With the Greenback expected to rise once the US Federal Reserve bank starts to signal higher interest rates, the cost of overseas travel for Australians is also likely to rise. If forecasts for a lower Aussie dollar prove to be correct and we see a depreciation over the next 12 months, then it may be a good time to lock the costs of some travel expenses away.

People planning a trip at the end of this year or at some point next year may want to think about starting to save with a travel card soon. So rather than taking the risk of loading the card just before you travel, when the Australian dollar could be weaker, it is possible instead to convert at today’s rates for future spending.

As an example: if you plan to travel to North America in 2015 and convert Australian dollars into US dollars now, at say 90 cents, it could mean a saving of more than 10 per cent should the exchange rate fall to around 80 cents as many are predicting.

Individuals can hedge too


While many businesses involved in international trade use hedging techniques to protect against adverse fluctuations in the exchange rate individuals rarely do. Securing an exchange rate for future travel is a hedge against the risk of a lower Aussie dollar. The key focus for most people when organising such trips is to ensure they get the best value flights and accommodation, with little thought as to how they can manage their spend whilst over there.

Most people consider the biggest expense to be the flight and hotel: for example a return economy flight plus 7 nights accommodation at an average hotel in say New York, costing around $5,000 per person. However when you factor in food and beverages, entertainment, taxis and day trips, and the odd indulgent purchase, the total spend can be much higher, and of course it multiplies if there are a few people travelling as a group.

The total spend can easily escalate and is hard to estimate, particularly when on-the-ground purchases are priced in a foreign currency and paid for by cash or credit card; but it is possible to get some certainty ahead of time.

Travel card popularity surges

Savvy travellers have caught on in recent times and become more aware of the benefits of pre-paid travel cards. MasterCard has predicted Australia's prepaid consumer travel card market will reach $2.9 billion by 2017.

According to a UK study by Compare Money, travel money cards gave a better exchange rate than other travel money providers, on average 8 per cent better than exchanging at airports, 4 per cent better than travellers cheques and 5 per cent better than at a bureau de change. Not only can the fees and exchange costs be cheaper than paying by credit card but the currency can be converted in advance locking in the actual exchange rate, providing some certainty ahead of departure.

If there are any US dollars remaining on the travel card they can be used on the next trip or to buy goods from overseas websites, as an alternative to paying more via a credit card or PayPal purchase.

Be warned though! For businesses involved in regular international trade, travel cards are not the best solution. For managing regular foreign currency payments it's best to source an international payments specialist that can not only help save on transaction costs but also deploy risk management solutions that suit your business.

Pay hotels direct


Those looking for even bigger savings can use an international money transfer service to pre-pay accommodation costs in a foreign currency. It is usually cheaper to pay for overseas hotels in the overseas currency as hotels can put a margin on the exchange rate when converting the Aussie dollars to their own currency.

So rather than leaving the conversion of Aussie dollars to the hotel take control of the situation and save even more.

Finally, if you are heading overseas to visit family or return to your country of origin then another way to manage your foreign currency is to use a local bank account. If you still hold your own account then send funds via international money transfer directly to that account. This way you can withdraw spending money when you get there with little or no fees whatsoever.