Travel money buying guide

Keep currency costs to a minimum on your next overseas trip.
 
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02.Card comparison

Prepaid and "cash passport" style cards

These cards are offered by banks including ANZ and HSBC, and by Travelex. Before leaving, you pay money into the card account and you use it for purchases and cash withdrawals as per a debit or credit card. For foreign currencies (not Australian dollars) you can "lock in" your exchange rate (including the exchange rate margin - see below) when you load money on to the card. These cards can be replaced if lost or stolen.

A major difference between prepaid cards and debit/credit cards is their fees. Some costs aren’t immediately apparent, such as margins built into the exchange rates applied to transactions. While you won’t pay an annual fee or interest, you may pay:

  • Exchange rate margins when you load and close the card: these are not specifically disclosed by the providers and vary from day to day.
  • Fees to load the card: up to 1.1%, or a flat fee of up to $15.
  • ATM withdrawal fees of up to $3.75.
  • An exchange rate conversion fee when you use the card: varies between providers. With Travelex the cost is from 5.95% to 8.45% when the withdrawal is in a currency other than what you loaded to the card.
  • If you reload or close the account, further fees apply (up to $10 to close the account).
  • As with all cards, make sure you read and understand the terms and conditions, including the fees. In some countries, for example, a tip will be automatically deducted (and later refunded) by the card provider when you use their card in bars and restaurants.

Credit cards

Credit cards are accepted almost everywhere for purchases and cash withdrawals. Using data from Canstar Cannex, we’ve covered hundreds of banks, building societies and credit unions, to calculate the average fees for overseas credit card purchases and cash advances so we can identify the best-value offers.

  • The median credit card charges a 2.95% currency conversion fee, plus a cash advance fee of $4 or 1.5% for withdrawals, whichever is higher.
  • The big five banks generally fall within this price range (see credit card table), while the most expensive providers charge up to 3.4% for currency conversions and a cash advance fee of up to $5.95 or 5%.
  • The table lists the only credit card with no currency conversion fee – GE Money’s Clear Advantage MasterCard absorbs the MasterCard charge so the exchange rate you get should be close to market wholesale rates. It also has no cash advance fee or annual fee. But, as with all providers, daily interest applies to cash advances until you pay your bill.
  • Some companies, including GE Money, don’t charge interest if you pre-load enough money to your account, so check with your card provider.  
Credit card fees for overseas transactions
Company Card Currency conversion ATM cash advance ($) ATM cash advance (%) Branch cash advance ($) Branch cash advance (%
Credit card with no currency conversion fee
GE Money Clear Advantage MasterCard 0.00% 0.00 0.00% 0.00 0.00%
Big five banks
ANZ First 3.00% 4.00 2.00% 4.00 2.00%
Commonwealth Bank Visa with Awards 2.95% 4.00 1.25% 4.00 1.25%
NAB Standard Visa Card 2.50% 4.00 1.50% 4.00 1.50%
St George Bank No Annual Fee Card - Visa 2.50% 1.25 1.50% 1.25 1.50%
Westpac Low Rate Visa Card 3.00% 2.50 2.00% 2.50 2.00%
Data for all card providers
Minimum 0.00% 0.00 0.00% 0.00 0.00%
Maximum 3.40% 5.95 5.00% 30.00 5.00%
Median 2.95% 4.00 1.50% 5.00 1.50%
Table notes

Source: www.canstarcannex.com.au and checked with financial institutions, updated April 2009.

ATM withdrawals and debit card purchases via EFTPOS may be charged as a flat fee or a percentage; this table shows the flat ($) fee as per standard practice. The currency conversion fee is additional and applies to all foreign transactions.

ATM and debit cards

Most banks, building societies and credit unions offer ATM cards that can be used for international purchases and cash withdrawals. Unlike credit cards, which offer interest-free days, the debit card transaction is deducted straight from your bank account and you won’t be charged interest for cash withdrawals unless you overdraw your account.

The big banks generally apply a currency conversion fee of 2%-3% to overseas debit card transactions – see the debit card table.
A further $4-$5 for ATM withdrawals usually applies, as well as possibly foreign ATM owners’ fees, so the fees for making lots of small withdrawals can really add up.
There are accounts with no fee though, such as with NAB Gold Banking – so check your bank, building society or credit union’s policy.

Debit card fees for overseas transactions
Big five banks Account Currency conversion ATM withdrawal ($) Purchase fee ($)
ANZ Everyday Visa Debit 3.00% 5.00 2.00
Commonwealth Bank Complete Access 2.00% 5.00 1.00
NAB Classic Banking 2.00% 4.00 0.00
St George Bank Complete Freedom 2.50% 5.00 0.00
Westpac Choice 3.00% 5.00 0.00
Data for all credit card providers
Minimum   0.00% 0.00 0.00
Maximum   3.65% 12.50 5.00
Median   2.00% 4.20 0.60
 

 Table notes
Source: www.canstarcannex.com.au and checked with the banks, updated April 2009.

ATM withdrawals and debit card purchases via EFTPOS may be charged as a flat fee or a percentage; this table shows the flat ($) fee as per standard practice. The currency conversion fee is additional and applies to all foreign transactions.

Is it really fee-free?

Since we originally published this article, a number of members have asked whether GE Money's Clear Advantage MasterCard really has no currency conversion margin or fees. A few asked whether a margin is hidden when transactions are first converted to US dollars and then to Australian dollars. Here's what the company told us:

"Any purchase made overseas is first changed into $US - by MasterCard at the current exchange rate. MasterCard then converts it to $A when they send it to the issuer (in this case GE Capital). However, it is not correct to think that the issuer (GE Money) makes any commission on this. In fact it is the opposite - MasterCard charges us (and every other issuer) the following two fees: a cross-border assessment fee; and a currency conversion fee.

"Normally these two fees are then on-charged from the issuer to the customer, but with the Clear Advantage card we absorb them. In addition to these two fees from MasterCard, normally the issuer also charges the customer an 'international transaction' fee. However, we do not charge Clear Advantage customers this fee.”

GE Money summarised by stating that “normally there are three fees on any international transaction - two charged by MasterCard, and one by the issuer. They normally equate to between two and four per cent. However, with the Clear Advantage card we absorb them all. It really is as simple as that."

 

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