The excitement of planning the next big overseas holiday is something to look forward to. Perhaps the beaches of Bali or the cafés of Paris are the destinations of your dreams. However, nothing spoils the high of the recent holiday more than checking the bank account and realising the lengthy list of additional fees.
Australians love to travel, but many of them are paying unnecessary fees to access their own money while abroad. If you want to enjoy your hard-earned Australian dollars, you need to know the truth about how card charges are implemented overseas.
The Truth About Foreign Transaction and Conversion Fees
Using your card while overseas is not just the simple process of swiping the card; behind the scenes, your bank is working hard to provide the service. And they charge you for the service. One of the most common charges is the foreign transaction fee. This is about three percent of the total purchase amount. If you enjoy a meal at a restaurant that costs one hundred dollars, your bank charges you three dollars more.
Another sneaky charge is the currency conversion fee. At times, the merchant or the network charges the customer the currency conversion fee. This is where the currency is converted at a terrible rate, so the difference is taken. This is something that happens rapidly when the two-week holiday is up.
Comparing Your Overseas Payment Options
You are presented with many options when choosing how to make purchases while overseas. Using your everyday card is the most expensive option. Most everyday bank accounts charge flat fees per overseas ATM transaction and also charge a percentage per purchase.
Travel-specific prepaid cards are aggressively marketed to the Australian public. Prepaid cards can be filled with the currency of the country that is to be visited before the trip. This secures the exchange rate, which is good for budgeting purposes. However, there are many hidden fees with prepaid cards.
The best option for many travellers is the credit card. Specifically, the best option is the no-fee overseas credit card. This type of card has no fees at all, which is great because there is already a three percent charge involved with using a regular credit card while abroad. This card also has the advantage of using the wholesale exchange rate, which is much more favourable than the exchange rate at the currency exchange booth. Paying off the full balance each month makes this the most cost-effective option available. Visit ING or another reliable provider and assess your options.
Practical Tips for Spending Abroad
While having the best travel card available is great, there are some tricks to be aware of when using the card. One of the biggest tricks is called dynamic currency conversion. This is where the card machine asks if the customer wants to pay in the local currency or in Australian dollars. It is imperative that the tourist chooses the local currency. If the tourist chooses the Australian dollar, the foreign retailer gets to choose the exchange rate, and they will inevitably rip the tourist off.
Another trick is to make sure to have another payment option available. Machines do break down, cards get lost, and some retailers simply do not want to deal with the hassle of cards. It is best to have some local currency available to save the tourist from stressful situations.
Save Your Money for the Trip
You work hard to fund your international adventures. Letting banks chip away at your travel budget with hidden surcharges is entirely avoidable. By doing a little research before you head to the airport, you can get a payment method that works for you instead of against you. Grab a no-fee travel credit card, avoid terrible exchange rates at the register, and get on with enjoying your well-deserved holiday!
