Travel, back to the future

By DAVID KING

Ten days into our meticulously planned and saved-for two-month tour of Europe, a Berlin automatic teller machine gave me the worst news possible - transaction declined, please contact your bank immediately.

A few frantic telephone calls later elicited the heart-stopping revelation that a mobile telephone company had direct-debited a whopping $9300 out of my account.

I was now massively overdrawn but the bank had allowed the debit to go through because I was a good customer and had never had any credit problems before.

It was a Saturday and the mobile telephone giant, whose name incidentally begins with a V and ends with an E, could not be contacted until Monday.

All the savings I had loaded on to my credit card had been wiped out, and although I was pretty certain there had been some sort of mistake, we faced something of a cashflow crisis until it could be sorted out.

To our rescue rode the trusty traveller's cheques, whose usefulness in the age of electronic bankcards I had seriously doubted, saving the day to buy us breathing space until the problem could be sorted out.

The cheques had been a last-minute purchase, but the length of the trip and the possibility of getting seriously stuck without money tipped the scales in favour of having them as a back-up, and they more than paid their way.

Paul Harding, a writer for travel guide Lonely Planet, says the past five years have seen a revolution in the availability of money because of the spread of ATM networks, making traveller's cheques less attractive.

While he used to carry traveller's cheques and small amounts of cash, he now relies on his debit and credit cards.

But he says: "No way are traveller's cheques dead. They definitely still have a place as a back-up, especially if you are on long trips in less westernised countries."

As a guidebook writer, he keeps a careful track of all transactions, and believes the difference between traveller's cheques and debit cards on a short two-week trip would probably work out at about $25.

If you are using a debit card for cash advances a lot then the transaction fees definitely mount up.

Obviously the more you take out at a time the more economical it will be, but then you end up carrying lots of cash.

Another disadvantage of debit cards is that it is usually difficult to replace them if lost or stolen overseas, warns Harding.

Credit cards and travellers cheques can be replaced more readily.

For travellers on a tight budget, traveller's cheques are a good way to manage money - when the cheques are gone it's time to go home.

David Russell, chief executive of the Consumers Institute, says traveller's cheques have been largely superseded.

"But they still have their place - depending on where you go.

"In Europe, the United Kingdom, North America and Asia you should be able to get by with credit cards. But in places like Myanmar traveller's cheques would be advisable.

"Either that or a bottle of Johnnie Walker."

Mr Russell, who remembers the days when you needed Reserve Bank permission to take more than a few hundred dollars out of the country, suggests carrying two cards.

One, he says, should be topped up in credit to pay for cash advances.

The second, he says, should be held in reserve for unexpected problems or bills such as accommodation that are best paid for by credit card.

And he says individuals should always shop around for the best rates.

Alastair Calder, managing director at Hamilton's Calder & Lawson Travel, says although cash and credit cards were now the preferred method of payment and getting cash advances, customers were increasingly concerned with the level of transparency with ATM transactions.

"With traveller's cheques you know the exchange rate you have bought at, so the costs are known.

"With cash advances the exchange rate varies from bank to bank. But I think that's far outweighed by the convenience of just travelling with one card."

While most New Zealand banks charge a $5 fee on cash advances overseas on normal debit cards, travellers should also be aware that foreign banks may levy a fee.

He says traveller's cheques remain popular with the older crowd.

"They may seem antiquated in an electronic age, but they are a more secure way of paying for a lot of people."

Dennis Payne, owner-operator of House of Travel in LynnMall, New Lynn, admits to having been caught out in Sydney recently when an ATM swallowed his card.

He says the more confident people are about travelling, the more likely they are to rely just on cards.

"Ma and Pa Kettle going on a three-month tour of Europe will invariably take enough traveller's cheques to keep them going in each country.

"They then have the security of knowing how much they can spend."

He says there is no answer to which way is the cheapest.

"If you are buying currency you are invariably paying around 1 per cent. The differences between products aren't substantial."

So choose the option that's safest for you, always shop around for the best exchange rate, and have a great holiday.

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Charges for traveller's cheques

Thomas Cook/Travelex

1 per cent commission. No commission if exchanged at Thomas Cook, but you will usually pay a second commission to other currency vendors.

American Express

Charges vary depending on where they are bought.

National Bank

$10 flat fee for $1000 and under, 1 per cent fee on purchases over $1000.

ASB Bank

1 per cent flat fee.

WestpacTrust

1 per cent flat fee, $10 minimum charge.

BNZ

1 per cent flat fee, $10 minimum charge.

ANZ

1 per cent flat fee, $10 minimum charge.

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Overseas rates for cash advances


National Bank

ATM cash withdrawal (current or savings accounts): $5*

Visa cash advance: $5

*The National Bank says foreign banks may charge for ATM withdrawals.

ANZ

ATM cash withdrawal: $5

Maestro Eftpos: $1

Mastercard/Visa cash advance fee: $5

WestpacTrust

ATM cash advance: $6*

Visa cash advance fee: $6*

*Westpac has joined a Global Alliance, which means that transactions carried out on partner banks' machines are free. The fee applies only to banks outside the alliance.

BNZ

ATM cash advance: $5

Visa/Mastercard cash advance: $2*

*If you have a credit balance the BNZ does not charge.

ASB Bank

ATM cash advance: $5

Visa/Mastercard cash advance: $5

Thomas Cook/Travelex

Visa Travel Money (VTM) card: ATM cash advance costs 2 per cent for each transaction.


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Dos and don'ts with currency


* Never carry large amounts of cash.* Take enough cash into the country to cover your travel from the airport, first night's accommodation etc, before you have access to cash.

* Keep traveller's cheques and passports separate, wherever possible.

* Photocopy all travel documents and traveller's cheque details, including card numbers, in case they are lost or stolen.

* Don't put all your eggs in one basket - two sources of cash (ie: a cash card and a credit card or traveller's cheques) are always better than one. Having three sources is even better.

* Always keep credit cards in sight while the transaction is being carried out so no extras are charged. Check statements as soon as you get home.

* Large amounts of cash should be carried in a money belt, with smaller amounts in a wallet, kept in a front pocket.