compared

What we did

We calculated charges for taking out foreign cash using a debit and credit card from 5 banks:

  • ANZ
  • ASB
  • BNZ
  • Kiwibank, and
  • Westpac.

We compared these with 4 travel cards:

  • Air New Zealand’s OneSmart
  • Kiwibank’s Loaded For Travel
  • Travelex’s Cash Passport, and
  • Westpac’s Visa Travel.

We also checked exchange rates to buy the same amount in notes at 4 banks — though travelling with your entire holiday spending budget in your wallet could stress out even the most seasoned traveller.