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Tips for Christmas Spending Abroad

If you're planning a trip overseas this holiday season, you should give some thought to how you will access money while you're abroad. Credit cards, ATMs, traveller's cheques, foreign cash, and pre-paid VISA cards are all viable options, but which should you use? The answer will largely depend on where you intend to travel, and which options are available to you through your bank.

With the strong Australian dollar, Aussie travellers are getting a lot more for their money. In the past year the dollar has skyrocketed to over 93 cents! Granted, it has subdued a little since then, but this still represents great value and experts predict the dollar could strengthen further in the new year.

Without a doubt the best way to purchase overseas is on your credit cards. However be warned - it is essential to call your bank and inform them of your travel plans. Otherwise, the sudden increase in overseas transactions on your card could be flagged by your card provider as suspicious, and your card could be automatically locked. In this situation you would need to call your bank to get your card unlocked - an inconvenience that could cost you more than a phone call while in the midst of travelling. Credit card use overseas attracts a fee of around 2.5% of the AU dollar transaction amount.

That ATM card may suit you fine in Australia, but if you intend to rely on it to withdraw cash overseas you should seriously consider arranging with your bank to increase the daily withdrawal limit on your card. Most ATM cards have a limit of $1000 you can withdraw per day, so if you plan on spending up big you'll need to do your homework before you step onto the plane. Banks charge around $5 + 1% of the transaction amount for each ATM withdrawal overseas.

While most people now favour-credit cards and ATM cards for their simplicity and ease-of-use, traveller's cheques still remain a viable alternative when heading overseas. They are accepted worldwide, are (almost) as good as cash, and they offer the security advantage of being replaceable if they are lost or stolen. Having a few of these distributed throughout your luggage could get you out of trouble in an emergency. For example, if you lose your wallet, traveller's cheques could pay for dinner that night and accommodation until replacement cards arrive. Most banks charge around 1.1% of the AU dollar amount ordered for your traveller's cheques.

You won't get by without some foreign currency while overseas. Just as in Australia many stores have a minimum purchase amount for credit card or EFTPOS use, stores overseas also enforce similar restrictions to ensure they cover their own transaction costs. Having foreign cash for smaller purchases such as food is essential. Distributing cash throughout your luggage is also a good safeguard in case of an emergency. Obtaining foreign cash within Australia is not easy, and usually requires you to place a special order a week in advance, so it is best to withdraw foreign cash from an ATM when you get to your destination. If you do decide to order foreign cash, the banks usually charge a $5 fee.

The newest way to spend overseas is a product called a pre-paid VISA card. The cards come pre-loaded with a certain amount of money, and are available in a wide assortment of designs. Pre-paid VISA cards are the perfect gift idea for giving to a loved one going overseas. However for individuals, a standard credit card offers many advantages over a pre-paid card. Firstly, you don't have to pay up front. And secondly, they offer a lot more flexibility to manage your cash flow while abroad.

If you're travelling overseas this Christmas, take a little time to plan ahead. Managing your finances while away is an easy task if you do your research before you leave. Ensure you have several sources of funds and pack them in different locations in your luggage. By doing this you distribute the risk and if you do lose your wallet it won't be the end of the world, or your holiday!

RateCity is the best website to shop around on for all credit cards, as well as most other financial products. At RateCity, you can use expert comparative data from CANNEX, Australia's leading financial research and ratings firm. CANNEX has analysed and evaluated hundreds of financial products to award five stars to only the very best. The CANNEX star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting the best product.

Use our easy search tools to compare credit cards at RateCity.

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