What is the Best Credit Card to use Overseas?
There seems to be a mountain of spending options to take with you on an overseas trip. Do you go for a travel card, a debit card or a credit card? And when you decide on the type of card which actual product do you sign up for?
There’s no clear-cut answer as to what the best overseas credit card is – but you can find out by following a short checklist of the most common features and fees to find one that’ll suit you.
The first box to tick on the list is where your card will be accepted. Having a shiny new credit card which isn’t accepted anywhere on your trip is as good as useless. Visa and MasterCard are offered at millions of locations worldwide, while other schemes (American Express and Diners Club we’re looking at you) aren’t offered at many locations, or can attract larger surcharges when used.
This second one definitely should be on your checklist. The biggest surprise when coming back to Australia and having to payback your balance is usually manifested in out-of-control fees, so it makes sense to find a card with low fees. But first of all what are the kinds of fees you’ll typically be paying while overseas?
Foreign transaction fees. Unlike a travel money card, a credit card converts your transaction from Australian dollars into the currency you’re paying in. This conversion usually sees your Australian dollars first converted into US dollars, and then finally into the currency you’re converting into, and you usually have to pay for this.
This is usually in the range of 2 – 3% of the value of each transaction, but each card provider will set their own fee amount.
ATM withdrawal fees. Withdrawing cash from an ATM using your credit card in Australia isn’t the cheapest way to get funds, so you can assume it’ll also be expensive while overseas. Just like a foreign transaction fee, card providers also charge you for withdrawing cash from an ATM while overseas. This can be as much as $4 per transaction of 2%, whichever is greater, so this is another important fee to find out before applying for any card.
ATM owner fees. Australian credit cards each have overseas partner ATMs where you can withdraw cash from. While you’ll still pay ATM withdrawal fees at these ATMs, you save by not paying ATM owner fees. These aren’t set by your card provider, so it’s not necessarily something you can avoid when taking out your card. One way you can compare different cards in this respect is to find out who your card provider’s partner ATMs are in the country you’re travelling to, and see if they are plentiful and near where you’re holidaying.
Look below to see how these fees can add up over the course of a few days shopping overseas. Over the course of a few short days this person racked up almost $35 in international transaction and ATM withdrawal fees.
Screen capture from Netbank after a recent trip to Hong Kong
Remember to factor in your annual fee into this. A card which will save you a couple of hundred dollars overseas might not be such great value if the annual fee is many times more than this.
3. Complimentary insurance
Travelling overseas can sometimes put you outside your comfort zone and outside your safety zone. If you do happened to get injured, delayed, break an item you purchase or crash a rental vehicle, insurance can make these unpleasant situations much cheaper. Some credit cards provide these insurances free of charge automatically when travelling. Considering that travel insurance for the family can cost hundreds of dollars, this is a big saving. Each card provider will have their own insurance policy, so have a thorough look at this and evaluate what the medical benefits are and how much cover you’ll receive.
If a credit card comes with travel insurances it also may have a range of other policies. The benefits of a platinum credit card can also include cover incase you break or lose an item, extended guarantees and more.
4. Interest rate and cash advance rate
Just as with any credit card, compare the rates for both purchases and cash advances. It’s also a good idea to know what transactions your card provider will count as a cash advance. Little known transactions include using your credit card to buy foreign currency, at home or overseas, or gambling using your credit card. If you’re going to use your card when you get back home this is even more important. Make sure you know what is and isn’t counted as a cash advance.
5. Rewards program
Some cards will earn points to reward your spending. These points will either be frequent flyer points in programs such as the Virgin Velocity or Qantas Frequent Flyer, or the card provider’s own type of points, such as the American Express Membership Rewards program.
These points can then be used to redeem for free flights, upgraded fares or even items such as books, technology and more. If this is on your checklist, ensure the membership fee for joining a program as well as the annual fee for having the card doesn’t outweigh the amount of points you’re likely to earn in a year. When using the card overseas, remember the foreign transaction fee might also cancel out the benefit of any points, so make sure you use the card wisely.
Beware of putting your credit card into credit when travelling overseas
Many travellers swear by putting their credit card into credit when travelling abroad. This involves loading money onto your credit card and then spending it as if it was a debit card. While this can help you avoid paying interest on some of your spending, a little known fact is that some card providers won’t be responsible for the additional funds loaded onto a card, but only your approved credit limit.
This means if you lose your card, it’s stolen or misplaced and unauthorised transactions are made using it, you may have no way of getting back any of the funds you loaded onto the card and lost. This is true for cards such as the 28 Degrees MasterCard.
Prioritise your overseas spending needs
Overall, the best credit card to use overseas depends on you. Go through the above checklist and prioritise what’s most important to you. For example, ask yourself, are you more likely to use your card to get access to cash or only to use your card to make purchases? The answer to this will tell you how much importance to place on low international ATM fees as opposed to a card which waives foreign transaction fees.
In addition, an expensive card which provides complimentary travel insurance may be more affordable if you think you’ll make use of these insurances each year.
It all comes down to you sitting down and asking yourself how you’re likely to spend your money while overseas. Remember there are also travel money cards and debit cards, as well as cold hard cash, so it may be a good idea to take a combination of these when travelling overseas.
Credit Card For Overseas Travel
Bankwest Zero Platinum Credit Card offers you $0 foreign transaction fees. A great card to take with you while you travel.
- $0 p.a. annual fee
- 17.99% p.a. on purchases
- 0% p.a. for 9 months on balance transfers
- Cash Advance Rate of 21.99% p.a.
- 55 days interest free
- Minimum Income Requirement of $65,000 p.a.
Comparison of No Foreign Currency Exchange Fee Credit Cards
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