This was published 6 months ago
How to make our weak Australian dollar stretch further overseas
By John Collett
With the Australian dollar down against the US dollar, the British pound and the euro, travellers will want to be extra careful not to pay too much for their travel money if they are planning a trip this year, with a number of popular options leaving you vulnerable to high fees.
Credit cards are a convenient way to pay for things overseas, but they can charge currency conversion fees – as can debit cards – of between 2 and 3.4 per cent, though some do not charge the fee, says Amy Bradney-George, personal finance expert at Finder.
The Australian dollar is down against most major currencies, making it even more important not to pay too much for travel money. Credit: iStock
In addition, currency exchange rates could change while you are away, so you could get caught out if the value of the Australian dollar falls further, she says.
Banks and foreign exchange fintechs have travel money cards that are prepaid, and to which multiple foreign currencies can be added, including when you are overseas. They can also be used to make purchases and withdraw cash from ATMs.
Some of the foreign exchange fintechs set the exchange rate at the “mid-market rate” and have low fees, while some others, such as those travel cards offered by banks, can have a margin on the mid-market rate, as well as fees.
These margins built into the exchange rates may not be immediately apparent, says consumer group Choice.
It advises travellers to check if travel cards have fees to load the card or charge a cross-currency fee or margin when you use the card in a currency that has not been preloaded.
One of the benefits of a travel card is that the money is separate. With a debit card, if the account is hacked, you may not have access to the money for as long as it takes your bank to resolve the issue, Bradney-George says.
If you will be accessing a lot of cash overseas, pay attention to how much cash and how often money can be withdrawn from an ATM before a fee is charged. The Australian Competition and Consumer Commission says it may be cheaper to buy foreign cash in Australia before travelling.
“This avoids possible fees charged by card issuers and overseas ATM operators for using a travel money, credit or debit card to withdraw foreign cash or for cash advances,” the regulator says.
“Foreign cash is more expensive at airports. Shop around and buy foreign cash before getting to the airport to save money.”
Withdrawals from ATMs with a credit card can see you pay a 3 per cent fee and cash advance interest rates of 20 per cent or higher, Choice says.
Bradney-George advises debit cards and travel cards can also levy a charge each time cash is withdrawn. Some travel cards may have limits on the number of withdrawals or a maximum that can be withdrawn in a certain period before a fee is charged.
If your card has no fees on ATM withdrawals, remember the ATM itself might still charge one, Bradney-George says. Limiting how often you get cash out can help minimise these fees.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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