Overseas Spending Travel Credit Cards
Using cash when traveling is necessary because you will find places that will not accept credit cards, although if you plan to use your credit card for making purchases online or overseas you should consider how much added fees you will be charged; particularly foreign transaction fees.
Here we have outlined a few credit cards tip that could save you a few dollars by reducing the fees you could be charged on international purchases.
Tips on Making International Purchases
1. Get a credit card that has no foreign transaction fee - If you know you will be travelling then it is worth your time to apply for a No Foreign Transaction Fee credit card. There was a recent study that came out that said that over 90% of bank cards and almost 60% of credit union cards have transaction fees while travelling abroad. The fees are around 2 to 3% of each transaction. Before you know it, you have significantly increased your spending without even realising it and just in fees! You end up paying a lot more than you intended to.
There are cards that offer no foreign transaction fee, however, and you should apply for one as soon as you know you will be going abroad. In addition to the credit card, it would be useful to also carry a debit card that will not charge you for making ATM withdrawals while travelling.
Zero Foreign Transaction Fee Credit Card
Bankwest Breeze Platinum Credit Card offers $0 foreign transaction fees whether the transaction occurs in a foreign currency or Australian currency. Minimum credit limit of $8,000.
- $99 p.a. annual fee
- 0% p.a. for 4 months (reverts to 11.99% p.a.) on purchases
- 0% p.a. for 6 months on balance transfers
- Cash Advance Rate of 21.99% p.a.
- 55 days interest free
- Minimum Income Requirement of $65,000 p.a.
2. Let your credit card company know that you are traveling out of the country - The last thing you want to have happen is be refused a transaction or unable to get funds because your credit card company has blocked your card. This is a security measure and a very good thing for the credit card company to do in order to eliminate fraud but very inconvenient if you just simply need to use your card. In order to eliminate this hassle, you must contact them first and let them know you will be travelling. Tell them where you are going and for how long so they will be able to make a note on your account and your credit card will not be flagged for suspicious activity.
3. Dynamic Currency Conversion – Avoid it! - There is a trend with some merchants to quote you your price of an item in your home currency. Often, merchants will give customers a less then favourable exchange rate and you end up paying more for an item than you had intended. In order to avoid this, all you need to do is refuse to sign your receipt unless it is expressed in the local currency. If conversion rates are confusing to you, you can add conversion apps to your smartphone and check it before you make purchases.
4. Carry your passport with you at all times - Now that there is the new chip and pin technology available, our cards have surpassed US standards of security and safety. In fact, there are many vendors in Europe that will not accept US cards that do not have the updated technology. However, if you carry your passport with you at all times, making purchases should not be a problem.
5. Load your credit card up with extra funds - For credit cards with no international transaction and conversion fees, adding additional funds to put your card in debit will allow you to withdraw cash from ATMs as you would with your typical debit card accessing the daily exchange rate. By drawing on funds that is in excess will mean you avoid any cash advance fees and cash advance interest rates. (ATM Provider may still charge a fee)
6. Take cash with you - While it’s safest to make most of your purchases with your credit card, there will be places that do not take credit cards. This is when have a modest sum of cash with you on hand is important. You should exchange some before you leave so you have some funds with you when you arrive at your destination. You do not want to run the risk of getting to the airport and not being able to find an ATM or you discover that is out of order.
You should also shop around for the best exchange rates so you get the most out of your money. Commissions and fees vary wildly from place to place and exchanging funds at the airport is not advisable because they offer some of the poorest rates around.
Benefits of Using Your Credit Card While Abroad
There are many benefits to using a credit card primarily for purchases while traveling abroad. Here are some of the reasons:
1. Reduce the amount of foreign currency you bring home - When you use your credit card, you will not have to deal with continuing to converting your cash into the local currency when you run short of funds. This also eliminates the worry of having the right amount on you and you will also no longer have to deal with finding an exchange place that will give you the best deal. With a credit card, you will enjoy interbank exchange rates which are generally better compared to exchange bureaus.
2. Lower risk of theft - Pick pockets are always on the lookout for tourists who may be carrying around with them large amounts of cash. If you get your wallet stolen and you have cash in there, you are out of luck. That cash is gone. However, if you have your credit take taken, you will not lose any money. All you have to do is report that your card was stolen and you will not be responsible for charges made on your card without your permission.
Options In Addition To Your Credit Card
While using your credit card is probably the most convenient and safe choice, there are some other options to consider in addition to using your credit card. If you choose wrongly, you may end up losing more of your money than you had intended.
- Travellers Cheques - This used to be the premier product back in the day but it has lost a lot of popularity. Travellers cheques are useful, however. They are certainly more secure than carrying a load of cash on you and if they are stolen or lost, they can be easily replaced. The other nice thing is that you have a set exchange rate with travellers cheques. This is in contrast to getting out cash while abroad which will cause you to be subject to the rate at the time which may or may not be favourable. Locking in a exchange rate will save you from rising rates. It is also a good choice when travelling to countries that are not as developed and do not have ready access to cash like many other countries. Be sure to check around for the best rates before buying them.
- Prepaid currency cards – These cards are useful because you can basically do the same thing as a travellers cheque but instead the funds are loaded onto a card. You can purchase a certain amount and use your card like a credit card. If you are concerned about staying within a certain budget this is a good option to consider. These are also a safe choice because if the card is lost or stolen because your card can be replaced. The downside to this option is that you are usually subject to very bad rates of exchange. There are also additional fees that are added onto the card that make it slightly less appealing. Be sure to read all of the small print before purchasing the card so ensure you get a good deal.
- Debit cards - If you do not want to pay any interest and only want to use the cash that you have on hand and available to you then you might want to consider taking a debit card on your travels. The debit card makes it possible to use it usually wherever Visa or MasterCard is taken and it will come directly out of your banking account. You can also access your cash all over the world because ATMs are much more plentiful these days. You also enjoy a good rate of exchange that usually hovers around 2-3%. If you want to save money on fees at the ATM, you could use your credit card for some purchases and your debit card for others. Be sure to go over the exchange rate fees and margin with your banking institution so you are not surprised when you look at your statement. You might be pleasantly surprised that your provider has very low margins and fees.
Protecting Yourself While Travelling
There are often many hidden fees and charge when you travel and exchange currencies. You should be sure to go to reputable places while travelling to ensure you are getting the best rate and are not being charged a commission.
It is a good time for Australians to travel because the Australian dollar has been quite strong. In fact, it has outperformed the US dollar for some time now, in addition to other currencies. This trend has caused many Australians to go abroad to purchases goods and bring them home to Australia.
However, forecasters are saying that the Australian dollar will fall again. In fact, leading banks predict that the AUD will only be worth US92 by year’s end. It is difficult to completely predict the currency market because it is volatile and subject to daily changes.
If you know you will be travelling in the future then you can protect yourself by taking out half the money now you intend to spend and then the other half later. This ensures you get the rate that is current and favourable in the event the rate goes up later when you need to travel. If you are the type of person that likes a little certainty then you might want to exchange most of your money as soon as possible.
If you are the adventurous type then you can opt for a foreign currency exchange traded fun or ETF or even sites for foreign exchange trades. They offer hedging options. This is a good way to get minimise your fees and other charges and get a good rate in the process.
Take Advantage of Banks Buy-Sell Spreads
Banks have a buy-sell spread on currency transactions. For instance, a bank recently sold the US dollar for $0.98. This meant that customers would receive $0.98USD whenever they spend an Australian dollar.
For those selling US dollars, they would receive $1.04AUD back for every US dollar they sold. The spreads can be quite wide so this means you should shop around at different banks and on different websites to find out what the spreads are. That way you are more likely to get a good deal. They change daily so you should check often.
Various Fees And Charges
You should be aware of the many charges and fees that may be assessed when you are getting ready to travel abroad. For instance, some banks charge a loading fee on their prepaid cards. Then you can also be charged again to add more money to your card. This is usually around 1%. There are some cards that do not charge an initial load fee but will assess fees in other areas. Be sure to check out the fine print before settling on a card.
Every place is going to charge a little something different. For example, if you go to CBA, they will charge you 1% of the value for foreign currency bills including a minimum charge of $8. Travellers cheques will usually run you approximately 1% of the currency value also with a minimum $8 charge.
ANZ offers a travel card that is just $11 for the initial fee and to reload you are charged 1.1%. ANZ will also provide foreign currency charging 1% of the currency value and minimum $8 charge.
If you really want to save, head to the Australia Post. There you will find no commission charges for foreign currency exchanges. You can also buy there Travelex Cash Passport, Amex Express Global Travel cards and also Amex Express travellers cheques.
Using Your Various Cards
When you are abroad and use your ATM card for withdrawals, you will most likely be charged $3 – $4 for each withdrawal. If you are using a travel money card, it will not be able to be used at POS or Point-of-Sale terminals. You will be charged additionally if you need to reload your card.
For most credit cards, you are charged around 2.95% for the conversion of currency per transaction. Although, there are some that charge up to 3.45%. If you need to use your card to withdraw funds for a cash advance while abroad you will be assessed an additional fee.
Debit cards are a bit better. The rate for converting is around 2% and going up to around 3%. The withdrawal charges and cash advance fees are about the same as a travel money card.
Travel Tips Before You Go
There are things you should do that will keep your money safe and give you peace of mind while on your travels.
1. Let your bank know that you are leaving on a trip. Tell them where you are going and when you plan to return. If you do not do this you may discover that your card is rejected when you get to your destination. Letting them know you are travelling will avoid this all together.
2. Upgrade your card. There are many countries that will not accept just a signature. In fact, New Zealand, China, Ireland, Britain and France are just some of the countries that have adopted the chip technology that makes you sign for all of your transactions.
3. Bring the numbers of all the customer service numbers for the cards you use. This will eliminate any stress in the event your card gets lost or stolen or if you need the help of a customer service representative for any other reason. You should also make a copy of your card so you have all of the numbers, as well, so you can provide them to customer service.
4. Find out if there are any restrictions for withdrawals in the country or countries you will be visiting.
5. Be sure to keep your cash, cards and travellers cheques in different places. This is a precaution in case you are robbed so you do not have everything taken at once.
6. Keep track of all of your receipts and check them against your statement when you return.
7. Bring more than one credit card with you. There may be occasions that one card is rejected for some reason or another so you want to have several choices. For example, there are many places that do not take American Express so be sure to bring different types of cards, as well, so you are sure that your card will be accepted wherever you go.
8. If you are using a card with a PIN, be sure to cover your PIN when you are using a PIN pad at an EFTPOS machine or at the ATM. You don’t want to provide possible criminals instant access to your account.
Additional Travel Tips
Travelling is wonderful as millions leave their homes each year to see the world. While most come back with memories and lovely experiences, there are some that are not so fortunate. If you are prepared, you can avoid some situations and be able to enjoy your holiday free from distress.
1. Consider where you are going - The fact that you are able to travel is seen as a great luxury to people in many countries and tourists are often an instant target. If you are in a place that has skyscrapers and beautiful buildings amidst squalor, you might be able to tell immediately that there is a great divide in that country between the haves and the have nots. If you want to enjoy your trip, you may want to avoid calling attention to yourself. If you like to wear designer clothing, expensive jewelry and carry a fancy camera, you will certainly be seen in the crowd. This is not necessarily a good thing while you are travelling because you will be targeted. Try to minimise attention and you will be safer in the long run.
2. Don’t carry a lot of cash - This seems like common sense but you do not want to be carrying a wad of cash around with you in case you are robbed. If you have a lot that you arrived with, just leave some in a safe at the hotel so you don’t have it on your person.
3. Keep your cash close to you - When you take cash out be sure to conceal it quickly and put it on your person. You can put it in a money belt or in your shoe or in a secret pocket in your dress or pants. This keeps it right with you but away from criminals.
4. Carry two wallets - Bring a cheap wallet or even a money clip that has some small bills and a some expired credit cards. If something happens and you are robbed, you can quickly hand over the money clip or cheap wallet but your real one will still be safe and sound. You should never carry your wallet in your back pocket.
5. Keep valuables in several locations - A purse is convenient but you don’t want to keep everything in there. Be sure to put things in several different places while you are in your hotel room and while you are out.
6. Identification, passports and airline tickets should be kept safe - These items are extremely valuable and they should be protected as such. You should also make copies of these items before you leave for your trip. Keep the copies in a safe and secure location, as well. If you are robbed then you will have the copies to assist in getting new cards, etc.
7. Dress sensibly - Do not wear flashy jewelry and parade around the latest technological gadget you have. This will only make you a target.
8. Do not walk alone - If it is at all possible, try to travel with someone else. There is always safety in numbers.
9. Take caution if you go into unknown areas - It might be tempting to see how locals really live but you may find that you get into trouble for doing so. Stay in areas where they are known and you are able to communicate if you need to. If you decide to go into a more remote area, maybe take a local person or guide with you so you know where you are going and will have someone there to help you communicate.
10. Ask locals about the best taxis - You can easily get taken by rogue taxi companies in certain countries. Do not get into an unmarked taxi and always take note of the number of the taxi and the identification of the driver. Locals will be able to tell you which companies are the best to use.
11. Do not leave valuables in your hotel room without a safe - Be sure that you have a hotel room that includes a safe. Valuables should be placed in the safe so you are sure that they will not be taken by hotel staff or anyone breaking into your room. If you must leave items there be sure that you never leave them out in plain sight. Put them in places that are not obvious such as clothing or drawers.
Just In Case
Most travellers are safe and leave a destination unscathed but sometimes bad luck occurs and someone gets robbed. If this happens, be sure that you do not resist. Simply hand over whatever is requested by the robber and do so as quickly as you can. It is much safer to give up your money than risk harm to your self. You should also report the incident as quickly as you can to the local authorities. It will probably may or may not be solved but at least the police can get an idea if there is a trend with certain individuals.
If you follow these tips you will find that travelling can be a joy. You will have peace of mind and you will have done all that you can to take precautions and protect yourself. If you use common sense and your intuition, you will have a wonderful time.
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