How to choose the best travel money card for you

Canstar's Travel Money Card Star Ratings reveal which cards offer the best value

If an overseas adventure is on your bucket list, choosing the right card for your situation may save you extra spending money.

Travel money cards, which give travellers the ability to lock in an exchange rate before they leave, can go a long way to helping keep holiday costs under control but how do they stack up when compared to relying on your credit or debit card?

Financial comparison website Canstar has analysed 12 travel money cards and looked at the pros and cons of travel money cards when compared to credit and debit cards.

"A travel money card is a specifically designed debit card, with similar security features that's not connected to your other bank accounts. It can be an easy and secure way to carry multiple currencies in your wallet," says Canstar's group executive of financial services, Steve Mickenbecker.

While there are benefits, there are several things consumers need to be aware of when deciding which card is right for them.

"Some offer competitive exchange rates but come with high fees, while others come with lower fees and make up for it by adding in commissions to their exchange rates," says Mickenbecker.

"Travellers should be on the lookout for an outstanding-value offer that has both low fees and a great exchange rate.

"It will pay to do your homework and be aware of these subtle differences, including any additional fees, because they may have an impact on your holiday funds."

Travel money cards, just like credit cards, may not be accepted everywhere and there are times when a credit or debit card may be more beneficial.

What are the likely currency conversion fees?

A travel money card likely won't charge a currency conversion fee if you pre-load the selected currencies you want to use while travelling ahead of your holiday.

However, some travel money cards will charge you a fee to pre-load money in the first place and you may be charged a fee if you want to use a currency other than what is loaded onto the card.

"Our latest research shows that the cost to spend a currency that isn't currently loaded on your travel money card can range from 0% to 5.95%, with an average of about 3.45%," says Mickenbecker.

"With credit and debit cards, the currency conversion fees on the market can be as high as 3.65%, proving to be one of the main culprits hiking up holiday costs."

Will there be ATM withdrawal fees?

If you are going to access cash overseas you should be prepared to pay some fees. At the very least you will be paying an ATM usage fee to the bank that provides the machine. In addition, some travel money, credit and debit cards charge a fee to process an ATM transaction while other cards process the transaction for free.

"Regardless of whether you're using a travel money card, credit or debit card, the chances are you'll be paying an ATM usage fee to the bank that provides the ATM," Mickenbecker says. "This will be a flat fee in the respective currency, which will appear on the screen in most cases. This is typically only ever a few dollars but it can add up if you are making multiple withdrawals."

How will exchange rates fair?

With travel money cards you are fixing the exchange rate when you load the card so you won't be up for any surprises. However, the trade-off is that you generally will be receiving a less favourable exchange rate when you load the card with the currency, meaning there's less spending money.

"These cards enable you to pre-load the more widely used currencies, and to do so at a time of your choosing - meaning you can convert your money into foreign currency when you feel that the exchange will stretch your money further," says Mickenbecker.

"Spending in the local currency also means you won't pay currency conversion fees every time. The necessary downside of locking in for a future period, however, is that the exchange rate usually isn't as sharp as it might be for credit and debit cards, so it pays to shop around and compare travel money card offers."

What is the typical loading time for putting more money on the card?

Travel money cards require a deposit of pre-loaded money in your destination country's currency, which doesn't apply to credit and debit cards given they are directly linked to your bank account. The benefit of pre-loading money is that you can set a budget of how much you plan to spend on your holiday. But if you do happen to go over this amount, then you will need to reload the card.

"Travel money cards can take up to three days to make funds available when you transfer more money onto your card, so they do require pre-planning and budget watching," says Mickenbecker.

Which travel card offers the best value?

Travelex, Qantas and Velocity scored five stars for both price and features.

The Travelex Money Card charges fewer fees than other cards, and holds 10 currencies.

The card can be purchased and reloaded at millions of outlets worldwide, with access to free Wi-Fi at many of these, giving users on-the-go connection without being charged roaming fees.

The Qantas Cash Card stands out due to the inclusion of the company's rewards program where cardholders can earn Qantas Frequent Flyer points on all eligible purchases both domestically and internationally. The card offers the ability to load up to 11 currencies.

Qantas Cash has low fees for accessing funds via ATM withdrawals overseas and doesn't charge fees for purchases, transactions, inactivity, or any ongoing monthly fees. The card also has a high degree of functionality within its smartphone app.

The Velocity Global Wallet achieved Canstar's five-star rating on the back of its rewards points, which allows cardholders to earn one Velocity Point for every $AU1 spent overseas and one for every $2 domestically.

The Velocity offering holds 11 currencies on its card and provides above average value on exchange rates.

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