What if I told you that there is a card that you can use at any ATM in Australia fee free, is widely accepted overseas, can earn you frequent flyer (FF) points, does not charge foreign transaction fees for online shopping bought overseas and does not charge ANY monthly account keeping fees?
Yep, such a product does exist. There are in fact at least two similar products that offer similar services. You might even have one and not realise it.
I’m talking about travel cash cards offered by Qantas (Qantas Cash) and Virgin (Velocity Global Wallet). There are similar products now offered by other banks and institutions, but I have chosen these two because this is what I already have in my purse – and they are two of the most common.
No, before I go any further I want to stress that I am looking at these products to play a particular purpose, and this is not, in fact, the purpose for which they were designed. These cards are marketed as something that you can load up with cash before you go travelling overseas. But I want to use them instead of a credit card to reduce fees and charges and gain frequent flyer (FF) points.
I am about to refinance my mortgage and when that goes through my mortgage will be on an internet-based account. I won’t be able to withdraw cash from that account and will need a physical bank account (and card) to do that with. Currently, I make most of my purchases with a Visa debit card attached to my bank account (which I will probably close early next year). Sometimes that card isn’t accepted, and when that happens I use PayPal or a low-interest Visa credit card ($49/year fee, no rewards).
- The cards function like a credit card. They are effectively a Mastercard (Qantas) or Visa (Velocity), and you can use them for all your major purchases in Australia and overseas. The big catch is that they are a debit card (so they will only work if you have money loaded onto them).
- You can pay bills with the traveller card. Well, you can pay bills with a credit card as well but in most cases, it is treated like a cash advance, which means higher interest rates than purchases – usually with no interest-free period. So even if you transfer money across immediately you will still be slugged with some cost. But because this is essentially a debit card, you are not hit with any interest payments. At all.
- You can earn FF points from paying bills, doing your shopping and making online purchases. It is easy to use one of these cards to pay your bills and because it has Paywave and a pin number, it is easy to use for shopping. I wish I knew about this before I paid a large tax bill last year – I could have ended up with a LOT of points.
- There are no fees for using ATMs in Australia. At least, not with the Qantas one – there is a fee of $1.95 for using the Velocity card. There are, however, modest fees with the Qantas product for using ATMs overseas, depending on which currency you use. If in Australian dollars it is AUD$1.95.
- You don’t earn interest on money on the cards. Unlike using a debit card attached to your bank account, you are not earning interest on the money in the account. Accordingly, you are better off keeping cash in a high-interest bank account (or on your mortgage) until you need it.
- Using the card adds another step. Before you can use the card, you must first upload it with funds. This is quick and generally only takes around a day or two, but it adds an additional step in the process. It also makes it hard to use it if you are taking advantage of a ‘Frenzy’ sale that is only available for 24 hours. This is a card for planned expenses, rather than spontaneous ones.
- Beware a free card. You would not have been given this card by bankers unless the underwriting company, bank and/or airline was going to make money out of it. Anytime there is a conversation from one foreign currency to another, the banks earn money on the ‘margin’ or difference. Anytime you load your card up with money, the banks/credit card companies can invest and earn more money on. Also, if you want to upload immediately there will be a 1 per cent charge. There is no need to be paranoid about this, just know that the card issuers want you to use the card because they will get something out of it.
- Do not assume that the exchange rate on the card is the best. Both Qantas Cash and Velocity Global Wallet openly publish their exchange rates. I checked these against AusPost and Travelex sites. There were a few differences but they were mostly similar. You might be able to find a better deal in country or before you leave (I have heard that small post offices or local banks often have competitive rates.) You might also get a better rate transferring funds to an overseas bank via something like OzForex.
- Some people have reported problems using the cards at ATMs overseas. Specifically, some online reviews note that while the card is uploaded with the overseas currency the purchase is converted back into Australian dollars then into the local currency again – effectively taking a margin on the exchange difference twice and costing a lot of money.
- The cards do not earn as many FF points as most credit cards. For someone like me who doesn’t actually want a credit card at all, using these travel cards has advantages because you can save on the annual fee and earn points that you otherwise wouldn’t. I did a quick look at the various credit card options, and in general, they earn more points but their fees and charges are much higher. If you are a big spender who travels a lot (e.g. you have a corporate job and use your credit card for frequent travel) the large annual fee on the credit card might be a good investment. For most of us, the higher costs do not justify the benefits.
- Many credit cards with rewards programs offer travel insurance. If you are planning to travel overseas, you might find that the large annual fee for a credit card is worth it to insure you for overseas travel. Check terms and conditions carefully – usually, you need to pay for all or some of your travel on the card. But if you are savvy, you might even pick up a special deal on a credit card. While researching this article I noticed that ANZ has a good offer on a credit card with 75,000 bonus Qantas Frequent Flyer points and no fees for the first year. It reverts to a $425 annual fee after that. Virgin Money also has a deal where you can get a $129 gift voucher and even get the $129 annual fee refunded when you make a certain minimum spend. (I am in no way affiliated with either of these products – nor is this blog conducting a comprehensive review of credit cards).
- There is a risk of fluctuations in the exchange rate. These cards allow you to ‘preload’ into a particular currency so that you can minimise risk. But there are still risks involved in any transaction involving foreign currencies. For example, imagine that you put $20,000 onto the card converting from AUD to US dollars ahead of a major trip. But then another September 11 style attack occurs a day before you leave and your flight is cancelled and new visa requirements come into place so you can’t go. Meanwhile, the US dollar has fallen 20% in value and so you effectively lose $4,000 plus conversation fees when you convert it back into Australian dollars. Worst case scenario that probably will never happen, but fluctuations are a risk in any type of transaction between currencies.
- Buying things just for the FF points is never worth it. It is easy to get so hung up on earning a few extra points that you overlook the reality of whether something is a bargain or not. FF points do add up over time (albeit slowly), but if you are buying things just to get a special offer on extra FF points then it is not worth it. But they don’t give you nearly as much as you think – Choice argues that each point is roughly equivalent to one cent. My own analysis suggests they are probably worth less, but it is difficult to compare flights and benefits easily. It is generally better to take the cheapest fare of the day rather than fly with the same airline just for the points. After all, the FF programs are designed to make us loyal to a particular airline rather than make a rational decision based on cost.
How they stack up
- In a comparison of Frequent Flyer programs, Qantas is better for business and Virgin for domestic. That is the result of a comprehensive review by Australian Business Traveller. Both, however, are similar. And there are problems with both when it comes to trying to get the flight you want with the points you have. Ultimately it comes down to which airlines you like to fly with. In the past I have often flown with Virgin for personal travel. But my man has lifetime gold membership with Qantas so being able to spend time in the Qantas Club is appealing.
- Qantas has better international access through One World. This includes access to partner airlines and more lounges throughout the world. If you frequently travel overseas, the Qantas Cash Card could be a better option for you.
|Qantas Cash||Velocity Global Wallet|
|Cost for joining Frequent Flyer program||$89.50 – or free when you apply for a Qantas Cash card, or free through a Woolworths Everyday Card||Free|
|Type of card||Mastercard||Visa|
|Includes travel insurance||No||No|
|Domestic purchases||1 point for every $4
(halved on 1 July 2017)
|1 point for every $3|
|International purchases||1.5 points for every $1
(halved on 1 July 2017)
|2 points for every $1|
|‘Double dipping’ by buying through program partners||Many opportunities to earn extra points with partners (e.g. Deliveroo, LJ Hooker)||Relationship with BP; opportunities with other partners|
|Free ATM withdrawals in Australia||Yes||AUD$1.95|
|Free ATM withdrawals overseas||No (e.g. around AUD$1.95)||AUD$1.95|
|Charges on transactions||None (but individual merchants may charge fees)||Inactive fee $1.95|
|Available pre-load currencies||AUD, USD, GBP, EUR, THB, NZD, SGD, HKD, CAD, JPY and AED||AUD, USD, Japanese Yen, Hong Kong Dollar, Euro, South African Rand, New Zealand Dollar, Singapore Dollar, Pound Sterling, Thai Baht, Canadian Dollar|
|Load fee for bank transfer||Free||Free|
|Load fee for Bpay||Free||0.5%|
|Emergency cash transfer fee||1%||$15|
|Foreign Exchange Fee||No (but earns from a ‘margin’ in exchange difference)||2.25%|
|$50 gift voucher (e.g. Myers)||9,850 points||9,000 points|
|$100 gift voucher (e.g. Bunnings)||19,650 points||18,000 points|
|$250 gift voucher||49,050 points||45,000 points|
|Spend for $100 gift voucher (assuming no special deals)||$78,600||$54,000|
As you can see, you have to spend a lot of money to earn FF points. Over time if used astutely for essential purchases, e.g. special travel deals, you could get some additional points. If you do not plan to travel overseas and do not need travel insurance, this is a great way to have the convenience and features of a credit card without having to pay for it.
I have been trialling the Qantas Cash card for several weeks. I already had it (in fact I had had it in my purse since 2013) and it took five minutes to activate it. I had some large bills I had to pay and found it quick and easy to upload funds (generally took one day). I also like the fact that, as it is a debit card rather than a credit card, it can be used as a good budgeting tool. It does, however, take up to eight weeks for the points earned to accrue so I am not yet able to assess how quick it is to build up points.
My partner already has a Visa credit card that has travel insurance with it, so for our international travel plans next year we will book and pay with that. So assuming that I then switch to the Qantas Cash Card (or use the Velocity Global Wallet) I would save around $130 in annual credit card fees for a comparable product with insurance, plus potentially earn around $50 in FF points over a year. Total saving $180.
Your challenge is to think about your credit card. Are you getting the most from it? Do you use it enough to benefit from FF reward programs? Could you benefit from ditching it and using a FREE Qantas Cash Card or Velocity Global Wallet instead?
Wants versus needs – estimate $300 just on Christmas
Kogans mobile $167 plan 365 days
Growing your own herbs $182 a year
NBN savings: $294.99
Weekly eat at home savings (estimated over a year): $1,300
Renting out space in my home: $10,000 a year
Qantas cash card – $180 a year