Mozo has found travellers who are planning to head overseas to beat the winter blues could end up forking out $385 in unnecessary bank fees by choosing the wrong travel money option - enough for a return flight to Phuket, Bali or Singapore.
For a traveller spending $10,000 overseas, making 4 ATM withdrawals and 20 purchases, the highest fees are overseas ATM fees and foreign exchange fees.
“When you consider the fact that some travel credit cards can hit you with fees that are the equivalent to landing return flights for your next getaway, it pays to compare travel money options before you take off,” says Mozo Director Kirsty Lamont.
Read on for the full report findings.
Key findings: sky high fees
Mozo compared 314 travel money products range from 89 providers and found sky high fees for debit cards and credit cards and poor value exchange rates through Australia Post and foreign exchange booths.
For debit cards, the highest ATM withdrawal fee in our database is $5.50 AUD, while the highest foreign exchange fee is 3.65%. For an ATM withdrawal of $200 USD, you could be charged up to $15.40 AUD in fees.
For credit cards, the highest foreign exchange fee is 3.65%. For a £200 GBP purchase, you could be charged up to $13.61 AUD in fees.
Less fee baggage
If you want to reduce the fees you’re going to be up for, Mozo found five debit cards that don’t charge foreign exchange fees or overseas ATM fees and 13 credit cards that don’t charge foreign exchange fees.
“Doing a little research about your travel money options before you take off really pays off when it comes to avoiding travel money fees. With a number of debit and credit cards taking a holiday on foreign exchange fees, it’s worth finding out where you stand before you start tapping away on your holiday,” Lamont says.
Securing your coin
We’ve also heard the horror stories of people having their wallet stolen on holiday. It’s worth considering having a few different payment methods if you want more secure travel money options.
Cash is probably the least secure travel money option. Although convenient, if you lose your wallet you have quite literally done your dough. So if you want a more secure option, it’s worth considering a pre-loaded travel money card.
Unlike credit or debit cards, if your pre-paid travel card is stolen or skimmed while you are overseas the malicious parties can not gain access to all your funds in Australia. Plus, these cards give you the chance to lock in an exchange rate before you travel, so you’ll be able to plan your budget down to a tee.
How your cash rates
Before you head to the airport you might be tempted to pop into Australia Post and take advantage of a 0% commission offer. However, converting your Aussie dollars through the post office might not pay off before you take off.
Mozo looked at a traveller heading to Phuket, wanting to load up on Thai Baht*. When we crunched the numbers, we found you’ll get 8% less value through Australia Post than you would through using your Visa or Mastercard when you landed.
It’s a similar story with foreign exchange booths and the big banks. Take Travelex for example - we found the same traveller would get 6.4% less value with Travelex than when using Visa or Mastercard. When it comes to the big banks, Commbank would leave you with 5.8% less value.
So the message is clear, while some foreign exchange options boast 0% commission, you have to look closely at the exchange rate you are getting.
Your travel money options
If cash is looking less tempting as a travel money option, then there are other strategies for paying while you trot the globe. Here’s a quick breakdown of three of the main ones.
Prepaid travel cards
• Offer similar exchange rates as exchanging cash, and you can fix your exchange rate before you leave
• Can help you stick to your budget and is usually safer than carrying cash
• Watch out for reload fees, ATM withdrawal fees and cross currency conversion fees
Travel credit cards
• Can be good for large overseas purchases or handy in emergencies, as you aren’t going to be left in the lurch if you need a little extra money
• Can offer rewards on your spend and complimentary travel insurance - just don’t forget to activate it
• Watch out for ATM fees, cash advance fees, annual fees and negative changes in exchange rates
Travel debit cards:
• Some cards have small or no ATM withdrawal or currency conversion fees
• You only have access to your own money, so there’s no chance of paying interest or building up debt
• Watch out for negative changes in exchange rates that can end up costing you more
Using your everyday plastic overseas
The majority of Australian debit cards and credit cards will work overseas, because they work on the American Express, Visa or Mastercard networks. However you’ll usually be charged up to 3% on your transactions as a foreign exchange margin and might also have to deal with ATM withdrawal fees.
The good news is there are some Australian bank accounts that have no foreign exchange fee for debit cards. These include:
To find out more, check out our guide on using your regular debit card or credit card overseas. Or, if you’re keen to find a dedicated travel money card for your adventures, head over to compare travel money options.
*Foreign exchange rates change frequently. Figures are based on prices on 12th June 2019 at 11am and use Thai Baht as an example only. Check current foreign exchange rates here.