Travel Money card vs credit card vs debit card: which one to choose?

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Whether you’re planning a family vacation in Bali or a romantic wine tour of Tuscany, the best way to access and spend your money abroad has likely been discussed when planning your trip.

Three of the most popular options for Australian travelers to make spending easier are travel cards, credit cards and debit cards. So, with a plethora of options available to you, which is the best choice when traveling?

travel money cards

A travel money card is a card you can load currency onto and then use it to make purchases and withdraw cash from ATMs. They work similar to a debit card, in that you deposit a certain amount into the account and usually have no credit limit. Unlike a debit or credit card, however, you can lock in an exchange rate when depositing funds and load multiple foreign currencies into your account, which can be useful for trips to multiple countries.

Since the money you deposit on the travel card is usually converted into the currency or currencies you need at the time of purchase, you can avoid paying ongoing currency conversion fees throughout the travel. However, certain fees may be charged by the issuer, including buy or close fees, overseas ATM fees, and inactivity fees.

One of the biggest benefits of a Travel Money card is that it’s not tied to your day-to-day bank accounts or personal financial information. This means that if your travel card is stolen, although it can be inconvenient and very frustrating, your key financial information and all related financial products have not been compromised by criminals. Dealing with issues like identity theft can be much more difficult overseas.

In addition, travel money cards can be issued by Visa or Mastercard, so they have a high probability of acceptance.

Benefits of travel cards:

  • Exchange rate lock – advantageous if you lock at a higher rate
  • Load multiple currencies
  • Potentially avoid ongoing currency conversion fees
  • Issued by Visa and Mastercard
  • Less risk in case of theft, compared to debit or credit cards

Disadvantages of travel cards:

  • Lock in the exchange rate – if rates go down, you miss out.
  • Some have fees, like purchase fees or ATM fees
  • No credit limit offered
  • May have limitations on specific currencies you can load

Debit cards

A debit card is your humble everyday bank card linked to a transaction account. Some travelers may simply choose to use their primary bank card when spending abroad, as this is an affordable option compared to purchasing a new travel or credit card. You can also benefit from accessing your account details through apps or digital wallets, making overseas payments even easier.

Debit cards can incur foreign transaction fees if you don’t do your research. This can include currency conversion fees and overseas ATM fees, which can climb up to 4% of each transaction. This means that if you spent $5,000 on your vacation abroad, your bank will pocket at least $200, or the equivalent of an extra night in a mid-level hotel. There are many debit cards and transaction accounts that don’t charge this fee, so it’s worth doing your research before you travel.

Unlike travel cards that need to be loaded in advance, opting for a debit card means you’ll have access to all of your funds, not just a small portion. Depending on your spending habits, this can be beneficial or risky. It should be noted that some retailers do not accept debit cards for payment, such as hotels requiring a deposit or for car rental.

Benefits of a debit card:

  • Many debit cards refund or do not charge overseas fees
  • Visa and Mastercard offered
  • Easily access and view your money through apps and digital wallets
  • Access to all your funds, not just spending money

Disadvantages of a debit card:

  • Some foreign transaction fees may apply
  • Not all retailers accept debit cards overseas
  • In the event of theft, it may be more difficult to repair this damage
  • Hotels may hold funds upon check-in, which can take weeks to return to your account
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