Article by John Kavanagh
Access original page here: http://www.smh.com.au/money/passport-to-hasslefree-transactions-20111129-1o3sb.html
Unclouded … buying foreign currency, travellers cheques or a travel card locks in your exchange rate. Photo: Louie Douvis
Should you take credit cards, debit cards, travel cards or travellers' cheques? John Kavanagh does the homework for you.
Australians are flocking overseas in record numbers thanks to a strong Australian dollar. The growing trend has prompted banks and financial institutions to upgrade their travel money services and offer more competitively priced products. It's not surprising given Australians are the biggest travel spenders worldwide.
Each month the Australian Bureau of Statistics calculates what it calls short-term movement resident departures; that's us going overseas for holidays and business trips.
More than 600,000 people a month have hopped on a plane or a boat so far this year. The number was 665,100 in September. That number has been rising steadily over the years. In 2007, a year when people were feeling very prosperous, about 450,000 a month were going overseas. A decade ago the number was about 290,000 a month.
Advertisement: Story continues below
Australians spent an average of $US3636 during their last overseas trip, making them the biggest travel spenders worldwide, according to a Visa survey published in September.
Australian respondents to the Visa Global Travel Intentions Survey say they are planning an average of three international trips in the next two years, spending an average of 16 nights on their next holiday.
In the financial world, the providers of specialist travel money products are competing hard to capture a share of that fast-growing market.
It has lowered the costs of buying foreign currency and making transactions abroad.
Specialist travel money products and services are also finding their way into everyday transaction and credit card accounts, giving consumers the option of setting up a permanent banking facility that will also cover travel needs.
AMEX BOOTHS
American Express, which has a long-standing agency arrangement with Australia Post for the sale for foreign currency, travellers cheques and travel cards, is now putting its own staff into Australia Post outlets to operate stand-alone Amex service counters.
The first of the new Amex booths opened in the Brisbane GPO this week and the company plans to open 200 of them over the next two years.
Last year Amex launched its GlobalTravel Card, a rival to the Travelex Cash Passport and similar cards offered by banks. Its card has no expiry date and no inactivity fee. There is no commission charge if it is bought at a post office.
Commonwealth Bank has upgraded its Travel Money Card to allow travellers to load multiple currencies on one card.
At the same time, a number of banks have incorporated a wider range of travel and foreign exchange services into everyday transaction and credit card accounts, with the aim of allowing customers to use those accounts when they travel overseas.
EXTRA SWEETENERS
In October, Citibank removed fees for overseas ATM withdrawals, overseas point-of-sale transactions and overseas funds transfers (to other Citibank accounts) from its Citibank Plus Transaction Account.
Citibank launched a new credit card, Signature, which includes international and domestic travel insurance and two airport lounge passes each year.
The card's rewards program includes four points for each dollar spent overseas, compared with 1.5 points for each dollar spent in Australia.
HSBC Bank Australia has launched a 24-hour foreign exchange trading service with live pricing. The service, Get Rate, is for retail and small-business customers. HSBC is claiming its 24-hour live pricing service is a first in the retail and small- and medium-enterprise markets. Available via mobile and online banking platforms, Get Rate offers access to 19 currencies.
In August HSBC launched a Platinum Qantas Visa Card, offering two points for each dollar spent overseas (compared with one point for local purchases), complimentary passes to the Qantas Club, travel insurance and purchase-protection insurance.
The question for travellers is whether they should shop for travel money products or find an everyday transaction account and credit card that will also meet their travel needs.
MIXED WALLET
The head of transaction services at Citibank, Sarah Black, says: "We have a transaction account that you can use anywhere. The proposition we would put to customers is that you don't need other products for travel."
The head of foreign exchange services at American Express, Nick Dinopoulos, says: "When considering a choice of bank transaction account and credit card versus travel money products, a big issue is certainty.''
When you buy foreign currency, travellers cheques or a travel card you have locked in your exchange rate.
"Having the foreign currency locked in allows you to budget and gives you peace of mind,'' Dinopoulos says.
"We recommend a mix. We are the largest wholesaler of banknotes in the Australian market and we can report that cash is king for travellers.
People like it for acceptance and liquidity. And it is cheap - once you have the cash there are no transaction fees.
"Our card product is growing share of wallet. Cheques are declining but are still a powerful product."
One of the significant changes that will result from Amex's move to have its own staff operating sales booths in post offices is that customers will get "instant fulfilment". Under the current agency arrangement, customers order their travel money product and come back a few days later to pick it up.
Now they will get their currency, cheques or card without any delay.
"Customers feel inconvenienced if they have to come back to pick up their travel money," Dinopoulos says.
There is no commission when any of those products are purchased through post offices and that aspect will continue under the new Amex arrangement.
COSTS
The head of retail banking and wealth management at HSBC Australia, Graham Heunis, says he understands that some travellers want the security of knowing exactly how much spending money they will have when they travel.
"For some people, having certainty and the ability to budget is a valid issue,'' Heunis says. ''But others prefer to be able to use their own transaction account and credit card wherever they are. That gives them a lot of flexibility and convenience.
"When I travel, I take a little cash, my debit card and my credit card. We see a growing number of our customers doing it that way."
The head of savings and investments at HSBC, Michael Danby, says customers use the service as part of their travel planning and overseas shopping.
"Customers like the fact that it is the same type of account as their Australian dollar account, with the same online access. You can use it to send foreign currency wherever you like," he says.
Comparison site RateCity says another important issue to consider when choosing from among the various travel money options is the cost of the service.
For travel card users, costs can include a purchase price of as much as $15, reload charges, ATM fees and inactivity fees.
For users of debit cards, costs include currency-conversion fees of as much as 3 per cent (ANZ and Commonwealth Bank) and ATM withdrawal fees of as much as $5.
Users of credit cards also pay currency-conversion fees and ATM fees. However not all card issuers apply these charges.
Travel money tips
❏ Notify your bank before you go.
❏ Some countries have moved to chip technology that requires a PIN, not signatures, for transactions.
❏ Keep a copy of the customer service numbers of your service providers.
❏ Check for daily withdrawal restrictions in your destination.
❏ Do not keep all cash, cards and cheques in one place.
❏ Ensure if you are robbed or lose your wallet you don't lose all your travel money.
❏ Keep a copy of all receipts to check against your statements.
Different countries require different approaches
University student David O'Brian, 22, made his first trip overseas two years ago, when he travelled to England and Europe. Last summer he visited South America and this summer he will be holidaying in Thailand and Cambodia.
For his first trip, O'Brian used a Travel Money Card from the Commonwealth Bank. When he left Sydney he had pounds for his short stay in England and euros for his stay on the Continent.
He found he could use the card everywhere without problems.
For his trip to South America he took US dollars and a travel card. But he took a lot more cash on this occasion because he had been advised that ATMs might be hard to find.
He is still considering how he will organise his money for his trip to Asia. He will visit rural areas in both Thailand and Cambodia and expects that he will need a fair bit of cash.
"I have read some guides that say it is best to have a combination of US dollars and Thai baht,'' he says. ''I'm worried that Asia could be an iffy place as far as security goes, so I don't want to carry a lot of cash.''
But he's not sure about taking a travel card. ''In Europe I probably spent close to $100 on transaction fees,'' he says. ''Unless I'm taking a lot, I don't know if I want to go through the hassle and the expense of a card. I forgot my PIN code a couple of times in Europe.''
O'Brian does not have a credit card. He doesn't like the idea of spending borrowed money. In any case, travelling with friends means if he runs short, one of them can help out.
Different options: fees and features
❏ American Express Global Travel Card. Three currencies available. Costs up to $15 to buy and up to $10 to reload. ATM fees are $US2, €2.20 and £1.25. A distinctive feature of the card is that it does not expire and there are no inactivity fees. Emergency card replacement and cash are available worldwide for peace of mind.
❏ Travelex Cash Passport. Five currencies available. Costs up to 1.1 per cent to buy and 1 per cent to reload. ATM fees are $US2.25, €2.20 and £1.50. Funds may be forfeited if the card expires and there may be monthly inactivity fees. A distinctive feature is the card can be reloaded via SMS. Emergency assistance is available.
❏ ANZ Travel Card. Six currencies available. Costs $11 to buy and 1.1 per cent to reload. ATM fees are $US2.20, €2.10 and £1.25. Funds will be retained by ANZ 12 months after card expiry and there are inactivity fees. Limits apply for daily spending. A replacement card is available at a cost of $35 but there is no other emergency assistance.
❏ Commonwealth Bank Travel Money Card. Nine currencies available. Costs $15 to buy and 1 per cent to reload. There is a $60 card-replacement fee. ATM fees are $2.50, €2.20 and £2. Funds may be forfeited if the card expires and there are inactivity fees. But there are no fees for closure. There are ATM balance inquiry fees and SMS alert fees. Emergency assistance is limited. A feature of the card is that it can load multiple currencies.
SOME GOOD DEALS
❏ The Citibank Plus transaction account has no fees for overseas ATM or point-of-sale transactions.
❏ Other debit cards with no overseas ATM or currency conversion fees include NAB's Gold Banking account, Hume Building Society's All Purpose account and ECU Australia's Access Plus account.
❏ The GE Money 28 Degrees MasterCard credit card has no ATM charges or currency conversion fees.
❏ ING Direct's Orange Everyday transaction account, which is fee-free for local banking, has a low $2.50 charge for international ATMs.
❏ ANZ is developing foreign exchange ATMs that will issue US dollars, New Zealand dollars, pounds and euros.
Read more: http://www.smh.com.au/money/passport-to-hasslefree-transactions-20111129-1o3sb.html#ixzz1fELjd0LQ
Posts
