Shopping online buying guide

With a few precautions, shopping on the internet can be a safe and enjoyable experience.
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  • Updated:10 Jan 2007

04.Extra costs of buying abroad

If you’re buying from an overseas website, don’t forget to factor in the extra charges associated with foreign financial transactions, or you might be shocked when you see the final cost on your statement.

Exchange rate

The first thing to calculate is the exchange rate. Some sites may list the US or UK price, probably the most common foreign currencies you’ll use, and the price in Australian dollars. You can also use an online currency converter such as to give you a rough idea of the cost.

Your bank or financial institution will convert the amount into Australian dollars using the exchange rate on the day you made the transaction. Using a formula more complicated than The Da Vinci Code, each bank sets its own rate, although the end result is usually quite similar.

Some online payment services charge users a higher conversion rate than they receive from the banks and skim off the excess. See Do I have other options?, below, for more.

Conversion costs

You’ll also pay a foreign currency conversion fee, which is a percentage of the purchase price. For example, a CD from a UK website that costs £16 will be converted to about $AUD40 and then a conversion fee of, say, 2.5% will add another $1. So the £16 CD actually costs nearly $41.

It may seem like a small figure, but it can quickly add up if you’re making large or multiple purchases. You should also consider overseas delivery costs. Some sites may give postage discounts or even wipe the costs all together, but you may need to spend hundreds of dollars to qualify.

We’ve listed the foreign currency conversion fees for the most popular credit cards with seven major banks. The fees range from 1.5-2.6%, although a few Westpac cards go up to 3%. Some Gold or Platinum cards, with a higher spending limit and extras such as free travel insurance, often have a higher conversion fee. They’re more likely to be used for foreign currency purchases and could be costing you more without realising it.

If you regularly shop online, it’s worth checking with your bank or financial institution about the conversion rate — it may be more relevant than the interest rate, especially if you pay the balance in full each month.

Bank Credit card Currency conversion %
ANZ Bank Visa 2.5
ANZ Bank Mastercard 2.5
BankWest Visa 2
BankWest Mastercard 2
Bendigo Bank Visa 2
Bendigo Bank Mastercard 2
Commonwealth Bank (a) Visa 2.45
Commonwealth Bank (a) Mastercard 2.5
NAB American Express 1.5
NAB Visa 1.5
NAB Mastercard 1.5
St George Bank Visa 2.5
St George Bank Mastercard 2.5
Westpac (b) Mastercard (c) 2.5
Westpac (b) Visa (d) 2.5

Table notes

(a) All Commonwealth Bank foreign currency transactions fees are now called international transaction fees.
(b) Other cards vary from 1.1—3%.
(c) Includes Gold, Low Rate, 55 Free Days and No Annual Fee Mastercards.
(d) Includes Gold, Student, 55 Free Days and Low Rate Visa cards.
Source: August 2006

Do I have other options?

Third-party payment services, such as PayPal, allow you to send money to anybody with an email address (see Payment options). However, you’ll need to provide credit card and bank account details to set up an account. The foreign currency conversion fee is calculated at 2.5% of the purchase price and added to the exchange rate is set by PayPal. You’ll also pay to receive and withdraw funds — the fees vary depending on the type of account and the balance.

Other online payment services include Paymate and Technocash, which offer several ways to transfer money to overseas accounts online.

You can also transfer money online using a credit card with Western Union; however, we don’t recommend you use it to transfer money to people you don’t know. It’s also pretty expensive — for example, a $25 payment to the UK will incur an additional charge of $20 in transfer fees. And watch the details! Western Union sets the exchange rate and any difference between the rate given to customers and the rate received by Western Union is pocketed by the company.


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