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A Guide to Travel Money Options


With the dollar riding high there has never been a better time to hit the road. But how to make the most out of your cash without being screwed over with fees? The travel money options below are far and away from the best for managing your cash overseas.

What Should I watch out for when using my bank card overseas?

Fees! Check the conditions on your credit card or debit card before you travel. Chances are there are transaction fees for overseas withdrawals that can add up to $7.00-$10.00 per transaction. This is made up of a withdrawal fee – usually around five dollars, and a ‘conversion fee’ of between 1-3% of the transaction. Even on a short trip, these fees can add up, on longer trips it can be a major expense – it’s’ rubbish and can be avoided.

Aussie Money

These high fees can also mean people take out more in each transaction, adding to the risk should you lose your cash or get robbed. It’s far more preferable to be able to take out smaller amounts without the worry of being hammered with fees each time.

So which is the best credit card to use overseas?

The 28 degrees Master Card. This is the only card in Australia with no annual fees and no overseas transaction fees. The best way to use the card is to keep it in credit and use it as you would an everyday transaction card (with a PIN organized before you leave home), as the interest rate if you fall into debt is quite high.

What is the best debit/transaction card to use?

The Citibank Plus Visa Debit card.  This new card (November 2011) is the first card linked to an Australian account that has no fees attached whatsoever.  No monthly fees, no overseas transaction fees – finally! check it out.

What is the best savings account?

Australia’s interest rates for money held in online savers are amongst the highest in the world. It makes more sense than ever to keep your funds in one of these handy accounts, and to simply transfer cash across to your transaction account as you travel.  One account with a high-interest rate and easy usage is the one offered by UBANK.

Read also: Compare Home Loan Interest Rates in Australia

Other things to look out for

  • Many outlets overseas will now offer to have a transaction carried out in your local currency – avoid this! The rates by which they convert this transaction are usually terrible, and they are certainly not doing you a favor. It’s best to be charged in the local currency (as of course you are using one of the options here, and won’t be charged any conversion fees).
  • Always inform your bank that you are going overseas, as they are getting increasingly proactive in blocking strange transactions.
  • When using internet banking overseas be wary – changing your password every month or so and being careful to sign out properly is important, as online piracy is rife.
  • Most robberies on travelers happen on the day you use an ATM, either at the cashpoint or by somebody tailing you to a dark alley – be wary.
  • Having trouble finding an ATM that will accept your card? Head to the nearest major hotel or Casino, as both should be able to help out with cash advances, and have 24-hour service.

What about those Travelex and travel money cards offered by banks and travel agents?

In simple terms they can be a hassle to set up, are not as readily accepted in as many places and have fees attached that make them the poor cousin to the accounts listed above. Why pay commissions to travel agents or banks when there are better options?

The Best Options

So with a combination of a fee-free credit card and debit card, and online savings account earning you money as you go that’s potentially hundreds saved on a long trip.  A mixture of these great options and carrying some plain old cash should be enough to get you around most places.

Just be sure you understand all the terms and conditions of each before deciding – but its pretty simple. We seem to get charged in Oz just for crossing the road – its satisfying to sidestep being overcharged when you can.

Read also: Foreign Exchange and International Financial Markets

The Best Travel Credit Card for Aussies

The 28 Degrees Master Card (formerly the Wizard clear advantage card) is hands down the best travel credit card for Aussies to use overseas. There is no annual fee, and best of all none of the nasty (and standard on other cards) ‘currency conversion fees’ or even ATM fees.

mastercard

The majority of credit cards, be they debit or credit, have high fees attached for taking out cash while overseas. There is the ‘conversion fee’ which is usually 2-3% of the amount you withdraw. On top of this is the ATM charge, which can be up to $7.50 on its own. These rubbish fees can be avoided using the 28 Degrees Card.

The interest rate is quite high, but all you have to do is keep the card in credit and sign up to use a pin on the card to use it like you would your everyday ATM/transaction card while you are overseas. You can now make payments to the card via Bpay, making it easy to top up online.

I’ve had one of these for a while now and have never had a problem getting out cash while overseas (always check with the bank if you are going way off the beaten path).

At present, there does not seem to be another card on offer in Australia which waives overseas ATM/Conversion fees (which add up on a long trip).

If using the card in Australia the new ATM rules mean you will be charged ATM fees unless you use it at a Westpac ATM (a recent partnership), in which case it’s free.

A Fee-Free Debit Card from Citibank

For the first time, Australians have the option of a fee-free everyday bank account that can be used overseas without any charges attached. Citibank has just introduced the Citibank Plus everyday account, with no monthly fees for local banking, and better yet, no fees for overseas transactions as well. It is far and away from the best debit card for overseas travel available at the moment.

This is a promising change for Australian accounts; it will be interesting to see if the other banks follow suit.  Previously the best option for Aussie travelers using their own money through a local account overseas was the NAB Gold Account – which has fee-free overseas transactions but a hefty $10.00 monthly fee for the account itself.  This is the option I’ve been using for a while but I’ll soon be switching to Citibank thanks to this new offering.

The Citibank account is a Visa Debit, which just means you can use your card at any place that accepts Visa and through the worldwide ATM network.

As an idea of the savings on this account compared to the major bank’s everyday options for overseas  transactions;

So you are taking out USD$200.00 from your Aussie bank account while overseas, assuming the US dollar is at parity with the Aussie$ (just for example).  This will currently cost you –

  • Commonwealth Bank:  $6.00 plus 3% of the transaction value.    Transaction cost $12.00AUD!!
  • ANZ :$5.00 plus  3% of the transaction value. Transaction cost $11.00AUD

These fees are ridiculous.  Even on a short trip they can really stack up, and often people will take out large amounts in one hit to avoid repeat fees; it’s much safer to be able to carry smaller amounts and not worry about ATM fees.

So this new Citibank Plus account is worth checking out and will hopefully start a trend away from the exorbitant fees currently charged on similar accounts in Australia.   If you need a credit card the other fee-free option is the 28 Degrees Mastercard, which has no overseas transaction fees but a high rate if you get into debt on the card.

It’s not the most exciting travel topic, but getting this part of the trip sorted before you go will save you lots and take away a major worry every time you need to take out money.

Read also: Increasing Aussies Offset Mortgages to Lower Interest

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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