Cash up before you fly out

Playing with money is always a bit of a gamble, especially when it comes to foreign exchange rates. That's why so many travellers prefer to work in advance and purchase a slab of US dollars, British Pounds or Euros when the rates are favourable.

The Aussie dollar may no longer enjoy heroic world-beating status of those US$1.08 highs but this is still a good time for business travellers and frequent flyers to cash up before your next few trips.

Many travellers purchase a slab of US dollars, British Pounds or Euros when the rates are most favourable.

At the time of writing, the Aussie dollar was sitting close to US$1.05 and has spent most of this year at or above UK 67p and a healthy ruddy-cheeked Euro 80 cents.

So why not grab some green while the going looks good? Here are a few strategies of frequent flyers.

Cashing in
One colleague takes the 'time to cash up' mantra quite literally. Every few months, when the dollar looks strongest, he'll trade a thousand Australian dollars or more for the currency of each country he regular visits: the US, UK, Europe, Singapore and Hong Kong.

So what's the best way to get cashed up ahead of your trip?

The airport can be the worst possible place to do it. It mystifies me to see so many people lining up at airport currency exchange desks where they'll be gouged with low rates and high commissions on top of that.

Foreign exchange bureaux in the city are a little better, even if their commissions still exact a pound of flesh from nearest your bank book.

(That said, I've found a bit of wiggle room in commissions from Travelex and the like; they're not set in stone.)

Best rates, least rip-offs
There are a few ways to sidestep the commission without losing out on the exchange rate.

I find that Flight Centre Travel Money shopfronts offer keen rates – at the time of writing, one of the Sydney CBD outlets is offering US$1.02 against a rapacious US96c at Sydney Airport.

Better yet is that there's no commission if you pay by cash or EFTPOS. However, you'll need photo ID if you want to swap more than AUD$1,000.

If my pre-travel to-do list is a little out of control, my next stop is the website. This not only offers competitive rates – and better than you'll find at most Travelex kiosks, especially the airport outlets – but if you pay for your currency order via BPAY there's no commission.

The caveat is that you have to allow an extra three days in advance for the BPAY order to clear. If you leave things to the last minute and pay with a credit you'll be hit with a 1.5% surcharge. (The solution is simple: get organised!)

But the icing on the currency exchange cake, and a huge timesaver for busy travellers,  is airport pickup. When you place an online order through you get to choose where and when you'd like to collect your foreign currency.

You can select any of the Travelex retail outlets, but why bother adding to your already packed to-do list? Select a Travelex outlet at the airport with the pick-up date as the day you fly. Then you can stroll up before or after you check-in, show your ID, collect your cash and you're good to go.

Travel money cards
If you'd rather limit your cash to 'pocket money' amounts, travellers are increasingly warming to travel money cards as the next best thing to carrying cash.

These cards are loaded up with foreign currency bought at that day's exchange rate. You can then draw against that over the counter – like a credit card, or more accurately debit card – or withdraw cash at an ATM.

This insulates you from fluctuating exchange rates, so you're covered against a sudden dip in the Aussie dollar. (On the other hand, should the Kanga bounce back up you'll still be stuck at the lower rate.)

They're a canny solution for business travellers, especially if you're working to a limited expense account. Companies can preload a card with cash and use the card's statement to record where the money was spent.

Perhaps a greater advantage is that unlike credit cards, which charge up to 3.5% on every overseas purchase, there are no transaction fees for using travel money cards.

ATM cash withdrawal fees are also cheaper with travel money cards than with ordinary bank-issued plastic – there's usually just a small flat fee of a few dollars, and some cards charge no ATM fee at all, whereas most banks hit you up for $4 and an extra 2-3% levy.

Most travel money cards are issued for a single currency only, but globetrotters should check out the Access Prepaid Cash Passport and Commonwealth Bank travel money cards. These let you store multiple currencies on the one card and even transfer money between those 'accounts' without charge.

How do you handle your travel spend: cash, credit card or prepaid travel money? And where do you get the best deal on your travel dollars?

David Flynn is a business travel expert and editor of Australian Business Traveller.

Twitter: @AusBT