1. Always pay in the local currency
First things first: always pay in the local currency when you’re overseas.
Choosing Australian dollars (AUD) can trigger a dynamic currency conversion surcharge, where the overseas merchant or their payment provider applies their own exchange rate, usually with a mark-up and sometimes an additional fee for handling the conversion.
Paying in the local currency means your bank sets the exchange rate, which is typically the cheaper option.
2. Use a debit or credit card with no transaction fees
Money.com.au research shows that 59% of Australian travellers paid foreign transaction fees on their most recent overseas trip, at an average cost of $80. One in 10 survey respondents reported paying up to $200 in foreign transaction fees.
Sean says many travellers overlook the hidden costs of using their card overseas.
“People will hunt down the cheapest flights and accommodation but then get stung on the small stuff like foreign transaction fees,” he says.
“These charges can quietly rack up into hundreds of dollars over a trip and the kicker is, they’re completely avoidable. If you use a debit or credit card with no foreign transaction fees, you can eliminate this cost entirely.”
In the case of credit cards, some of these 0% FX fee cards come with other useful perks for travellers like complementary travel insurance and frequent flyer points.
As always, it’s important to compare fees, interest rates and features alongside any benefits to make sure the card suits your needs.
If you’d prefer to lock in your exchange rate before you travel, you can consider a prepaid travel card with no international transaction fees.
3. Use ATMs from partner banks when you can
Some ATMs overseas charge their own withdrawal fees on top of what your bank may apply.
These operator fees are set by the ATM provider and can increase the cost of withdrawing cash while you’re travelling.
To minimise fees, it’s best to use major bank ATM networks like the Global ATM Alliance or your bank’s international partners. These ATMs are also more likely to be well-maintained, which may reduce the risk of card skimming or scams.
Sean cautions against withdrawing cash using a credit card (known as a cash advance).
“These transactions typically attract higher fees than debit cards, along with higher interest rates, and interest is charged immediately. Where possible, avoid this option unless it’s an emergency,” he says.
“Also avoid using a credit card at casinos or for gambling, as these transactions are often treated as cash advances because they’re considered ‘cash equivalents’.
“That means they can attract higher fees and interest rates, even if you’re not physically withdrawing cash.”
4. Plan ahead when exchanging money
If you do need to exchange money, consider doing it before your trip. Exchange rates can fluctuate, so it’s worth keeping an eye on them in the weeks leading up to your departure and making the transaction when rates are more competitive.
Try to avoid airport currency counters as they often have some of the heftiest exchange rates and fees.
If you need local currency, it’s usually better to use a reputable currency exchange provider outside the airport or to withdraw a small amount from a bank ATM using a debit or prepaid travel card. These options typically offer more competitive exchange rates and lower fees.
5. Always carry a backup card and some cash
A recent Money.com.au survey found that a third of Australians (33%) experienced at least one card payment issue on their most recent overseas trip.
Don’t rely on just one payment method when travelling. Payment terminals can fail, cards can be declined, and ATMs may not always be available, especially in smaller towns or remote areas.
Always carry a second card, ideally from a different network. For example, if your primary card is issued on Visa, having a backup from Mastercard can give you an extra layer of security if one network isn’t accepted.
It’s also a good idea to carry a small amount of local currency for situations where cards aren’t accepted, like taxis, markets or smaller vendors.
6. Increase your daily spending limit before you travel
Before you go, check your daily transaction and ATM withdrawal limits and adjust them if you think you’ll be spending more than you typically would at home.
This can help prevent awkward situations where payments are declined or you can’t withdraw enough cash when you need it. In some cases, you may be able to exceed your limit but be stung with fees for the privilege.
Just be careful not to let higher limits lead to overspending. It’s still important to keep your travel budget in check.
Also, let your bank know your travel dates before you leave to help prevent legitimate transactions from being flagged as suspicious and your card being temporarily blocked while you’re abroad.
7. Check out your credit card protections
Don’t skip the fine print on your credit card – it outlines what protections you’re entitled to.
Most modern credit cards come with built-in fraud protection, often including ‘zero liability’ policies for unauthorised transactions. These protections are backed by major payment networks like Visa, Mastercard and American Express.
This means you could get reimbursed for transactions you haven’t authorised or fraudulent charges on your credit card or account. That’s provided you report any suspicious activity promptly and follow your card provider’s conditions.
A final word
Getting your money strategy right before you travel can make a big difference to your overall trip.
A few simple steps can help you avoid hidden fees, reduce the risk of things going wrong when you’re paying on the go, and keep your spending under control, so you can focus on margaritas by the pool, not worrying about your finances.
