DOMINICK NG
Software Engineer

Travel Money

Spending money in a foreign country is a frustrating process. Credit cards typically charge a currency conversion fee of 3% or so, and hit you with an exchange rate that's inevitably worse than the actual rate, sometimes by several percent. Travel cards are offered by various banks and currency exchange companies, but there are a plethora of hidden fees for loading money onto the card, as well as a fee for the card in the first place. Currency exchangers commonly charge a commission, as well as using a less-than-optimal conversion rate. I like to think of currency exchangers as sharks, swimming in the pre- or post-travel waters, ready to extract exorbitant payment from tired and nervous travelers.

Thankfully, Australians have a few decent and accessible options for avoiding these traps. The first option is the 28 Degrees Mastercard. This is a very handy credit card offered by GE Finance, with the following features:

• No annual fees
• No foreign currency conversion fees
• No international ATM withdrawal fees (other than those charged by the ATM operator)
• Up to 55 days interest free on purchases (i.e. 25 days to pay your bill at the end of each month)
• Foreign currency conversion uses_ the Mastercard spot rate at time of use_
• Security chip on the card and PIN (useful for Europe)
• Fully online application process (including online ID validation, assuming you have a passport, Medicare card, and are enrolled to vote at your current address)

In other words, this card has no fees, and converts Australian dollars to international currencies at almost the precise exchange rate at the time of use. I've used the card without any problems all across Europe, and it's also handy for purchasing from online retailers who price in US dollars.

One downside of the 28 Degrees card is that it provides no rewards program for money spent on the card. However, it is intended as a travel card, and it succeeds in this domain handsomely. With the Australia dollar at historic highs (and forecast to remain at or above parity with the US dollar well into 2013), using this card for foreign exchange purchases can save hundreds of cumulative dollars in conversion fees and poor exchange rates. It's also handy for use on Amazon, and other websites that charge in foreign currency.

You can use the 28 Degrees card to withdraw money from international ATMs, and this is by far the most efficient method of converting money. But, as a security measure, interest is charged on cash withdrawals (also known as advances) immediately, rather than using any interest-free days. If you really want to avoid being charged interest on cash withdrawals, you can prepay money onto the card, using BPAY. This is essentially like overpaying a credit card bill, so there is a positive balance on the card. For example:

1. Your credit limit is $2000, and your balance is$0 (nothing owing)
2. You use BPAY to pay $500 to GE Finance 3. Your balance is now$500, and your effective credit limit is \$2500 Now, while your balance is positive, you can withdraw cash from ATMs using the 28 Degrees card without paying interest. This will last until the transaction where the balance goes negative and you've run out of the"extra" cash on the card. Regular credit card purchases also draw out of the extra money, so some care is needed in how you interleave withdrawals and payments.

Of course, this method has many pitfalls. It takes a few days for BPAY to get the money to the card, so this is an operation that requires some foresight. If your card is stolen, then the extra money can be spent by a miscreant, and will be unrecoverable. And finally, credit card companies dislike it when their credit cards are used like this, as they are being duped out of interest payments. So overloading too much money onto the card (scuttlebutt suggests more than the credit limit on top) is cause for GE Finance to cancel the card. But a few hundred dollars here and there is much more palatable to them, and can mean huge savings in the long run for international travel.

Credit cards can sometimes prove tricky to acquire. This is particularly the case for students, who often have transitory, inconsistent, or non-existent incomes and credit records. Thankfully, another option is available for this situation: the Citibank Plus account with a Visa Debit card. This account is an everyday banking account with Citibank Australia that has just about every feature of the 28 Degrees card, including no fees, no exchange conversion or international ATM fees, and currency conversion at the Visa spot rate at time of use. The main differences are that there is no security chip on the card, and that you get a Visa Debit card rather than a credit card. Hence, it's really easy to open an account since there's no credit check. And pulling cash out of ATMs requires no dodgy preloading - it's all money that you already have sitting in the account. Electronic transfer into the account is as easy as with any other Australian bank account, so you can shuttle money in and out with ease.

The lack of a security chip on the Citibank Plus card is something of a letdown as the majority of cards issued in Australia are starting to include this feature. A chip is becoming increasingly necessary in Europe and Asia, and there are anecdotal reports of stores rejecting cards without chips. Still, given that the account is free to open and maintain, it's a no-brainer investment for someone who is ineligible for a credit card. I've used the Citibank Plus card in the US and across Asia, for purchases and for cash, and it's saved me a substantial amount in fees.

One thing that's important to keep an eye out for is that foreign card machines will occasionally ask you if you want your Australian card charged in AUD. This is almost always a trap to lock you into a worse exchange rate - always let your card do the conversion, rather than the merchant. This also applies on Amazon, which has a Currency Converter service that always gives you a pretty bad rate.

A final piece of traveling advice: before you leave on your overseas trip, find a currency conversion place that isn't in an airport and doesn't charge commission. Buy some foreign currency to help tide you over when you first arrive. You shouldn't need much more than a few hundred dollars in cash - it's not really safe to carry much more - but it can be invaluable to have ready cash just in case something goes wrong along the way.

EDIT: Thanks to Joseph, here's one more piece of traveling advice - make sure you call your credit card providers before departing on an overseas trip and tell them where you're going. Using your card internationally may be flagged as potential fraud and lead to your card being locked - very inconvenient when you're far from home.