Credit cards for travellers
If you’re about to embark on an overseas trip, then it’ll be a good idea to brush up on a few money tips before you go. From travel insurance to travel money, Mozo’s got you covered. But when it comes travelling overseas with a credit card, you’ll read everything you need right here.
Why travel with a credit card anyway?
No one goes around carrying wads of cash these days, so it’s only logical to have the flexibility of paying for products and services with one small plastic solution, a credit card.
Providing you’ve secured a handsome credit limit with your lender before you leave Australia, the best thing about traveling with a credit card is that you have access to a good amount of money to use any time in your trip.
Buy now, pay later
You're on holiday! More reason to let go a little and splurge on that bottle of vintage you normally wouldn’t. But as much as we’d like to say go ahead and buy whatever you fancy, Mozo recommends splurging to your repayment capabilities.
It’s a good idea to have a repayment plan lined up before you even step on a plane. Set yourself a budget or ‘allowance’ of how much you can afford to spend per day and thus repay upon your return. Taking into consideration of course, interest rates and how long it may take you to clear your debt. A $10k two week trip to Venice sounds amazing! But not if it takes you more than 12 months and $20k to pay it off in principal and interest.
Check out some of our top cards below.
Features on travel credit cards
Isn’t it fab to know that there’s a myriad of credit cards to choose from, especially designed to suit Australians traveling overseas? It means that if you’re not happy with one lender’s offering, there’s plenty of others to choose from. Apart from being able to access your money from anywhere in the world, some of the other features you can expect to see may include:
Kinda like a frequent flyer reward scheme where you accrue points as you fly, you can accumulate and even redeem rewards when using a ‘reward’ based travel credit card. Perfect if you jet about regularly. However check the fine print, because it may only benefit your international trips, not domestic.
Don’t know about you, but the lower the rate, the less panicky we at Mozo tend to get when we use our credit cards. Even better since you’re travelling and all. Because everything from flights to accommodation can get pretty expensive when you start adding it all up, especially when you throw in eating out nearly every night. General rule of thumb: the lower the rate, the less fancy the card and its offerings. But paying less for your expenses is always a bonus, so you need to weigh up your priorities.
No foreign transaction fee
Say what?! No transaction fee on my purchases while traveling overseas? GIVE ME THE CARD ALREADY. And after falling in love with the odd shop or two, when you return to Australia and want to shop from their international online store, it means that you won't get charged an international money conversion fee during the transaction. Perfecto!
Free travel insurance
You won’t believe just how many people double up on their travel insurance, not knowing that their credit card already covers them - especially a travel credit card. What’s the point of signing up to a travel credit card if it doesn't have this kind of perk? If the product you’re enquiring about doesn't offer free travel insurance, our advice is to find one that does. Remember, read the fine print to ensure you’ll have enough cover for the length of time you’re traveling and that for you’ve met the spend criteria for it to be activated for your trip.
Global. Access. That’s right. In case you need reminding, you have the power to buy whatever you want when you want when travelling overseas. Even the smallest village in Vietnam have vendors with credit payment options. And for those who don’t, if you absolutely need the hand woven basket made from recycled strips of ancient silk, then there should be an ATM nearby where you can withdraw cash on your travel credit card. Just don’t do it too often! With the cash withdrawal rates sky high on any credit card, you're better off arming yourself with local dollars to buy the handmade, one-of-a-kind item you can’t live without.
Jet over to Mozo’s travel credit card page to compare card providers.
Keeping your credit card safe while travelling
Ever used a bum bag? Don’t roll your eyes. They’re making a comeback dontcha know. Anyway, you can now purchase super flat ones that fit nicely under your clothes as you walk about, keeping cash, return plane ticket, passport and credit card safe. Other ways to keep your card safe include:
- Keeping your PIN safe. Don’t tell anyone what it is and always cover your hand while you key it in.
- Any online purchases you make while overseas or in Australia needs to follow strict cyber security measures. In other words, make sure it’s a ‘safe site’ before proceeding to book your next hotel or flight. For more information see Mozo’s online credit card security tips.
- Keep your eyes on your credit card. At all times. This means when dining at a restaurant, you go with the wait staff to the location of their eftpos machine. Also, don’t trust eftpos machines you can’t see that are hidden under counters. Who knows what’s happening under there!
Tip: tell your lender the dates and location of when and where you’re traveling so that they can record this information on your file. That way you can spend freely without your lender needing to report suspicious activity on your account.
Credit card fees overview
As you may well and truly know by now, when it comes to credit cards and bank accounts in general, most fees are unavoidable. But there are ways to save money around them. You just need to be a little more savvy in the way you manage your accounts, even the most time-poor need to take heed!
Want to turn your back on annual fees? Well now you can. There’s an umpton of lenders out there who will offer ‘no annual fee’ promotions for the first year or for the life of your account. But this great deal is not without a catch. Expect to pay a higher interest rate for your purchases compared to other travel credit cards. Do the sums - save on annual fee or save on overall debt? We know what we’d choose.
Foreign exchange margin
Monthly or annual fees are one thing, but currency exchange? That can come with a nasty bite. See how many things you need to consider before securing the most suitable travel credit card? That’s why it’s really important to look at all your options first. Credit card foreign exchange fees can be as high as 4% of the Australian dollar purchase amount. This means that for every $100 you spend overseas you’ll pay an extra $4 in fees. It might not sounds like much but over a three week holiday this fee adds up. If you are going to travel frequently or shop online often at international stores it’s wise to choose a card that doesn’t charge foreign exchange fees on purchases.
Uh oh. You’re at the airport in a foreign country and you need to pay your VOA, better known as Visa on Arrival. You kick yourself for not exchanging money back home in the currency of the country you’re visiting. You go to offer Australian dollars but instead the airport visa consultant shakes their head ‘no’ before pointing to a sign that reads: ‘Native or American dollars only’.
So then you go to the closest ATM where you not only get charged an exorbitant fee to withdraw cash from your credit card, you are charged a foreign exchange rate on the amount you withdraw as well, forfeiting the brilliant 0% interest free for the first 6 months of purchases you secured because it’s CASH, not a purchase. What’s Mozo’s advise on cash advances? Be better prepared for the unexpected and avoid withdrawing cash if you can help it.
Again? Something so avoidable should be just that. Avoided. Save yourself hundreds in late payment fees by paying at least the minimum required amount each month a few days before the due date. That way you can be sure that your transfer reaches your lender in a timely manner. Go one step further and pay more than the minimum requirement to reduce your debt as fast as possible. The ultimate solution? Pay off your debt each month so that you not only avoid late fees but don’t even pay a jot of interest. Problem. Solved.
Credit card alternatives
Prepaid travel cards
Think of a prepaid credit card as something in between a credit card and a debit card. It looks and acts like a credit card but it’s using your own money. The main benefits around this type of card:
- Your cash, your way - you load value as you go, or onto the card before you leave Australia.
- Safety - you need to use a PIN to process payments. Make sure you’re vigilant about keeping your PIN safe. Also capping the amount available on your card can limit purchases if it’s stolen or even limit your own frivolous spending sprees!
- Save - depending on the lender, you can save on anything from currency exchange for purchases and cash withdrawals without costing you the earth.
- Flexibility - with looking and acting like a credit card and a debit card, this bit of plastic could be the universal bit of plastic that speaks many languages.
With so many positives, why would you choose any other way to travel? Compare Prepaid travel cards with Mozo to see if there’s a product or lender that will suit your needs.
If you’ve got the savings and didn’t have time to look into securing a prepaid travel card, then a debit card can be your next best bet. Without using credit and racking up a debt, you will find comfort in knowing that you ultimately have the control of how much you spend and are perhaps persuaded less by the new fancy fashions of a new exciting destination. You can see how much you’ll pay in fees to use your debit card overseas with Mozo’s debit card fee finder tool.
The downside is, if your personal funds are limited and have a costly emergency from medical, accommodation to flights, not having enough funds at your disposal could make you feel extremely limited and powerless. Mozo’s advice is to have a regular credit card or a travel credit card on standby for the times you need it most.