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How to manage your money when you travel

Heading overseas? Avoid big fees and unfair exchange rates.

foreign currency next to a black credit_card and payment terminal


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When planning an overseas trip, you always need to think about what you'll use for money once you get there. The choices these days are pretty straightforward, and as with all things in life, each travel money option has its pros and cons. Most likely you'll use a combination of:

It can be a good idea to open a separate low-fee credit or debit card for travelling and online shopping purposes so that you're not handing over the details of your everyday banking account to merchants you're not familiar with, which comes with its own dangers. 

The advantage of paying by credit and debit cards (select 'credit' when you pay) is that you can ask your bank for a chargeback if things don't go to plan. This means your bank reverses a disputed transaction back to the merchant's bank in accordance with card scheme rules set by Visa, Mastercard or American Express – and the money goes back onto your card.

But if you're going to a location where you have less or no access to ATMs, cash and even traveller's cheques might be a good option for you.

Travel money, credit and debit cards

Prepaid travel money cards

Travel money cards are offered by banks, airlines and money exchange companies like Travelex. Before leaving, you pay money into the card account and you use it for purchases and cash withdrawals like you would 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 onto the card. Travel money cards can be replaced if lost or stolen.


A major difference between pre-paid travel money cards and travel 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 
  • fees to load the card (either a percentage of the total or a flat fee)
  • ATM withdrawal fees
  • further fees if you reload or close the account.

Also, be sure to have the right currency loaded on the card, since card issuers may charge a fee for using currencies not loaded on the card.

Pre-paid travel money cards may not do you much good if you spend less than about $3000 overseas, since the fees you'll pay for having and using the card will likely outweigh any overseas ATM or transaction costs you'd incur if you used your regular debit or credit card.

Travel credit cards

Visa and Mastercard credit cards are accepted almost everywhere for purchases and cash withdrawals. But credit cards from the major banks in particular charge a currency conversion fee which make them an expensive choice.

And beware of cash advances. You'll be slugged with an up to 3% cash advance fee and interest rates of up to 20% will apply immediately. For overseas cash withdrawals, you should use a travel debit card or travel money card instead.

Fee-free travel credit cards

We found some fee-free travel credit cards that can be a good alternative. These credit cards have no overseas online purchase or foreign exchange fees and no annual fee (even for additional cardholders). Some credit cards also give you free travel insurance which can be handy, but it's important to remember that this form of travel insurance does have limitations such as age limits and exclusions for pre-existing medical conditions (you should also make sure cover for COVID-19 is included).

The travel insurance that comes with credit cards may need to be activated separately by paying a minimum amount for your holiday on the card, or activating it online before you leave. 

Debit cards

What could be easier than using your debit card when travelling overseas? Most everyday debit cards are now on the Visa or Mastercard network, which means they're accepted at many retailers and ATMs in most countries. 

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.

We found some low-fee debit cards that don't charge a currency conversion fee. The exchange rate you get is set by Visa or Mastercard and is usually better than the high exchange rate margins set by travel money cards. 

But use your standard debit card, especially if it's from the Commonwealth Bank, ANZ, Westpac or NAB, and you could be in for some high fees and exchange rate margins.

  • The big banks generally apply a currency conversion fee to overseas debit card transactions.
  • A further amount 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.

Cash and other payment types

Cash currency exchange

Cash still comes in handy. No matter where your travels take you, you'll be hard-pressed to find an outlet of any description that doesn't accept cash, and in remote places paying with plastic may not be an option. But consider some safety precautions: don't carry large amounts, and keep what you carry in a safe place.

Buying money at the bank before you go

Shop around various banks and other providers as you might save a few dollars. Some institutions give existing customers a fee discount.

Place your currency order about a week before your trip (allow longer for exotic currencies) as some places may not have the currency you need in stock. If an institution needs to order the currency, rate changes can occur between the time you order and receive your cash.

Buying money at the airport

If you wait until you get to the airport, you'll probably pay even more in fees and margins. 

Some airport providers give better rates if you order in advance. However, if you wait until you arrive at the airport and use your credit card to buy the currency from Travelex there, you'll pay much more.

Dynamic currency conversion (DCC)

Not really as exciting as it sounds, DCC just means a hotel or shop in, for example, London or Lisbon might offer to charge your card in Australian dollars, rather than sterling or euros. The potential problems are twofold.

  • Firstly, the exchange rate offered by the foreign hotel or shop probably includes a profit margin for them. The exchange rate is unlikely to be as competitive as the rate your bank or credit card provider would apply to the transaction.
  • Secondly, if you're using plastic, you may be charged a second fee by your credit card company, as some charge for cross-border purchases – even those in Australian dollars.
So, should you pay in Australian dollars or foreign currency?

When in Rome... We suggest you pay in the foreign currency instead of Australian, and let Mastercard or Visa apply their more competitive exchange rates. In short, pay with the coin of the realm when you travel.

Traveller's cheques

Traveller's cheques may seem like a relic from the past – something your grandparents may have used as they made their way around the globe in propeller-driven planes – but they still exist.

The trouble is that the number of banks that offer them, and the number of places that accept them, has significantly dwindled in recent decades. Traveller's cheques would only really make sense if the nearest ATM or card terminal is a long way away.

Some people like to carry traveller's cheques as a back-up since, unlike cash, they can be replaced by the provider if lost or stolen. If you don't use them, some foreign exchange providers will refund the cheques at no extra cost. Be sure to keep a record of the serial numbers (in a separate place to the cheques) so you're protected in the event of loss or theft.

  • Check the fees and commissions that apply. Depending on where you buy traveller's cheques, they may cost more than cash due to the insurance that's built in. 
  • Check if a second set of fees will apply when you go to cash the cheques in overseas banks and exchanges. 
  • Also find out where you'll be able to exchange the cheques.

Stock images: Getty, unless otherwise stated.