Why Curve Card is Still the Better Option
Recently I wrote an article about the travel money options I’d been using for sending and spending money abroad (here). It explored the Curve Card, the Circle Pay App and community swap site WeSwap. At that point I explained how Curve’s 0% FX fees, and the opportunity to earn rewards on multiple linked credit cards, made it, in my opinion, the best option available. As a reminder Curve is a Mastercard which you can link to all of your Visa and Mastercard credit/debit cards, meaning you can use one card and choose via the app which linked card the transaction goes against. For transactions in foreign currencies it has 0% FX fees, charging transactions to your linked card in GBP. (You can read more about Curve here, use the code O2MEP for £5 free credit if you do decide to sign up).
However, since I wrote that article WeSwap have launched an interesting new feature, which made me (briefly!) question whether my preferred card for foreign spending might change. WeSwap now offer ‘Smart Swap’ – a feature you can use to set the target return for your currency exchange. If the exchange rate hits the level you set, then the money is exchanged immediately, with the 2% instant swap fee applying. If it doesn’t hit the target then the exchange runs for the normal period and you get the option of whether or not to swap at the end. So for example, today £200 would get you €230, but you could instead decide to set a 7 day swap, but set up a Smart Swap, so that if the return went over €240 euros it would swap instantly. If by next week this hasn’t happened, then you’ll have the option to cancel the swap or accept the rate at that point. In theory this improves your chances of getting a better rate over the 7 days.
So does this give it the potential to make it a better option than Curve? Well the answer is still…probably not!
Firstly, as a quick, but not perfectly scientific(!), test I looked at the likelihood of getting a rate which was 2% (i.e. equivalent to the fee) better over their 7 day swap period. As a representational exercise I looked at the fluctuations in GBP to EUR exchange rate for multiple weeks over the past year. Typically they were under 1%, sometimes 1.5%, very rarely over 2% in just 7 days. According to investing.com, even during the week of the Brexit referendum the fluctuation was within 4.7% (although the shift on the day after the referendum itself was 8%). The point is that fluctuations which make a bigger difference than the 2% fee you pay with WeSwap, but save with Curve, are fairly unusual. So if you’re running a 7 day swap, chances are that you won’t get more than 2% more for your money. That said, I accept that this is entirely dependent on the currency you’re exchanging and the specific dates, etc. – i.e. it seems unlikely, but not impossible.
However, it gets more complicated than being about whether you can hit the 2% during that 7 day swap, as this assumes you’d otherwise be making a payment with Curve at the start of the swap period. However, with Curve you are making the transaction(s) at the exact point you need the money (i.e. you are charging the transaction to your credit card via Curve) as opposed to WeSwap where you are pre-loading the money at a set rate in advance. So if on day 7 you get a 2% better return with WeSwap than you would have on day 1, you could actually also get an equivalent rate through Curve, but minus the fee. The only scenario where it would be better is if the pre-loaded swap occurred at a peak in exchange rate, and the rate subsequently dropped by more than 2% before your transaction. Obviously there’s no way to take advantage of Smart Swap to predict this, so you’re ‘gambling’ on the exchange falling by at least 2%. Odds are that the majority of the time taking the fee free rate at the point of transaction will be a safer bet (remember to always charge transactions in the local currency, to get the mid-market rate, not the payment processors rate).
So finally, I considered whether WeSwap made more sense for pre-loading money required for cash withdrawals, which might then incur a charge from your credit card provider. But of course you can also link your debit card, and choose this as the source for any cash withdrawals abroad, so then you’ll also avoid any fee here.
On balance then, for me Curve Card remains a better option – that said this new feature does look like an enhancement to WeSwap, which remains a decent, simple option, particularly for pre-loading and sticking to a set budget.
Read more about Curve via the link below, and if you do decide to try it, use the code O2MEP for £5 completely free credit on your new card when you make your first transaction. Curve Website
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N.B.. Disclaimer: This is an amateur, personal blog. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances.