Portable Currency
The Age
Monday September 16, 2002
Venturing overseas? Here's how to get more bang for your holiday buck. By Denise Cullen.
TRAVELLERS spend hours hunting down bargain flights, searching for the most affordable accommodation and checking out the cheapest tours. But by treating their spending money as an afterthought, they sell their holiday plans short, industry insiders say.
Failing to carry the right combination of cash, cards and traveller's cheques can mean unnecessary chunks of your funds are siphoned off in fees, commissions and exorbitant exchange rates.
Ultimately, that means less to spend on a romantic gondola ride in Venice, those fabulous Balinese woodcarvings or another Singapore sling at Raffles Hotel.
Australian Federation of Travel Agents chief executive Mike Hatton says that while he relies on plastic rather than paper when he travels, his cash-carrying preferences depend upon the individual and the type of trip planned.
"There's a big difference between the requirements for extended leisure travel versus a short business trip," he explains. "It's a matter of finding the right fit for the particular traveller."
It used to be a no-brainer. Anyone heading overseas considered traveller's cheques as essential as their passport and toothbrush.
But American Express figures show that only one in two Australians now carry them when they travel.
Despite the advantages of traveller's cheques - they're secure, easily replaced if lost or stolen and widely accepted - they can be a nuisance. Travellers must visit a bank or exchange office to buy them and find a local money changer to cash them. And then there's the fiddling about with identification, serial numbers and signatures.
As with all forms of foreign exchange, you also have to remain savvy about the exchange rates offered by different institutions. Some are more favourable than others, while a small number are downright opportunistic.
The accessibility of traveller's cheques has improved now that 2900 Australia Post outlets sell American Express traveller's cheques and about 40 Harvey World Travel agencies offer in-house Travelex (formerly Thomas Cook) foreign-exchange facilities.
Commission charges vary depending on where you buy your cheques but expect to pay at least 1 per cent, or $10 - whichever is greater.
Although American Express points out that its traveller's cheques can be used fee-free in "millions" of hotels, restaurants, shops and other outlets, some banks and money changers do charge a small fee for cashing them.
Debbie Giudes, owner-manager of HWT's Giudes Family Group, which was one of the first travel agencies to trial in-house foreign-exchange facilities, says she prefers to take a pre-paid stored-balance card called Cash Passport (formerly Visa Travel Money) when she travels.
Cash Passport allows travellers to draw local currency at almost 700,000 ATMs around the world.
"(The cards are) PIN-protected, can be replaced quite quickly and you can draw out the local currency as you want it," Ms Giudes says.
Travelex regional manager Paul Walling says an upfront fee of 1 per cent applies to buy the Cash Passport, so if your spending money totals $5000, you'll pay a $50 fee. Each withdrawal also attracts a flat $3.75 fee.
"The pre-paid card appeals to people who prefer to save up in advance for a trip, fix the exchange rate and travel securely knowing they have ready access to cash," he says.
Purchases of $5000 or more also give the purchaser benefits such as legal assistance, emergency interpretation or medical evacuation.
Another way to fund an overseas trip is to use your existing credit card, particularly if you boost your buying power by loading it with cash before departure.
"Checking into a hotel, renting a car and securing any number of other travel services is now well impossible without providing a card imprint as security," says American Express spokesman Kevin Tanner.
But if you are planning to access cash using your credit card, steel yourself for a steady drip drip drip in fees.
For example, Westpac charges its credit card holders a cash advance fee (1.5 per cent of the cash amount, with a minimum fee of $2.50) plus a currency conversion fee of
0.5 per cent of the value of the purchase or cash advance.
In addition, cash advances attract interest charges immediately unlike purchases, which are often subject to an interest-free period.
Westpac spokeswoman Julia Quinn points out that accessing your own money by withdrawing cash from your savings account at an ATM is cheaper than using a credit card.
For instance, there are no access fees if you use ATMs belonging to Global Alliance member banks (including Barclays in Britain). Withdrawing cash at other ATMs overseas that display the CIRRUS logo
costs $2.65.
"Keep fees to a minimum by using your credit card for purchases such as paying your hotel bill or for a meal," she advises.
DONT' GET DIDDLED
1. Make sure your pockets contain some local currency to cover taxis, tips, food and other incidentals upon arrival. Foreign notes can be bought at home for a nominal charge. Westpac, for example, charges a flat $8 fee.
2. Get your foreign exchange before you leave Australia because exchange rates at home are usually better than those offered overseas, Travelex advises.
3. Unfamiliar currencies make it difficult to keep track of your credit-card spending, but if you let things get out of control fees will really eat into your holiday savings. For example, ANZ charges a $25 fee if you exceed your credit limit and a $25 late-payment fee if you fail to meet your required monthly payment.
4. Relying solely on your credit card is a popular but potentially disastrous way of funding your trip. Research conducted on behalf of American Express showed that more than one in five Australians travelling overseas had some sort of difficulty accessing their funds via an ATM. Ensure you have other options.
5. Your destination will largely determine the appropriate mix of cash, cards and traveller's cheques. For instance, cards are useful in major tourist destinations such as Britain and Europe, while traveller's cheques are probably better in places lacking extensive ATM networks, such as Bali and Fiji.
6. Take advantage of the benefits that accrue to you through holding particular products. For example, traveller's cheques in foreign currencies are available commission-free to certain ANZ customers, such as Gold MasterCard holders. Westpac Gold Card holders get comprehensive overseas travel insurance and free travel accident insurance.
7. If you want to avoid currency fluctuations and be certain of how much you're spending, pre-pay as much of your holiday as you can.
© 2002 The Age
