Debriefing: Money, money, money

The questions seem never to end: Where to exchange money, what about travellers’ checks, what kind of credit card do you need, and which card will be accepted. In the end, it is all pretty simple, even though a couple of points should be noted.

Right from the start: There is no need to exchange anything before you get to New Zealand. Most banks do not stock currencies any more, and in any case you will be hit by a number of premiums: The cost of storing the bank notes, the buying strategy of the bank, the cost of securely delivering them to you. And be wary of any “refund” promises: No bank is giving anything away. It’s probably better to spend all the cash you can rather than hope for a good or better exchange rate after your trip.

Credit cards are the way to go, with VISA and MasterCard being the most widely accepted varieties. Make sure you have a card that does not attract an annual fee, or any fee for foreign cash withdrawals. If your bank doesn’t provide a card with these requirements, then there are other providers and you do not have to open another bank account to make avail of a true credit card. Also be aware of the credit limit and be prepared to either increase the limit for the period of your holiday, or to transfer funds to the credit card account to make sure that the limit is not reached. Note that there are two types of limits for these cards: A weekly limit (which expires on Friday evening at midnight in your bank’s timezone), and a daily cash withdrawal limit. There are also differences between “debit” and “credit” cards (and the word should be printed on the card so you can tell the difference). One is that the funds for a bond (e.g. for a car) taken from a debit card become frozen and therefore unavailable, whereas this seems to have no effect on a credit card. And don’t put high hopes on the “insurance” which comes with the card. For a start: It only applies to purchases made with the card. And I haven’t heard of any case when they’ve coughed up.

Your first cash can be collected from one of the numerous ATMs in the airport terminal, before even passing through customs, although there are also machines in the public areas of the airports, and you will need some cash for the bus into town and a couple of initial purchases.

I prefer to use cash wherever possible for a couple of reasons. Firstly, paying with the card always comes with a bank fee from your bank of 2-3%, on top of the buying exchange rate surcharge of around 2%. A cash withdrawal is charged only at the buying exchange rate, and the rates do not differ on any particular date. Secondly, vendors will often charge their own fees of around 5% (not entirely legal, but InterCity buses do this with an “internet transaction fee” for each purchase, which comes down to the same thing since you can only pay online with a credit card). Thirdly, some vendors will give a discount for cash purchases. Fourthly, spending control – it’s easier to see if you are overspending when the cash runs out. Fifthly, security. Only use the card when necessary, and keep it in a safe place where you know it will be, with the PIN stored separately. The more you use the card, the more likely you are to forget it and lose it. Finally, who wants to see their bank statement at the end, full of $2 transactions with €0.05 bank charges?

Having said that, there are a couple of points to note about cash withdrawals. First, some banks (notably ANZ) charge their own fees. The fee is announced just before the transaction is completed, and the machine will allow you to cancel the transaction before the fee is charged. Go to another bank. Other banks limit the amount that can be withdrawn at any one time (this time, bnz, with a limit of $400, and the annoying and factually wrong claim when you try to withdraw more that the card limit has been reached). Westpac and Kiwibank seem to have no problems with withdrawals up to the daily cash withdrawal limit.

Cash machines in FourSquare supermarkets (which are often the last resort for buying anything in out-of-the-way places) do not dispense cash on foreign credit cards. You can still use the card to buy stuff, but you won’t get any change.

The good thing with using the credit card for cash is that you can withdraw a minimal amount (as low as $20), especially, e.g. at the end of the trip, when you don’t want to be stuck with leftover cash. You’d be out of luck trying to find a bank to convert your last $20 back into €, and the rate will be appalling. Spend it. On anything – fashion jewellery, souvenirs at the duty free, donate it to UNICEF on the plane, or keep it as a souvenir.