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Bank of Montreal introduced a new alternative to traveller's cheques yesterday. You can definitely leave home without it.

BMO's Prepaid Travel Mosaik MasterCard solves the problems that have turned traveller's cheques into a relic from a bygone era of vacationing, not unlike Bermuda shorts. But it's an expensive solution, and a superfluous one at that for most people.

MasterCard, Visa and American Express all have prepaid travel cards available in the U.S. market. Visa's TravelMoney card has quietly been available from the Canadian Automobile Association, but BMO's new Mosaik card appears to be the first bank product in the category. All of these cards aim to provide the safety benefit of traveller's cheques without the hassle of finding someone to cash them and not gouge you with onerous fees, commissions or crummy exchange rates.

The easiest way to pay for things while travelling is to bring a credit card and bank card, both of which you can use to make withdrawals at the automated teller machines that are now globally ubiquitous. The Prepaid Travel Mosaik MasterCard is a third option.

You load the card with cash (in the same way as you pay a bill) and then use it like a regular MasterCard to pay for goods or make cash withdrawals from an ATM. The card is safe because if you lose it you can have it cancelled and your funds replaced. You also have zero liability for unauthorized purchases. "We feel it's a much better option for our customers than traveller's cheques," said Nancy Marescotti, brand marketing director at BMO.

Ms. Marescotti said that demand for travellers cheques is declining, but annual sales still come in around $1-billion a year. Other potential customers for the new card would include people who want to put themselves on a strict budget when they travel and those who don't have or can't get a credit card, she said.

Another use for this card, and certainly one of the most sensible, would be as a way of giving some travel cash as a gift to a teenager who doesn't have his or her own credit card.

Ms. Marescotti said prepaid travel credit cards have been popular in the U.S., but are ultimately a niche product. "This card is not for everyone," she said. "Some people are quite comfortable using their credit cards or debit cards when they travel."

The cost of prepaid cards makes a combination of credit cards for merchandise and debit cards for cash at ATMs the better option. The only benefit to the prepaid travel card from a cost point of view is that you'll never pay interest charges. After all, you're only spending what you've already paid.

Whereas there always seemed to be a way to get traveller's cheques without paying fees, you'll have to cough up $9.95 for the Prepaid Travel Mosaik MasterCard. If you use the card in an ATM, you'll pay from $1.50 at a BMO machine in Canada to $4.50 at a machine outside Canada and the United States. These charges are those that would apply if you used your BMO bank client card in a foreign ATM.

A $2.75 transaction fee applies to the prepaid Mosaik card in a limited number of situations, including the purchase of foreign currency and casino gambling chips. If you want a refund, it costs $3 to have your card balance transferred electronically to your bank account and $10 for a cheque. The card expires after three years and you pay an inactivity fee of $2.50 a month if it sits idle for more than a year.

There's a foreign currency markup on the prepaid Mosaik card of 2.5 per cent, which represents an additional fee on top of the currency conversion rate. This is standard for credit cards, which also offer the benefit of earnings reward points as you spend.

The Prepaid Travel Mosaik MasterCard does play the reward game to a limited extent, offering one Air Mile point for every $40 spent. That's a pretty weak ratio of spending to reward points, however.

It also doubles the warranty on goods you buy, and offers purchase protection insurance to cover the cost of goods that are bought on the card and then lost or stolen.

Insurance for rental cars is not included with the card, but Ms. Marescotti said you can use it to rent a car or guarantee a hotel room for late arrival. She warned, however, that a hotel can put a hold on the funds needed to pay your room fee, thereby cutting into the available cash on the card.

The prepaid travellers Mosaik card is a definite improvement on paper traveller's cheques, but it's a pricey and unnecessary one if you have a credit card and bank card. Leave home without it and you won't look back.

The cost of convenience

Here are the fees and service charges associated the new Prepaid Travel Mosaik MasterCard introduced yesterday by Bank of Montreal.

Card Fee $9.95
Additional Cards (per card) $9.95
Telephone/Web/ABM Balance Inquiry Free
Refund Processing Fee
By Cheque $10.00
By Electronic Balance Transfer $3.00
Inactive Fees
After 12 months inactivity prior to Card expiry date $2.50 per month
After Card expiry date $5.00 per month
Overlimit Fee $25.00
Charge for Dishonoured Payment $25.00
Printed Copy
Printed statement $2.00
Sales slip $2.00
Transaction Fees - Wire transfers, money orders, traveller's cheques, foreign currency, bets, and purchases of lottery tickets or casino gambling chips $2.75
Foreign Currency Mark-up (on transactions, including refunds) 2.50%
Cash Withdrawal Fees
Automated Banking Machine (ABM) Network
BMO Bank of Montreal Instabank Machine $1.50
INTERAC Network in Canada $2.75
Cirrus Network in U.S. $3.50
Cirrus Network outside Canada and U.S. $4.50
BMO Bank of Montreal Branch $3.00
MasterCard financial institution in Canada $4.00
MasterCard financial institution in U.S. $5.00
MasterCard financial institution outside Canada and U.S. $6.00


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