Forex and the Best Travel Money Cards: Part Four – The Best Credit Card

A five part series on travel money and the best Debit and Credit card options; see Introduction for links and description for all parts as they become live.

Part One: Forex Basics
Part Two: Pre-Load Travel Card Vs. Debit Card for Cash
Part Three: The Best Debit Card (for Travel and Forex Spend). 
Part Four: The Best Credit Card (for Travel and Forex spend)
Part Five: Travel Spend Strategy 

By now you should have already read the Disclaimer on the Introduction page, but if not then please read it now.

The best Credit Cards for Travel or Forex Spend

First Published: 20 November 2018

Like Debit cards the fundamental criteria for Credit cards is foreign transactions converted at the lowest possible rate (i.e. the credit providers rate and without markup by the card issuer).

BUT unlike Debit cards (where if it doesn’t offer NO FEEs it doesn’t make the cut); sometimes for a Credit Card, for the RIGHT card paying a fee can make sense, so long as your getting back more in value than the cost of the card.

So when considering a card that carries an annual fee the value proposition of that card needs to be considered. And more importantly when that value no longer exceeds the cost you drop that card unlike it hot.

So in this post we’re going to look at two reward style cards that come with an annual fee, and introduce the value proposition, but if you just want to know the BEST two cards for forex spend or travel (which wont shouldn’t cost you a cent) skip over the following on Reward / Annual Fee cards.

Reward Card Basics – When Does It Make Sense to Pay an Annual Fee

As two reward type cards, each with there own annual fee make the list as honerary mentions, I thought best to introduce some of the concepts around when it makes sense to hold these types of cards. Personally I’ll pretty much always have at least one type of reward / fee paying card in my wallet, but only so long as it makes sense.

So when does it make sense?

When the value of the points earned and other benefits (e.g. airline lounge entry, complimentary insurances) exceed the value of the annual fee.

Obvious right?

Well, kind off. The value of points earned (once you know) how is easy to calculate, but the the other benefits which may all form part of the value proposition can be a little more difficult and subjective.

And this difficulty is exactly why credit card companies can and do offer points and perks in exchange for an annual fee –  because the vast majority of card holders are not calculating the value of the points earned, are otherwise not using the other rewards entitled and ARE paying MORE for the card than they receive back in benefit.

The irony of course is that if everyone took a value focus toward credit cards, the rewards would be invariably less, or non-existent.

So first lets raise a glass to those who don’t care, because its you guys who keep the card companies highly profitable, and help subsidise the people who do care (like ME!).

If a card issuer gives you points for spend, it’s because they have already worked out the value of those points and how many they can afford to 'give you' in order to still make a profit if, OR WHEN you actually redeem them.

And ultimately a financial institution will never make a loss to the ‘people’, but the person... well, he/she can do a ‘little’ better...

Honourable Mentions

The following two rewards style cards are (currently) the only two on the market with no foreign transaction fee and the conversion processed at the credit provider rate (best you can get).

However they both come with an annul fee. So before signing-up you need to work out your own value proposition to ensure they’re right for you.

For big spenders this can be pretty simple, but for the most part I’d recommend jumping down to see the number one and two cards below because whilst they also have forex converted at the credit providers rate, they’re NO ANNUAL FEE – EVER (or at least right now).

Coles Platinum Rewards

• No foreign transaction fee with rates processed by Mastercard (best you can get).
• $99 annual fee.

The Value Proposition

• Points are earned to the FlyBuys program which is also a transfer partner to Velocity rewards.
• FlyBuys themselves are REALLY easy to value;
  • You can redeem 2000 points for $10 at the checkout at Coles (or via Flybuys travel, but I don’t recommend that as an option).
    • So that makes FlyBuys points worth at least 0.5c/pt. With the $99 annual fee you hence need to earn 19,800 points for break-even. At 2:1 points per dollar earn rate for this card that means an annual spend of $9,900.
    • Do that and the card is then effectively free with upside potential for any additional points earned, with the other features now also free.
  • You can also transfer FlyBuys to Velocity points, but the value proposition here is not so simple;
    • 2000 Flybuys transfers to 870 Velocity points (unless its a bonus period).
    • So given 2000 Flybuys points can be redeemed for $10 at Coles, those 870 Velocity points cost $10, or 1.149c/pt.

But for me this (1.15c/pt) is too much to pay for a Velocity point.

However, during one of the regular 15% Flybuys to Velocity transfer bonus offers this reduces the price-per-point to 0.999c/pt – which is a reasonable price to pay for a Velocity point and I’m happy to transfer in at this rate.

Why 0.99c/pt and not 1.15c/pt? Well because in my own valuation of Velocity points I conser them worth about 1c per point. and paying too much to earn a point means potentially losing out on a flight redemption by paying higher in points than a direct cash fare.

OK, at the top-end of rewards even a 1.149c/pt would make a MEL-LAX Business class cost $1149+ ~$100 tax which is terrific value (if you can find a seat; I have, twice and it was FANTASTIC!!). But generally speaking this is the tip of the VA award redemption so 0.999c/pt provides a much safer buffer.

• The card also also has free delivery for online purchases from Coles over $100 which depending on your shopping habits could be of benefit.
• It also comes with shopping / purchase protection insurance and a Concierge service, but personal I don’t put any value on these types of this benefits.
• And like any insurance product you need to consider the PDS and make sure its right for you.

Coles Platinum Mastercard – Find out more or apply online here.

ANZ Rewards Travel Adventure

• No foreign transaction fee with rates processed by Visa (best you can get).
• $225 annual fee.

The Value Proposition

• The value proposition for this card can be pretty good once you factor in the complimentary return Virgin Australia domestic flight that comes with this card (see eligible flights and other conditions via the interactive maps on page link below).
• Two Virgin Australia lounge passes also increase the value of this card making a potentially long and expensive layover (due to spend on Airport food) a lot more tolerable.
• ANZ points can be redeemed for gift vouchers, but I DON’T recommend this as much much better value can be obtained by converting to airline miles for flights. So we’re going to only look at that option. However you can explore all reward options here  and decide for yourself how many points you need to accumulate to get a reward with Gift Vouchers, and more importantly how much it’s going to cost you to do this in spend (but don’t forget you’ve already spent $225 on the fee)!
• ANZ points can be redeemed for Virgin Australia Velocity, Singapore Airlines KrisFlyer and Cathay Pacific Asia Miles programs.
  • But whilst it’s nice to have direct access to these airline programs, for most people Velocity is going to be the only practical transfer partner.
  • But again I’d only ever recommend transferring to Velocity during a bonus transfer period (up to a huge 40% bonus has been on offer for ANZ Rewards transfers to Velocity in the past).
  • It’s also worth mentioning tho, even if you want to get them into KrisFlyer its actually better to go via Velocity during a bonus period and then convert VA > KF at the 1.3:1 transfer ratio than go directly from ANZ rewards (note VA > KF devaluation coming 1 January 2019 which may change this). 

So lets briefly consider a Velocity points redemption –

• Earn rate is 1.5pts/$ up-to $2000 each statement period, then it’s 0.5pts/$ thereafter. So let’s say you max out $2000 each statement, thats 3,000 points earned at a cost of $2,000
• 2 ANZ points transfer to 1 Velocity point, so that first $2000 spend each month to earn 3000 points could then be redeemed for 1500 Velocity points; effectively costing you 1.33c per Velocity point on spend.

And this is REALLY too much to pay for a Velocity point!

BUT, during a 40% bonus transfer period this makes that $2000 spend get you 2100 points at 0.95c/pt, and this is a good price (IF a 40% bonus is on offer and you transfer at that time)!

BUT, you’re paying $225 for the priveledge so you can see this gets complicated very quickly as the cost of the annual fee needs to then be factored into the cost of points earned.

So whilst I haven’t actually looked at the value obtained (or obtainable) by transferring to airline miles (only you can do that based on your own spend), for this card it’s really the bonuses that make-up this cards value for most people.

REMEBER – If no bonus is on offer I’d NEVER recommend transferring unless you really have too).

• This card also has some potentially pretty handy travel and shopping insurances, the former including both Interstate Inconvenience and Overseas Travel coverage, but again you need to consider the PDS and make sure it’s right for you.

ANZ Rewards Travel Adventures – find out more or apply on line here.

And with that, coming it at number two on the Best Credit Cards for Travel or Forex spend is…..

2. 28 Degrees No Annual Fee Mastercard

• No annual fee (but remember it’s a credit card and terms, fees and conditions may still apply!).
• No foreign transaction fee wth rates processed by Mastercard (best you can get).
• FREE wireless hotspot access via Boingo global network.
  • This is a truely an unordinary perk and I value it alone sufficient to get this (currently) fee-free card. And whilst the network is limited in some parts of the world where it is available its really, really handy. (Search or zoom-in on the interactive maps here to see coverage).
• This card also offeres discounted (paid) travel insurance, but I’ve not looked into that as my travel insurance portfolio is taken care by other ways (…but we’ll save that one for another day).
• It also offers a few other perks like purchase protection and concierge service, but for this card the purchase protection is not free and typically I never get / use either of these type of ‘benefits’ (I just make sure to get the best price when I buy).

However, one particularly interesting offering of the 28 Degrees purchase protection is the $200 ‘inconvenience benefit’ just for losing your card overseas. And for this alone it does have me reconsidering. As so long as you pay your balance off in full BEFORE the statement date the paid-for additional benefits are then effectively free because the price you otherwise pay is charged as a percentage of the closing balance at statement date.

The end on this card

With no annual fee, no foreign transaction fee with conversion processed by Mastercard, and free global wifi hotspot access via the Boingo network, this card is a no brainer.

28 Degrees Mastercard – Find out more or apply online here

1. Bankwest Zero Mastercard Platinum

• No annual fee (but remember it’s a credit card.. blah blah blah blah)
• No foreign transaction fee with rates processed by Mastercard (best you can get).
• It also has some potentially pretty handy Interstate Inconvenience and Overseas Travel insurance coverage, but like any insurance you need to consider the PDS and make sure its right for you.

I have (read the PDS - actually I’ve read ALOT of PDS’, and for ME the BankWest Insurance it good piece of my insurance puzzle, particularly for the travel.

The end on this card

With no annual fee, no foreign transaction fee with conversion processed by Mastercard and complimentary (usefull) insurances; this card is again a no brainer.

Bankwest Zero Mastercard Platinum – Find out more or apply online here.

The End

I currently have one of the rewards cards mentioned and I’ll continue to carry it whilst it makes sense for me.

But I have both of the no annual fee cards as not only do they together make one great card*, but like my Debit card strategy you need to carry at least two different cards when travelling and like my Debit card pair, my Credit cards have  NEVER, and will NEVER meet (as in never in the same bag).

*The free Boingo wireless hotspot is a great perk, as is (note singular) the Bankwest card Travel Insurance. So for a fee-free card (again, noting singular but now about to refer to plural) they make a great card.

Especially at NO ANNUAL FEE and NO FOREX CONVERSION FEE.