Travel debit cards explained
Almost every Australian has one. That little piece of plastic sitting in their wallets ready to be pulled out for everything from regular purchases to ATM withdrawals. But did you know that, a debit card could be the perfect option for overseas spending as well? Many debit cards issued by Australian banks and other institutions run on the Mastercard or Visa networks, meaning your card can be used at a host of checkouts and ATMs across the world.
There are a number of options in the world of travel debit cards that make spending overseas as convenient and fee-free as possible, thereby reducing your costs and giving you more to spend on the fun parts of travel like food, drinks and sightseeing!
But how do you know which travel debit card could be the right fit for your next trip, and what are the tips and traps you should know about them before you fly? Read on as we tackle some of the most common questions relating to travel debit cards.
What are the benefits of using a travel debit card?
Whether you’re flying to Hawaii for you best friend’s wedding or embarking on a three month trek through Southeast Asia, finding the right travel money option to take with you will be key to making your trip run smoothly. Most Aussies heading abroad will rely on a payment mix of either a travel debit card, travel credit card, prepaid travel card or cash while they’re away, but what are the benefits of adding a debit card to your wallet?
- Budget-friendly: The main reason many travellers rely on a travel debit card is because it provides a cost-effective option which only uses their own money. So if you’re sticking to a tight budget while you’re on holiday, using a debit card may be a better option than a credit card to ensure your spending doesn’t go overboard.
- Low fee: Depending on the travel debit card you choose - especially one with low or zero overseas ATM and international transaction fees - you could seriously cut down on the amount of fees you pay compared to a standard credit card.
- Secure: Aside from the benefit of not having to carry around a pile of foreign currency wherever you go, Australian issued debit cards linked to either Mastercard or Visa enjoy protection against fraud and unwarranted purchases via the respective Zero Liability programs.
- Handy for online shopping: While a travel debit card can be a handy option to take with you on holiday overseas, it can be equally useful for anyone who enjoys shopping online on foreign websites. This is particularly true of travel debit cards without international transactions fees, because you’ll be able to purchase clothes or other goods online without having to fork out an additional pesky fee.
What are the travel debit card fees I should know about?
When it comes to choosing a travel debit card which can help minimise costs and maximise convenience while you’re abroad there are a number of fees and features to consider. So while you’re probably already aware of the debit card fees and features relevant to everyday transactions in Australia, what are the travel specific ones which could affect your spending overseas?
- International transaction fees
If you’re a fan of online shopping or you’ve been overseas before, you will probably have noticed the international transaction fees (otherwise known as overseas transaction fees) popping up on your account statement after a purchase. That’s because most banks and providers will charge an extra fee for transactions which require a currency conversion.
For example, say you’re on holiday in New Zealand and you use your Australian debit card to pay for your food, drinks and other smaller purchases while you’re over there. Typically your bank will charge you an international transaction fee on every one of these purchases because they’re exchanging Australian Dollars (AUD) to New Zealand Dollars (NZD) for you.
While these fees are generally a fraction of the actual transaction - usually in the 2-4% range - they can certainly add up over time, especially if you’re on a longer trip and regularly using your card. Fortunately there are now a handful of debit cards on the market that don’t charge international transaction fees, making them even more cost-effective travel money partners.
Unless you’re wanting to drag around a suitcase full of foreign currency while you’re away, you’ll probably want to access foreign ATMs as you go. You won’t have any problem making cash withdrawals with the majority of Australian debit cards, especially those linked to Mastercard and Visa which have ATM partnerships all around the world, but withdrawals generally do come at a cost.
You should expect to pay at least a couple of dollars for each withdrawal at an ATM overseas, though using a debit card to take out money abroad is still likely to be a cheaper option than using a credit card.
Like international transaction fees, taking the hit to your wallet for a couple of overseas ATM withdrawals might not be huge issue for you if you only do it a few times, but if you’re taking a longer holiday away they can seriously add up. That’s why comparing travel debit cards with low or zero overseas ATM fees before you leave could prove a good way to keep unnecessary costs down while you’re away.