Credit cards and travelling - the fees and some basics
While planning your holiday can be fun, accessing money on one or using your money while overseas can be a different story. Organising travel money on bad advice or getting caught out when you’re already away can cost you both time and money. When it comes to security, most cards these days are protected by chip and pin security, and the banks monitor accounts for fraud (but you should let the bank know where you’ll be overseas and for how long).
There are a few great resources to help you get started, so make sure you check out the links with more information while organising your next holiday. The number one rule with travel and money is that one way of accessing your cash isn’t enough. Smart travellers will have a backup card (or two), some cash and possibly a debit card too while away.
What fees will I be charged on my credit card while overseas?
With a standard credit card (Visa or MasterCard or American Express) you can count on paying the following fees when using it in another country, or to shop online from overseas retailers (except the ATM fees won’t apply in that case).
Currency Conversion – 2-3%
This is the cost of converting your purchase from Euros/USD or any other currency into Australian dollars. The conversion may be done first to USD.
Travel money cards may charge a conversion fee if you don’t have enough funds available in the right currency.
Foreign exchange booths will not usually offer competitive rates, because of the commission they often charge and the fact the MasterCard rate will usually be different.
The banks charge anything from 2-3% for currency conversion. To compare what different banks charge, view this international fee comparison table. There are a couple of credit cards which do not charge a currency conversion fee highlighted.
ATM fees - $4-$5 per transaction
You’ll be charged a fee every time you use one while away, around $4-$5. This will be on top of the ATM fee which the foreign bank may charge.
You can avoid the Australian ATM access fee; by choosing a card which doesn’t charge for ATM withdrawals on foreign transactions (check the card’s fee schedule).
Tip: If you’re using a foreign ATM, try and withdraw money from a card you’ve pre-loaded with cash so you don’t pay interest.
A foreign ATM may charge a cash advance fee when you use your credit card to withdraw cash. Any transaction where you take money out of the ATM attracts the higher cash advance interest rate with your bank here at home. Even if your credit card has interest free days, this won’t apply to money you withdraw, you’ll be paying the highest interest rate from the day you take money out.
Tip: Rather than taking cash out with your credit card while away, using it for purchases you will get any relevant interest free days to pay them off when you get home at the end of the month.
Travel money and fees
Travel money cards, also sometimes called cash passports, are another popular way to access your money overseas. You’ll have a second back up card with this option, but there are a couple of things to be aware of.
1) You’ll still pay a conversion fee if you don’t have enough on the card in the right currency.
2) You’ll also still pay the ATM fees mentioned above, and a reload fee as well (usually about 1%).
1) Consider your options
You do have options for accessing your money while overseas, such as a debit card or the Citibank Plus account which gives you free transactions at Citibank ATMs all over the world. Do a thorough search and find the best option for you. Sites such as creditcard.com.au can provide unbiased information about what’s on offer from other banks than y our own.
Also don’t forget that a credit card, when you use it to buy tickets, might also be the cheapest option you have for travel insurance. Check your situation first if you are considering taking out travel insurance, as using a card might mean you’re already covered.
2) Don’t rely on one card
Even with a fee free credit card you could be stuck if you lose it, it gets stolen or doesn’t work for some reason. It is only sensible to take at least one backup option, such as a travel money card or other credit card AND a small amount of cash with you. This way you can also spread your funds around; leave one card at the hotel room or some cash with your travel buddy so hopefully you’ll have quick access to funds in case anything happens to your main source. Travellers’ cheques are also a possibility, though they aren’t as common anymore (but they can be a secure way to move large amounts of money with you overseas).
3) Keep cash and cards safe
Keep your cash secure, and concealed in a body bag or in some other way, and never keep all your cards and cash together. Watch for suspicious behaviour wherever you are and also keep copies of your card numbers and details somewhere safe to make it easy if you do have to report an incident. Try to limit the number of withdrawals you make while overseas too.
*Bio This post was written by Kalianna Dean, managing editor of creditcard.com.au. Follow Kalianna on Google+ or twitter (@kaliannagrace) for regular updates on personal finance content. Creditcard.com.au is Australia’s premier credit card comparison service and a source of information for Australian credit card users and consumers. Compare today to see if your card stacks up against the latest offers.
Posted By Kalianna Dean on 7th June 2013
Updated : 19th May 2014 | Words : 956 | Views : 7375
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