Travel SOS: How do you avoid paying overseas bank fees?

Joanne is wondering whether it is possible to avoid being stung by high fees on holiday.

Travel SOS: How do you avoid paying overseas bank fees?

Joanne is wondering whether it is possible to avoid being stung by high fees on holiday.

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Q. Joanne
Last time I went to Europe I just withdrew money from ATMs as I went from country to country. I tried to withdraw small amounts because I was worried about my personal security, travelling through tourist hot spots. When I got home, I received my bank statement and saw that I paid a heap of currency conversion fees and I realised this was probably not the smartest way to handle my finances overseas. I am planning another European trip next year, but what is the best way to handle my money to avoid paying overseas bank fees?

A. Choosing the wrong travel money option can be an expensive experience and overseas ATMs and foreign exchange fees are two of the items that can cost the most money.

Comparison website Mozo estimates that some Aussie travellers pay up to $385 in unnecessary bank fees.

Here are some tips on how to avoid some of the fees you can encounter when travelling.

Exchange rates
To avoid the stress of fluctuating exchange rates you can convert and load your money onto a prepaid travel card before you leave Australia. The advantages of this are you can lock in one exchange rate, but it can mean that you miss out if the Australian dollar happens to spike in value.

Another option is using a debit or credit card for your purchases, which gives you access to the interbank exchange rate, which is usually the best rate across the banks. This will still leave you exposed to day-to-day changes in exchange rates but does mean you will get close to the best rates available.

You should definitely avoid converting money at the airport or at exchange offices overseas, because these often have the worst conversion rates and you will usually also have to pay commission charges.

Currency conversion fees
If you opt for a prepaid travel money card as suggested above, you can make sure the card holds enough money in the local currency to last you until the end of your trip. That way there will be no conversion happening while you are on holiday. If you do your research, there are also debit and credit cards available that don’t charge currency conversion fees.

Overseas ATM withdrawal fees
You can choose a debit or prepaid travel card that won’t charge you to withdraw from international ATMs. You will still be charged an ATM fee by the overseas bank, but it will stop your Australian bank charging you a fee at this end. Some Australian banks have partnerships with overseas banks, which allow cardholders to withdraw from ATMs without being charged. Do some research to see if there are any partnership banks at your overseas location.

Avoid using your credit card when taking money out overseas. Not only could you be charged an ATM fee, you’ll also start paying interest on the withdrawal straight away. This can really sting your travel savings, especially if you make multiple withdrawals.

For information on avoiding other fees while travelling visit mozo.com.au.

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    COMMENTS

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    SuziJ
    7th Sep 2019
    9:44am
    First of all, NEVER use an Australian credit card overseas.

    There are lots of Pre-paid debit cards on the market. From ones that have your name on them to the ones you can get at the bank, foreign exchange bureau or post office without your name on them.

    For peace of mind, I'd rather have one that has my name on it. The only ones I know of are the Virgin Velocity Global Wallet and the Qantas Travel Cash cards. Both of these have your name on one side with your membership number and the other side has your pre-paid card on it. Both of these have cheaper ATM fees than most others I've seen. There's one available from ANZ which has your name on it, and costs $11 when you order it on the internet and you collect it at the local branch and you receive 2 cards 1 to use and 1 as a back-up. Virgin will charge you $10 for a 'spare' card. I cannot comment on the Qantas one in this regards.

    These 3 cards have 11 currencies on them with up to 5 'active' currencies. The AU$ being one of them.

    All you need to do is to transfer the funds to the card and then exchange it to the currency/ies you're going to be using. The night before you leave home, change the active currency to the one you're going to be using when you arrive at your destination. There's no 'need' to have foreign currency on you when you arrive as most terminals have ATMs available, and exchanging cash at the airport before you leave can cost you lots.

    Don't expect to use these cards for the deposit for a car rental - even you've paid for the rental prior to leaving home. The rental agencies won't accept them, not even here in Australia. I'd pay a cash deposit rather than using my Australian credit card, as they'll charge you for the exchange rates, etc.
    The Sheriff
    7th Sep 2019
    3:46pm
    Thank you for that most informative report, Suzi.
    AussieTuca
    7th Sep 2019
    9:58am
    I used several times Qantas Cash. Assuming that you will have a secure Internet connection along the way, just reload your card from your bank account overnight and the money will be available to your card next day. Never had any problems.
    Russell
    7th Sep 2019
    12:35pm
    I have a NAB Travel Card and I used to use it for travelling to Thailand until I saw the fees that they charged and the exchange rate that they paid. There is no fee for putting the money onto the card but when you draw on the card overseas then they hit you with their fees. If the official exchange rate for AUD to THB 24 baht to the dollar they only paid 22 baht to the dollar and then there was there fee and then there was the fee for using the Thai ATM. I solved the problem by opening a Thai bank account and I transfer money via Transferwise direct for my Aust bank to my Thai bank at a much better exchange rate and a lot less fees plus there is no ATM fee either. My money goes further now than it did before.
    Tood
    7th Sep 2019
    2:59pm
    Wouldn't it be nice if the banks dropped their 3% exchange rates. ING has conditions & Latitude 28* rejected me before I even finished completing the form! That's for no annual fee cards
    Jenny
    7th Sep 2019
    8:09pm
    ING conditions are easy to meet... and they even refund the foreign ATM fees.
    I've used Westpac and Qantas currency cards and 28 degrees plus nourish visa and MasterCard in the past.
    ING beats them all hands down.
    johnp
    8th Sep 2019
    11:49am
    I have found shopping around the various hole in the wall money changers before leaving Australia to be the lowest cost and best exchange rate. Then just use cash overseas.


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