Learn how to avoid certain foreign transaction fees, and you’ll have more cash to spend on your souvenir shopping
Using a credit card while travelling overseas may be convenient, but it can get costly between the rates and the fees. Learning how to get the most ideal rates, and avoid having to pay extra fees can go a long way towards saving you some extra spending money during your travels. You have a few options when it comes to saving money on fees for foreign transactions which will be covered in the following article.
Compare credit cards with no foreign currency conversion fee and annual fee
What is the difference between the foreign currency exchange rate and foreign currency exchange fees?
There is a distinct difference between rates and fees when talking about foreign transaction charges. The rates refer to the exchange from Australian currency to the currency of the country you are visiting, and will vary from what you see listed with the interbank rates. This is because some banks will add additional fees to their exchange rate as a way to cover their costs.
Fees are charges made to your card for certain transactions made while overseas. You may be charged for using ATMs abroad, or making purchases inside of stores. The different merchants you shop with may also add a surcharge to your purchase for conducting the transaction with a foreign credit card.
How can I pay for transactions overseas?
How you are going to pay for your daily expenditures while travelling overseas is an important point to think about. There are a number of different methods, each with its own set of risks and good points. Consider where you will be travelling, the accessibility of cash using a bank or ATM, extra fees and charges, and the safety of the areas in which you will be visiting. All of these factors will help you determine which method is most effective to cover your vacation needs.
Travel Money Options
No Foreign Exchange Currency Exchange Fee Credit Cards
If you are a frequent traveller to lands afar, it would be advised that you to seek out credit cards that are designed for travelling. These cards advertise low or no fees on foreign transactions, are connected to extensive worldwide ATM networks and in some cases will even waive any extra fees for currency conversion. You may pay a slightly higher annual fee for this type of credit card, but the money you save on overseas spending may balance that out.
Comparison of No Foreign Currency Exchange Fee Credit Cards
Rates last updated November 25th, 2015.
- Bankwest Breeze Platinum MasterCard
Purchase rate offer + $0 annual fee for the first year has been extended until 30 September 2015
July 6th, 2015
- Bankwest Qantas Platinum MasterCard
Increased bonus points offer of 50,000 for new customers who apply before 10 December 2015.
September 28th, 2015
Prepaid travel money cards
A prepaid travel money card provides you with a happy medium between credit cards and cash. These can be preloaded with multiple currencies, eliminating the worry of currency conversion rates. There is a fee charged by the bank when issuing this type of travel card, but you will find that with certain accounts, that fee is waived. You are also able to load a prepaid travel money card directly from your account using online banking in some cases. Again though, depending on your bank, there could be fees for using that option.
Comparison of Prepaid Travel Money CardsRates last updated November 25th, 2015
You always have the option of conducting the majority of your overseas transactions in cash, but that too can become costly once you start adding up the fees. Unless you are using a bank that has a global presence with ATMs in foreign countries, expect to be charged for your cash withdrawals. Not only will you be charged by your own bank, you could also incur charges by the bank that is issuing you the cash. Your strongest bet is with finding a bank that is partnered with major international financial institutions, or is internationally recognised on its own.
Rewards credit card
Rewards credit cards that are geared towards travelling are another option if the terms are right. You may find that some offer low or no foreign transaction fees as a part of the package as well as global ATM access. These cards often come with other travel related perks that can save you money, such as complimentary travel insurance and discounts on hotels and rental cars along with points for flights. Even if you are unable to completely avoid paying extra fees, the savings from the other features may help to make up the difference.
Comparison of Rewards Credit Cards
Rates last updated November 25th, 2015.
- The American Express Essential Credit Card
$0 annual fee + 0% for 12 months BT + $50 credit when applied online by 2 February 2016
November 16th, 2015
- Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% for 14 months balance transfer offer has been extended until 13 December 2015.
November 24th, 2015
- Virgin Australia Velocity Flyer Card - 0% Interest Offer
0% purchase and balance transfer offer extended until 13 December 2015.
November 24th, 2015
What else should I consider?
By paying attention to the fine print while comparing credit cards and their foreign transaction fees, you should be able to find the most suitable offers for your travelling and spending habits. Consider these points as you make your comparisons across various cards:
- ATM fees. If you are not careful, you could be paying fees for using an ATM outside of Australia from both ends. Unless your bank has a global ATM alliance that allows you to make withdrawals overseas without any fees, you will be charged by your bank and the issuing bank for withdrawals and even account balance checks when travelling.
- Annual fee. The price of having low or no international fees with your credit card is often made up for by a high annual fee. Before committing to any one card, make sure that the savings you will benefit from make up for the annual fee charged for using the card.
- Supported currencies and global acceptance. Your credit card should be one that is accepted worldwide, such as Visa, MasterCard or American Express. Only then will you be guaranteed that it can be used when making an overseas purchase in any currency.
- Merchant fees. In some cases you might find that the merchant adds a surcharge to your transaction for using a foreign issued credit card.
- Exchange rates. Check to see how often the exchange rates are updated and if there are additional fees for converting currency.
- Added travel perks. Complimentary travel insurance and discounts on other travel expenses are worth thinking about when comparing cards to use when travelling overseas.
How often you travel and the length of your stays will play heavily in the type of credit card you use to cover your overseas expenditures. Be sure that you are factoring in the way in which you spend while travelling and the expenses you typically incur in order to help you narrow down your choices and find a card that gives you the most benefit.Back to top
Frequently asked questions
Am I also charged interest if I make cash withdrawals overseas?
Yes, cash withdrawals also incur an interest charge, and usually at a higher rate than the purchase interest rate.
Are there limits on the amount of money I can withdraw or spend while overseas?
Banks will typically impose a limit on the amount of cash allowed to be withdrawn daily. As for purchases, that is not likely but you may want to check with the bank first if you do plan on making a large purchase.
What are the fees for overseas cash withdrawals?
They will vary, but will normally be advertised as the greater of a specific dollar amount or a percentage of the transaction.
Is there a limit on the amount of money I can load onto a prepaid travel card?
No, you should be able to put as much money as you see fit onto your travel card.