Cash in foreign currency

Travel money

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.

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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.

European getaway

Scenario: European mini-break and British holiday. Our traveller has budgeted €400 for a few days on the continent and £1000 for sightseeing during their stay with family and friends in the UK. Our traveller doesn’t want to travel with large amounts of cash so makes 7 withdrawals.

Buying sterling and Euro notes at BNZ before jetting off was the cheapest option. But the saving comes with the biggest risk: if you lose all your cash in transit, it’s gone.

Of the cards, Westpac’s debit card offered the best value. It worked out nearly $80 cheaper than BNZ’s Advantage Classic Visa, the most expensive choice when we took 30 days of accrued interest into account.

The standard annual fee for a debit card is $10 — half the set-up fee of Loaded for Travel or Westpac Visa Travel — so Westpac customers might find arranging one a good option before they head abroad.

If you’re with another bank, Air New Zealand’s OneSmart travel card may be your most affordable option. The exchange rate is not as favourable as Visa and Mastercard, but the card carries few other fees.

Exchange rates offered by the Cash Passport were the least favourable of any of the cards we looked at.

Travel cards can save credit card-holders accrued interest — you’ll pay up to $1.60 a day if you use your credit card to withdraw this amount of money in cash advances.

Spending money €400 + £1000

Bank/cardNZ$ cost after conversion[width=medium] Fees[width=small]Interest (30 days)[width=medium]Total
Buy notes at bank
Debit card
ANZ Visa Debit$2,418.77$95.47n/a$2,514.24
ASB Visa Debit$2,418.77$103.29n/a$2,522.06
BNZ Flexi Debit Visa$2,418.77$106.92n/a$2,525.69
Kiwibank Visa Debit$2,418.77$102.47n/a$2,521.24
Westpac Debit Mastercard$2,404.86$81.12n/a$2,485.98
Credit card
ANZ Airpoints Visa$2,418.77$95.47$38.71$2,552.95
ASB Mastercard$2,404.86$106.61$36.72$2,548.19
BNZ Advantage Classic Visa$2,418.77$106.92$38.89$2,564.58
Kiwibank Mastercard Zero$2,404.86$86.49$36.72$2,528.07
Westpac Airpoints Mastercard$2,404.86$81.12$37.97$2,523.95
Travel cards
Air NZ OneSmart$2,485.95$10.73n/a$2,496.68
Kiwibank Loaded For Travel$2,478.32$62.00n/a$2,540.32
Mastercard Cash Passport$2,510.59$11.00n/a$2,521.59
Westpac Visa Travel$2,418.77$102.47n/a$2,521.24

GUIDE COST is from a simulation run in March and April 2017, based on online conversion rates and fees. TOTAL assumes that foreign ATMs charged no withdrawal fee (separately to customer’s bank’s own foreign ATM-use fees) and that customer did not use an ATM with a reciprocal fee waiver agreement. For some transactions, Visa and Mastercard may process the payment on a different date, and a different rate may apply.

Oz adventure

Scenario: A traveller takes a flying visit to Australia where they’ll spend A$500 cash.

For a one-off withdrawal of A$500, using a debit card in an Australian ATM was usually the cheapest and quickest option.

After 10 days’ interest accrues, credit card-holders from any bank but Kiwibank may find it slightly cheaper to arrange a OneSmart card, though the savings of a few cents to a few dollars may not justify the extra effort (and ongoing maintenance fees).

As with our European expedition, Westpac’s debit card was the cheapest of the 5 banks’ cards.

Kiwibank’s Loaded For Travel was the least economical option on this trip.

Spending money A$500

Bank/cardNZ$ cost after conversion[width=medium] Fees[width=small] Interest (10 days)[width=medium] Total
Buy notes at bank
Debit card
ANZ Visa Debit$546.25$18.66n/a$564.91
ASB Visa Debit$546.25$18.97n/a$565.22
BNZ Flexi Debit Visa$546.25$19.79n/a$566.04
Kiwibank Visa Debit$546.25$19.66n/a$565.91
Westpac Debit Mastercard$546.85$16.67n/a$563.52
Credit card
ANZ Airpoints Visa$546.25$18.66$3.92$568.83
ASB Mastercard$546.85$19.80$3.78$570.43
BNZ Advantage Classic Visa$546.25$19.79$3.93$569.97
Kiwibank Mastercard Zero$546.85$16.12$3.78$566.75
Westpac Airpoints Mastercard$546.85$16.67$3.90$567.42
Travel cards
Air NZ OneSmart$567.21$0.00n/a$567.21
Kiwibank Loaded For Travel$566.25$26.00n/a$592.25
Mastercard Cash Passport$566.9$10.00n/a$576.9
Westpac Visa Travel$546.85$36.67n/a$583.52

GUIDE COST is from a simulation run in March and April 2017, based on online conversion rates and fees. TOTAL assumes that foreign ATMs charged no withdrawal fee (separately to customer’s bank’s own foreign ATM-use fees) and that customer did not use an ATM with a reciprocal fee waiver agreement. ANZ and Westpac customers can use their Australian banking counterparts’ ATMs without paying a fee. ASB customers using a Commonwealth Bank ATM in Australia will pay a reduced conversion charge. Any bank customer can use 1 Wellington- and 4 Auckland-based BNZ ATMs to withdraw Australian cash for a $5 fee. For some transactions, Visa and Mastercard may process the payment on a different date, and a different rate may apply.

By Olivia Wannan
Investigative Writer

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