Guide · Money and travel ·
Travel money for Australians: cash, cards and fees
Travel money for Australians comes down to four choices: cash, a credit card, a debit card or a prepaid travel card. For most trips, the best plan is to mix two of them. Carry some cash for small buys, and take one card as your main way to pay.
This guide compares the four on cost and safety, using the fee figures the banks have reported. Fees change, so check your own bank's fee schedule before you go.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia.
The four choices at a glance
| Option | Main cost | Main risk |
|---|---|---|
| Cash | The exchange rate and any fee at the booth or bank | Loss or theft, with no way to get it back |
| Credit card | A currency conversion fee on each purchase, and a higher fee for cash | Interest if you carry a balance |
| Debit card | Fees set by your bank, which vary | A thief can reach your own account money |
| Prepaid travel card | Fees for loading and using the card, which vary | Only the loaded amount is at risk |
The table is our summary. The fee sizes are in the sections below.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia.
Cash
Cash is simple, and shops everywhere take it. You pay no card fee. But you pay through the exchange rate, so compare the rate and any commission before you swap your dollars.
The biggest problem with cash is safety. If it is lost or stolen, it is gone. Split it between your bag and your pockets, and keep some in your hotel safe. Bring enough local money for your first day, such as a taxi from the airport, so you are not rushed at the arrival hall.
The Reserve Bank of Australia noted in May 2008 that fees from households rose strongly, owing to higher foreign currency fees such as those on travellers' cheques. Travellers' cheques are safer than cash, but they carry a fee, so ask what it is before you buy them.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia.
Credit cards
A credit card is the most common choice for Australians abroad. It is safe, widely accepted. But every overseas purchase attracts a fee.
The Reserve Bank of Australia surveyed the major banks. It found that the average foreign currency conversion fee on their credit cards was 2.5 per cent of the purchase in 2007. In 2002 it was 1 per cent. On a A$1,000 spend, 2.5 per cent is A$25.
Cash from an ATM on a credit card costs more. The same survey lists the average fee for an overseas ATM cash advance as A$3.60 or 1.4 per cent of the amount. It says most banks charge the greater of a flat fee or a percentage. Read your card's terms, because cash advance rules differ by bank.
Use a credit card for bigger buys such as hotels and tours. Pay it off in full when you get home, so you avoid interest on top of the fees.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia, Table 4 on fees on credit cards.
Debit cards
A debit card takes money straight from your account. You can use it at overseas ATMs and in many shops. It is handy because you spend only what you have.
The Reserve Bank's survey does not list overseas fees on debit cards, so we cannot give you a figure. Banks set their own. Many charge an overseas ATM fee, and some add a currency conversion fee. Ask your bank for its fee schedule, and compare it with the fees on your credit card.
The safety risk is higher than with a credit card. If a thief gets your card and PIN, they can reach the money in your own account. Keep only the amount you need in the linked account, and check your statements often.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia.
Prepaid travel cards
A prepaid travel card is loaded with money before you leave. You then spend it like a debit card or take cash out at an ATM. Because only the loaded amount is on the card, a loss costs you less.
These cards are not new. Travelex launched its Cash Passport in 2002 as an upgrade to its Visa TravelMoney card. In October 2005 the National Australia Bank announced it would sell it through its branches. It held UK pounds, euros, Australian dollars and US dollars, and could be topped up by phone or internet.
Before you buy one, ask five questions. What does it cost to buy the card? What does it cost to load it? What is the fee for each ATM cash withdrawal? Are there fees for using it in shops? What happens to the money you do not spend? Add up the answers and compare the total with a credit card.
Sources for this section: East and Partners, NAB to sell Travelex issued Cash Passport, 18 October 2005.
A simple plan for your trip
- Tell your bank where you are going and for how long, so it does not block your card by mistake.
- Carry two different cards, and keep them in separate places.
- Take a little local cash for the first day.
- Use a card for large buys, and use cash for small ones.
- Pull out larger amounts less often. Where an ATM charges a flat fee, fewer visits cost less.
- Keep your card numbers and the bank's overseas phone number somewhere apart from the cards, in case you need to cancel one fast.
If a shop or an ATM asks whether you want to pay in Australian dollars or the local currency, think twice. Ask what rate applies before you agree.
This is general information, not financial advice. Your own bank can tell you the exact fees on your cards.
Sources for this section: Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia.
Sources
- Reserve Bank of Australia, Bulletin, May 2008, Banking Fees in Australia: rba.gov.au
- East and Partners, NAB to sell Travelex issued Cash Passport, 18 October 2005: eastandpartners.com