The real cost of foreign travel websites

Kate Wick

By Kate Wick

4 min read

Armed with a credit card and a dream, booking your next holiday couldn’t be simpler with online travel websites now bringing bargain deals into your own living room.  

But, the real cost of booking your dream holiday could have a sting in the tail, particularly if you book using foreign travel sites.

A RateCity study revealed that over 97 percent of 189 credit cards incur a currency conversion fee, also known as an ‘international transaction fee’, on transactions made with overseas merchants or paid in a foreign currency.

Australians are not required to be notified about the extra charge at the time of their holiday booking, leaving most consumers reeling when they discover a currency conversion fee lurking on their next bank statement.

So what’s the impact of ‘.com’ versus ‘com.au’ websites to your bottom dollar?

What is a currency conversion fee?

A currency conversion fee is charged by your bank for all transactions made in a currency other than Australian dollars — or in AUD. But with an overseas merchant, the fee is charged as a percentage of the converted AUD amount shown on your bank statement. For example, if you were charged $2000 Australian dollars, which was converted by your bank from another currency, and your bank charges a 2.8 percent fee for the conversion, you will incur an extra $56 on top of your travel costs.

RateCity data shows an average conversion fee of 2.81 percent is applied across most credit cards, with a maximum fee of 3.65 percent.

Conversion fees differ from banks and card merchants, such as MasterCard, Visa and American Express – so check with your financial institution to find out how much you will be charged.

Alex Parsons, CEO of RateCity, said, “Since travel deals moved from flight agency offices to online it’s become substantially easier to take control of your own travel plans. But I’d urge travellers to do your homework on fees and charges to make sure you’re getting a great deal.”

It’s important to note that these fees don’t stop once you have reached your holiday destination. International transaction fees can be applied each time you withdraw money from an overseas ATM or use your credit to pay for purchases with an international merchant.

The real currency conversion rate

If you are booking directly with a foreign travel site, be aware not just of the fees, but, the ‘real’ currency conversion rate.

“First, check that your quote is in Australian dollars, because if not it could end up costing you more than a local travel deal site,” Parsons added.

“There are plenty of currency conversion tools online that can quickly convert a foreign currency into Australian dollars by pulling real-time currency data, so check the exchange rate before committing to the deal,” he said.

Travel money options explained

Some credit card providers are resisting the trend and ditching the currency conversion fees altogether.

Not all credit cards have fees for currency conversion, so it pays to shop around before you start swiping the plastic.

GE Money’s 28 Degrees Mastercard, Aussie’s Low Rate Platinum cards and Bankwest’s Breeze Platinum MasterCard, Zero Platinum MasterCard and More Platinum MasterCard, each offer cards with zero currency conversion fees (at the time of writing).

But be aware that while they charge zero currency conversion fees most still charge other international fees, such as international ATM cash withdrawal fees.

”Always look at comparing credit cards and look at the complete picture, by factoring in interest rates and other fees, to make sure you are getting the most value out of your card,” Parsons said.

A cash passport is another alternative to a credit card and allows travellers to buy online without currency conversion fees, because they can be loaded with foreign currency. 

But these are not without fees. Some cards incur applicable fees and charges, including reload fees and inactivity fees, so it pays to check whether this is the most cost effective option for you.

Currency conversion fees can still apply on cash passports if you make a purchase on a foreign website in a currency not loaded on your card or you have insufficient funds to complete the transaction. These fees may also apply to purchases made while overseas – so make sure you read the product disclosure statement.


Compare your product with the big 4 banks, or add more products to compare