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. If you withdraw money from an overseas ATM there’s often extra fees for that too.
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 annual fees. There are some cards that offer extra perks for a 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: ING Orange Everyday Visa
ING Everyday Bank Account used to have fees on foreign transactions and ATM withdrawals, but those were removed in November 2017. Now provided you meet certain easy criteria (with more required after March 2018) the account is completely fee-free. 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 in certain countries outside Australia we were sometimes asked to sign when paying. It also supports Apple Pay and Android Pay so you you can pay with your phone.
What makes this card extra special is that ING not only doesn’t charge any fees for overseas ATM withdrawals, but will refund any fees that the ATM operator may charge you (again, if you meet the aforementioned criteria). That means you can use any ATM in any country and never pay a fee.
Backup debit card: Citibank Plus MasterCard
Citibank Plus everyday account used to be our primary travel debit card before the ING changes. It comes with a MasterCard card (used to be a Visa until early 2017) that met our no-fees criteria. The currency conversion happens using MasterCard rates and there are no extra fees or sneaky surcharges involved. 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. It’s not the case in some other countries though. For example in Thailand even Citi’s own ATMs will now charge a fee for withdrawals. That is why we primarily use the ING card now, which refunds those fees.
Having no fees (other than possible ATM operator fees), unconditionally (unlike ING) this is a great card to have, which is why we keep it as a backup when travelling. It doesn’t support Apple Pay or Android Pay, although Citibank has its own Android payments app which is similar to Android Pay. We haven’t used it though.
Recently Macquarie Bank waived international ATM and purchase fees on their transaction account and MasterCard. There seem to be no other fees and the card does support Apple Pay and Android Pay so it may be an alternative backup option for some.
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.
The accounts and cards described are ones that we personally use when travelling and we don’t get compensated by any of the banks for mentioning them. It’s all our honest, independent opinion and facts.