Using the wrong card overseas could cost you
Australia is renowned as a nation of travellers; more than 600,000 people a month have hopped on a plane or boat so far this year. But while we undoubtedly love exploring other countries, a downside to overseas travel can be the unexpected costs, particularly in the form of credit card fees.
These charges may appear on your credit card bill as an "overseas transaction fee" or a "currency conversion fee", and occur when a bank has to convert your Australian dollars into foreign currency during an international transaction. RateCity research shows that these additional costs can stack up with credit card fees adding more than $330 million to our travel expenses each year.
For instance, based on a typical Aussie making four ATM withdrawals while overseas, and each trip to the cash machine costing an average of around $5, RateCity estimates the simple act of withdrawing money costs us $142 million in access fees annually.
Furthermore, RateCity's analysis suggests if we typically spend $1000 on credit cards during our travels, with banks charging an average foreign currency fee of 2.70 percent (costing you $27 per $1000), there are even more fees to consider. Over the course of a year, this would mean we pay $191.7 million in currency conversion fees for our international credit card purchases. What's more, our credit card spending and the subsequent fees may be even higher than this estimate, with a recent study by Visa showing that Australians are the world's biggest travel spenders, splashing out an average of over US$3600 on their last overseas trip.
No matter what you spend, it's obvious that when using a credit card abroad, the fees payable can end up blowing out your post-trip credit card bill. However, the good news is there are some cards which charge less than the estimated average for accessing funds overseas, and even some that charge nothing at all. For instance, GE Money's 28 Degree MasterCard has no fees for currency conversion, international transactions, or overseas cash withdrawals. This could save you up to $50 in fees per trip, a figure which takes on more importance if you travel multiple times through the year. For travellers who prefer to pay cash, the Citibank Plus is a free account that offers fee-free transactions overseas.
So before you book your next escape, it's worth finding out just what charges apply when using your credit card overseas and comparing credit cards to ensure you have the one fit for your travel plans. If the sums don't add up, it might be time to research a lower cost card and save on unwanted costs after your trip.
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