If you’re heading overseas or even buying something online that comes from overseas, chances are you’re paying a fee on those foreign transactions. If you’re an avid traveller or frequent online shopper, you may want to consider a credit card with a 0 per cent currency conversion. Credit cards with 0 per cent currency conversion don’t charge you any fees on foreign transactions.
Credit cards with 0 per cent currency conversion can help you save money if you’re using your card overseas or shopping online with an international retailer. Even though you’re not paying a currency conversion fee, you’re still using a credit card. Before you apply for a credit card, do your research and compare which credit card makes the most sense for you.
What is foreign currency conversion?
When you travel overseas or buy something using your Australian credit card in another country, the amount you spend gets converted back to Australian dollars. Even if you have a credit card that charges you 0 per cent to convert the currency, the amount you spend will still be converted back to Australian dollars. The exchange rate is usually set daily by the credit card or bank and will vary depending on the type of credit card you use. Generally speaking, banks and credit cards have less favourable interest rates, so check before you make any large purchases.
Depending on where you travel, you might have the option to pay in either the local currency or in Australian dollars. Although it may seem like good value to pay in Australian Dollars, ‘dynamic currency conversions’ (DCC) attract a fee which ranges between 3 and 10 per cent, so be sure to check before you sign on the dotted line.
What to look for in 0% foreign fee credit cards
Credit cards with 0 per cent foreign fees are ideally suited to borrowers who use the card for overseas transactions or shopping online from international stores. At the end of the day, 0 per cent fees on international transactions are features of a credit card, which means that when you’re comparing your options, it’s important to remember that there are other factors to consider.
Here’s what you need to look out for to avoid any surprise charges or out of pocket fees.
Currency conversion fee
When you use your credit card overseas, you’ll most likely be charged a conversion fee to convert your overseas purchase into the local currency. Opting for a 0 per cent foreign fee credit card means that you don’t pay anything to convert the funds from Australian dollars to the local currency. Most credit cards charge an average fee of 3 per cent, so if you’re a frequent flyer or shopper, cards that don’t charge currency conversions could save you additional costs.
Overseas ATM withdrawal fees
When you’re overseas, using your card to withdraw local currency from an ATM can add between 2 to 4 per cent to the transaction. To avoid any additional fees, opt for a card which doesn’t charge any ATM withdrawal surcharges.
Other charges to look out for are cash advance fees and any additional annual card fees.
At the end of the day, you’re probably looking for a credit card that gives you the freedom to travel, but doesn’t charge you additional fees for the privilege. As with any credit card application, always make sure that the costs don’t outweigh the benefits and that you’re borrowing within your means.