We want memories of the places we’ve been and seen on a holiday, not how much it cost us to use the ATM.
Travelling overseas is a great adventure. It’s expensive too. Flights, hotels, hostels, food, souvenirs – there’s a range of costs, and the list goes on. But what about the cost of accessing your money overseas? A travel-friendly credit card is a great solution for someone who is looking for peace of mind when on their holiday. The right credit card with features such as travel insurance can protect your family and help keep your holiday from turning into a nightmare. All credit cards are not created equal however, so this guide will first help you understand what a travel credit card is, why they’re useful overseas and what fees you can generally expect to pay when using one. Finally it’ll show some examples of travel credit cards with low fees when purchasing items overseas, and some cards with reward programs which can get you free flights. Once you know the different features, fees and interest rates associated with travel-orientated credit cards you can effectively compare the different products in the market.
Comparison of Overseas Travel Credit Cards
What is an overseas travel credit card?
A travel credit card is a credit card that offers features which are beneficial when you’re making purchases and travelling overseas. Overseas travel credit cards may come with some or all of the following features:
- Waived foreign transaction fees
Foreign transaction fees are charged when you make a purchase on a credit card in a foreign currency, whether that’s while shopping online or buying something from a merchant overseas. Some travel credit cards will waive this fee.
- Rewards programs
Travel rewards credit cards are very similar to air miles credit cards and frequent flyer credit cards, and may in some cases be one and the same. It will depend on what rewards are being offered for your points. Rewards cards may well include all manner of travel rewards, such as flights, cruises, hotel accommodation and car hire.
- Travel Insurance
Many credit cards offer complimentary travel insurance. This can save you thousands if you injure yourself or become sick while overseas. Some cards have policies which also cover lost luggage and delayed flights.
- Purchase Security Insurance
This type of insurance usually gives you an extra period of time after you purchase an item where it’ll be replaced if lost, stolen or damaged. Check the policy offered with the card you’re interested in and find out how many days after the purchase it’s valid for, what items are excluded from the policy, and the dollar amount limits for specific items.
- Transit Accident Insurance
This covers you and any dependents in the event you’re injured while entering, exiting or during transit directly to the airport, port, bus depot or railway station before a trip.
- Travel discounts and services
If you travel and spend on your credit card frequently, points-based reward schemes could mean you can cash in your points for all kinds of great travel rewards.Points can be earned by flying on an airline specified by your points program or making purchases using your card. When you gather enough points you can redeem them for free flights, products or services such as airport hire cars.
- Zero liability guarantees
MasterCard, Visa and American Express each offer similar fraud protection services which include monitoring your account for fraudulent transactions and covering the costs of any fraudulent transactions which occur on your card. For more information about how you’re protected when using your credit card click here.
It should also be noted that travel credit cards that have a reward points system generally have higher fees associated with them, although there are now credit cards on the market which have annual fees of less than $100 and in some cases $0.
Travel-friendly credit cards are offered by a large number of providers including American Express, GE, NAB, Virgin Money and more. If these benefits may not seem like reason enough to take out a new travel-friendly credit card before an overseas trip, the nature of a credit card also means it has other unique travelling benefits.
Comparison of Travel Rewards Credit Cards
Why use one of these credit cards abroad?
In addition to being a great emergency source of funds, credit cards have other benefits when travelling overseas:
- Credit cards are accepted all over the world - You can use them as a form of payment for goods and services in millions of locations, and they are a fast and convenient way to make purchases and withdraw cash wherever you find yourself during your travels.
- Using a credit card is safe and secure - You don’t need to carry around large amounts of cash which could be a security risk, and all transactions on the card are protected by the credit card provider. Should your card be lost or stolen you can easily cancel your card by contacting your credit card provider.
- You can use a credit card to make ATM cash withdrawals if you need extra foreign currency - Using a credit card is an easy way to pay for accommodation, gifts for loved ones, tours and everyday expenses such as food and drink. Having a great credit card when you’re travelling overseas makes life much easier and leaves you with free time to enjoy yourself.
Ensuring you have the right credit card to use abroad is important – even if you only plan to use it in emergencies. Choosing the wrong card or not knowing the different ways purchases may attract fees can mean you’ll pay more while on your holiday.
What are the fees charged with common overseas use?
Although credit cards offer convenience while you’re overseas by allowing you to make purchases at a range of locations and get access to emergency cash, there’s a trade off – credit cards charge fees for international transactions. Some charge more than others, so it’s important to compare and find the right one for you.
The fees below are just some of the expenses you’ll need to think about when using your credit card overseas. Some fees, like the aforementioned international transaction fees differ depending on what card you choose, whereas ‘Dynamic Currency Conversion’ charges or cash advance fees can be avoided if you plan your overseas transactions carefully.
International transaction fees
Using your credit card when travelling overseas can be expensive depending on which card you use. A foreign transaction fee is charged when you use your card abroad and make a purchase in any currency other than AUD. This charge is applied whenever you purchase goods or services, or even withdraw cash in a foreign currency.
Depending on which card provider you use, this foreign transaction fee could range between 2.75% – 2.99% of the transaction value. So for every $100 you use abroad, you might be charged between $2.75 and $2.99 by your credit card provider. Some providers are an exception to this rule and charge a low foreign transaction fee or nothing at all.
According to the Department of Energy, Resources and Tourism’s 2011 Outbound Travel Report, holidaying Australians spend an average of 20 nights overseas per trip at $289 a night.
Foreign Currency & International Fees for Credit Cards
International Traveller Credit Card
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- $199 p.a. annual fee
- 19.99% p.a. on purchases
- Cash Advance Rate of 21.99% p.a.
- Up to 55 days interest free
- Minimum Income Requirement of $40,000 p.a.
Cash advance fees
Using your credit card to get hold of cash quickly overseas through a cash advance at an ATM is a bad move that could see you paying high interest rates in addition to other fees. Some providers will charge a fee which could be 2% or $4, whichever is greater. This is calculated based not only on the cash amount you’re withdrawing, but also foreign transaction fees and any ATM withdrawal fees your bank may charge you.
Be aware that buying foreign currency even while in Australia is considered a cash advance by card provider, so when buying foreign currency it’s smart to buy it using cash rather than using your credit card and incurring cash advance fees.
Cash advances also incur higher interest rates, so if you plan to use your credit card for cash transactions be sure to find out how much these transactions will cost you and choose a card with the lowest possible fees and interest rates for cash advances.
A final, hidden sting of the cash advance is that the interest-free period associated with many credit cards won’t apply, so while normal purchases will enjoy a set period before interest is charged, cash transactions will start being charged interest from the day the transaction is made.
Dynamic Currency Conversion charges
Some overseas retailers will give you the opportunity to pay for goods in your own currency rather than the local currency – known as Dynamic Currency Conversion (DCC) or Cardholder Preferred Currency (CPC). This might seem like a great way to avoid foreign transaction fees, but could prove costly overall, as it can carry a charge of up to 4% of the transaction.
This could be much higher than international transaction fees when using your card abroad. Retailers offering this service are bound by law to give you the choice of whether or not to use DCC, so sometimes it’s wiser to refuse and make sure you choose to pay in the local currency of the country you’re in if you want to avoid fees.
Foreign exchange fees
Buying foreign currency before you set off on a holiday can also hit you with hidden charges and fees. Foreign exchange bureaus add on fees and commissions to the cost of your foreign currency transaction, but this isn’t the only added cost of buying currency to use abroad. If you buy currency using your credit or debit card you may be up for even more hidden costs such as ‘handling fees’.
A way to avoid these extra card fees when purchasing foreign currency is to visit a competitive exchange bureau at home – not at the airport, and use cash to stock up on the foreign currency you need. Withdraw the cash at a nearby ATM using your savings rather than your credit card and avoid paying with your credit card at the foreign exchange bureau at all costs.
If you do need to use your credit card to withdraw cash when travelling overseas then make sure you know exactly how much it’s costing you. Not only will the foreign transaction fee be charged but you’ll also pay higher interest rates and additional handling fees. These add up and can make using your card abroad an expensive exercise. There are however some card providers who offer lower cost foreign transactions when using your credit card abroad. It pays to shop around and find the most competitive deal so you can avoid paying the high fees that some travel credit cards might charge.
Unless you intend to pay the entire balance on your travel credit card when you return from overseas travel, you need to look at the standard interest rate on the cards you intend to use.
When organising your travels you should look for credit cards that have a competitive interest rate for purchases and also try to find low rates for cash withdrawals in the case that you may need it for this purpose.
Stay away from cards with high interest rates and cash advance fees, and look for cards which offer interest-free periods.
Cards that cost less but waive international transaction fees
Some of the more recent credit cards to enter the travel-friendly market offer travel benefits with low annual fees and no foreign transaction fees.
It also has some of the complementary insurance policies explained above which are activates if you pay for your trip using the card, including:
- International travel insurance
- Transit accident insurance
- Interstate flight inconvenience insurance to cover the cost of delays, lost luggage and funeral expenses during interstate travel.
Some cards also offers protection on items bought using the card.
- Purchase security insurance – Items which are damaged, stolen or lost can be replaced.
- Guaranteed pricing security – If you buy an item which you then find for a lower price, it will reimburse you the difference.
The Breeze Platinum also comes with a 2.99% p.a. on balance transfers for 9 months. When the purchase rate promotion ends, the Breeze Platinum still has a low rate of 8.99% p.a., making it a good credit card not only for travelling, but also for when you get back home.
Cards that offer travel rewards
Some cards come with frequent flyer schemes to reward you for flying with specified airlines and making purchases, although these can come with more expensive international transaction and annual fees. These reward points can then be redeemed for free flights, products or services, and also offer discounts on tours, hotel stays and other attractions while travelling.
Frequent flyer programs are offered on credit cards from most providers including ANZ, CBA, NAB, Westpac, American Express, HSBC, Citibank and many more. These reward schemes include the Qantas Frequent Flyer, Velocity Frequent Flyer, Kris Flyer and Skyward Miles programs, and are offered on many different cards through many different providers.
This card comes with both an American Express and MasterCard version which earn points at different rates. The American Express offers a better earning rate, but the MasterCard gives you more acceptance from international merchants when you travel.
The points required to get a free flight differ depending on the destination, and conditions apply, but for a one way ticket to Auckland from Sydney you’d need 18,000 points.
To earn 18,000 points you’d need to spend approximately $27,000 in a minimum of three statement cycles using the American Express, and more using the MasterCard.
The NAB Qantas Gold Card also offers complimentary international travel insurance, transit accident insurance, price protection insurance and extended warranty insurance, but charges a fee of up to 2.50% for international transactions.
Virgin Money have their own frequent flyer program called Velocity. Their Velocity High Flyer credit card has an annual fee of $289, but offers 1.25 Velocity points for every $1 you spend. Unlike the NAB Qantas Gold Card, the High Flyer doesn’t cap the amount of points you can earn in a statement cycle.
The High Flyer offers features tailored to the frequent flyer such as complimentary travel insurance – but has a fee of 3.3% per foreign transaction.
Tips to remember when using your credit card overseas
- Interest rates are applied to cash advances from the date of the transaction and you’ll be charged from that date until the debt is repaid in full.
- You should always budget so that you’re sure you’re able to make the monthly payments in full. Missing payments will result in further charges being added and more debt accumulating.
- Always remember to make sure you are aware of all the terms and conditions which are associated with your credit card and that you know all the expected charges and fees which will be applied. As long as you know the details then you won’t have any unexpected and problematic debts arising each month. Knowledge is your go-to weapon against unanticipated transaction charges.
Travelling overseas doesn’t need to have the added stress of hidden fees. Nor should you have to worry about what would happen to you or a family member if you fell ill or were involved in an accident while travelling. Choosing the right travel-friendly credit card can cover these bases when you travel overseas and ensure you have fond memories for years to come.
Looking for Travel Insurance for your next trip?
Hunting out the right travel insurance for your trip is just as important as hunting out the credit card offers the right travel rewards. With so many different policies available on the Australian market, travel insurance providers are going to great lengths to get the edge over their competitors by offering exclusive offers to help you reduce your premiums and receive great bonuses such as, free family cover.
Finder now features a range of exclusive travel insurance deals from some of Australia’s leading travel insurers. If you are on the market for a competitively priced travel insurance options with all the necessary features for your next trip, take a look at our travel cover deals page to review current offers. As always, Finder recommends you don’t base your decision on what product to go with on price alone and get a clear understanding of the policy terms and conditions before signing up.