When you're planning an overseas trip, money should always be an essential item on the packing list. But is a wallet stuffed full of sterling, greenbacks or rupees the smartest way to travel, or should you stock up on credit cards and travellers' cheques?

CHOICE recommends you take a mix of cash and cards to cover expenses and provide a back-up plan. Here are your options, and the fees that go with them:

Cash is still king

No matter where you go, you'll be hard-pressed to find an outlet of any description that doesn't accept cash, and paying with plastic may not be an option in some places. Make sure you have enough cash to pay for a few days' expenses, and a taxi, meal and hotel room when you arrive.

Buying money at the bank

Banks usually give competitive exchange rates and fees, but shop around various banks and other providers as you might save a few dollars. At a bank, if you buy $1000 worth of foreign notes you'd generally pay about $25 in fees and commissions, roughly 2.5% above market exchange rates on the day. 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

So if you wait until you get to the airport, what can you expect to pay? Fees and exchange rate profit margins at the airport are up to 8%, so buying $1000 of foreign notes could cost you $80 in fees and margins. Some airport providers give better rates if you order in advance – Travelex offers an exchange rate similar to banks if you order online at least two days 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.

Travellers' cheques

They probably seem a little outdated now, given most of us have credit and debit cards, however some people like to carry travellers' cheques as a back up since, unlike cash, they can be replaced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 travellers' 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.

Dynamic currency conversion (DCC)

Not really as exciting as it sounds, DCC just means a hotel or shop in 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.

When in Rome...

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

Prepaid and 'cash passport' style cards

These cards are offered by major banks and by money exchange companies like 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 onto the card. These cards can be replaced if lost or stolen.


A major difference between pre-paid 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 - either a percentage of the total or a flat fee,
  • ATM withdrawal fees,
  • an exchange rate conversion fee when you use the card - varies between providers, and
  • further fees if you reload or close the account.

The small print

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.

In general, this increasingly popular type of travel money relies on a hefty exchange rate markup when loading money onto pre-paid cards. Portability and convenience can easily be offset by the exchange rate margin and a confusing array of other fees – so be especially vigilant when considering one of these.

Also, be sure to have the right currency loaded on the card, since card issuers may charge two percent per transaction - or more - for using currencies not loaded on the card.

On a shoe string?

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 bank-issued debit or credit card.

Credit cards

Credit cards are accepted almost everywhere for purchases and cash withdrawals. A credit card charges a currency conversion fee, plus a cash advance fee for withdrawals, plus you've got the interest rate building up on any withdrawal.


Cash advance fees in particular can really put a dent in your travel budget, so avoid them unless it's an emergency.

Some companies don't charge interest if you pre-load enough money to your account, so check with your card provider.

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 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.

There are accounts with no fees though, so check your bank, building society or credit union's policy.

ATM withdrawals and debit card purchases via EFTPOS may be charged as a flat fee or a percentage. The currency conversion fee is additional and applies to all foreign transactions.