Travel money card fees and exchange rates

Nobody sets out to pay more on holiday, but overseas spending has a way of leaking money through small charges you do not notice at the time. The good news is that the costs are not a mystery. They fall into a short list, and once you know it you can read any card before you travel.

The fees that actually exist

Travel cards and bank cards carry fees in different places. The ones to watch:

• Overseas transaction fee. A charge applied to purchases made in another currency, usually a percentage of the amount. This is common on standard bank cards and one of the main reasons a travel card can be cheaper.
• Foreign ATM withdrawal fee. A charge for taking out cash at an overseas machine, sometimes on top of the local operator's own fee and sometimes in addition to a currency conversion charge.
• Loading and top-up fees. What you pay to put money on a prepaid or multi-currency card. Some providers charge to load, others don't, and the method can matter.
• Conversion fees. A charge applied when you convert from one currency to another, whether you do it deliberately in the app or automatically when you spend from the wrong balance.
• Inactivity and closing fees. Charges that can appear if you do not use a card for a while, or when you close the account. Easy to miss until months later.

The exact figures vary by provider and change over time, so no single number belongs in this guide. What matters is that you read the fee schedule, not the marketing, before you pick a card. Our guide to travel money card types explains the difference between prepaid, multi-currency and credit options you are comparing.

How the exchange rate works

The exchange rate is where travellers lose the most without noticing, because the cost is built into the number you see rather than charged as a line item. Two things are happening:

• There is a wholesale rate and a retail rate. Behind the scenes, currency moves at a mid-market or interbank rate. Banks and card networks buy and sell to you at a margin on top of that, and the gap is their profit.
• You usually pay the margin again on every transaction. On a bank card, each purchase in another currency is converted at the time you spend, so the margin applies over and over.

A multi-currency travel card changes this. If you load a currency in advance, you convert once at a rate you choose, and then spend from that balance without a fresh conversion on each purchase. That is the real advantage, and it is often worth more than any small fee difference on the card itself.

Dynamic currency conversion: the sneaky one

When you buy something overseas, the merchant or ATM may offer to charge you in New Zealand dollars instead of the local currency. This is called dynamic currency conversion, and it sounds helpful but usually works against you:

• You pay their conversion margin. The rate offered at the counter is set by the local operator and is generally worse than the rate your card would use.
• Always choose the local currency. When the terminal or ATM screen asks, decline the offer to pay in New Zealand dollars and accept the local currency instead. Your card then applies its normal rate.

How to keep the cost down

You do not need to obsess over every dollar, but a few habits cut the total meaningfully:

• Pick a card whose fee schedule matches how you spend. If you mostly tap a card, watch the transaction fee. If you need cash, watch the ATM and conversion fees.
• Load the currency early and often. On a multi-currency card, convert when the rate is good and top up in advance rather than converting at the airport or the checkout.
• Say no to dynamic conversion. Pay in local currency every time you are asked.
• Minimise ATM use. Withdraw larger amounts less often to spread fixed ATM fees across more cash, and keep a card with low ATM fees as your cash card.
• Carry a backup. A second card with different fee terms gives you a plan B if one charges too much somewhere. See our separate guide on using travel cards safely for how to handle it on the road.