Disclaimer: I’m not a financial advisor and this is not financial advice. It is important you seek the independent advice of an appropriately qualified professional before making a decision on a product from the information you have obtained from this website and associated sources.
When travelling overseas picking a destination, flights and hotels is just the first step. Then comes the moment when you have to part with your money to pay for your dream holidays and, as with everything, there are different ways to deal with this problem. Most credit/debit cards will hit you twice when paying for something in a currency other than Australian Dollar.
First, you’ll be hit by spread, which is in layman terms a commission that the bank adds on top of the exchange rate. Second, most banks will charge you a foreign currency transaction fee on top of that.
I don’t like fees so when we started travelling more I decided to look for options that would help us avoid paying unnecessary fees. There is a surprisingly large array of products marketed to travellers offered by banks, airlines and other companies, usually in form of prepaid cards. However, after some deeper research, I found the products best suited for our needs weren’t actually marketed as traveller cards at all.
When picking a card we were looking for the following:
- No yearly fees. There are some cards that offer extra perks for a yearly fee (usually several hundred dollars). We wanted free.
- No foreign transaction fees. Ever.
- No spread. Spread is a “hidden” fee. While it’s unavoidable, we wanted it as low as possible.
- Two cards. We wanted a credit card for when it’s required and a debit card for ATM withdrawals and as a backup.
Here’s what we we ended up getting.
Debit card: Citibank Plus Visa
Citibank Plus everyday account comes with a Visa card that met our no-fees criteria. The currency conversion happens using Visa rates with no extra spread from the bank, and no foreign transaction fees. Also, being a Visa it is accepted literally everywhere we went. The card has a chip and PIN but outside Australia we were always asked to sign when paying.
Citibank has a worldwide presence, so for example in Japan, we were able to use their ATMs to withdraw cash. Also, while Citibank doesn’t charge you when withdrawing money from non-Citi ATMs the operator of the ATM may. However, we used ATMs at 7-Eleven and from some Japanese banks and were never charged any fees there, although we may just have been lucky.
Credit card: BankWest Zero Platinum MasterCard
We found there were two credit cards meeting our criteria: Zero Platinum MasterCard from BankWest and 28 Degrees Platinum MasterCard. Both have no yearly or transaction fees and both use MasterCard rates. We went with BankWest as it offered extra insurance but the 28 Degrees card may be easier to get.
We also set up a direct debit to automatically pay the card off in full every month and avoid late payment fees or being hit with interest. Adding extra cardholders is also free but requires a visit to a branch.
Being a MasterCard it’s accepted everywhere.
The card is also useful not just when you’re travelling. We use it every time we buy something online from Amazon or any other overseas store.
Sometimes the merchant will ask you if you want to pay in local currency or AUD. Always pick the local currency. Otherwise, the merchant’s bank will convert the local price to Australian Dollar, adding their spread and fees on top of that, effectively wiping the benefit of your no fees card.