Foreign Currency Transactions Using Debit Cards

Debit cards are very popular in Australia due in part to their extreme flexibility in use and convenience as opposed to carrying around large amounts of cash. But many people overlook the other benefit in that debit cards can be used for foreign currency transactions.

However, there is a need for caution when using a debit card for foreign currency transactions as there are often additional fees attached. If you are intending to take your debit card overseas when you travel it might be worth considering a prepaid debit card to use for your foreign currency exchanges.

Using your debit card overseas

When you purchase any goods or services overseas you make payment in the currency of the vendor but the charge for the transaction is made in Australian dollars. The advantage to you is that when you want to make a purchase overseas you pay with your debit card at the price which is offered to all customers as opposed to looking for a store which will take Australian dollars and paying extra for the privilege. The saving to you is local price and no need to exchange your dollars into the local currency.

Another bonus of having a debit card is being able to use it for online purchases; particularly if you are buying an item outside of Australia. Many overseas websites don’t accept Australian dollars, preferring to have US dollars or Euro, but with a debit or credit card you don’t have a problem as they are accepted virtually worldwide. You make your purchase in the currency offered for example US dollars and your card is billed in Australian dollars. Consequently you have a lot wider shopping experience available to you.

Foreign currency transactions

The downside when making overseas purchases is that they do carry foreign currency transactions charges. These fees can vary between different card providers; some offer a fee free card for overseas transactions, whilst others can charge you from a low minimum to quite a high rate. It is a good idea to check with your card issuer before going overseas as to what fees are likely to be charged to your card when you make purchases outside of Australia.

Another factor to take into account when travelling overseas with your debit card is the fact that exchange rates are charged daily on your card. Generally you will find these rates are not particularly competitive, although they may be slightly better than the exchange rates available in airports.

Prepaid debit cards

If you travel frequently for work or pleasure you may be better advised to use a prepaid debit card for your trip. Whilst these cards are exactly the same in principal to debit cards the advantage they have is that you have a predetermined balance paid into the card. These cards often provide competitive exchange rates, compared to your normal debit card and particularly those debit cards with a reasonably large balance, plus there is no foreign currency transactions fee charged.

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