Joanne is wondering whether it is possible to avoid being stung by high fees on holiday.
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Q. Joanne
Last time I went to Europe I just withdrew money from ATMs as I went from country to country. I tried to withdraw small amounts because I was worried about my personal security, travelling through tourist hot spots. When I got home, I received my bank statement and saw that I paid a heap of currency conversion fees and I realised this was probably not the smartest way to handle my finances overseas. I am planning another European trip next year, but what is the best way to handle my money to avoid paying overseas bank fees?
A. Choosing the wrong travel money option can be an expensive experience and overseas ATMs and foreign exchange fees are two of the items that can cost the most money.
Comparison website Mozo estimates that some Aussie travellers pay up to $385 in unnecessary bank fees.
Here are some tips on how to avoid some of the fees you can encounter when travelling.
Exchange rates
To avoid the stress of fluctuating exchange rates you can convert and load your money onto a prepaid travel card before you leave Australia. The advantages of this are you can lock in one exchange rate, but it can mean that you miss out if the Australian dollar happens to spike in value.
Another option is using a debit or credit card for your purchases, which gives you access to the interbank exchange rate, which is usually the best rate across the banks. This will still leave you exposed to day-to-day changes in exchange rates but does mean you will get close to the best rates available.
You should definitely avoid converting money at the airport or at exchange offices overseas, because these often have the worst conversion rates and you will usually also have to pay commission charges.
Currency conversion fees
If you opt for a prepaid travel money card as suggested above, you can make sure the card holds enough money in the local currency to last you until the end of your trip. That way there will be no conversion happening while you are on holiday. If you do your research, there are also debit and credit cards available that don’t charge currency conversion fees.
Overseas ATM withdrawal fees
You can choose a debit or prepaid travel card that won’t charge you to withdraw from international ATMs. You will still be charged an ATM fee by the overseas bank, but it will stop your Australian bank charging you a fee at this end. Some Australian banks have partnerships with overseas banks, which allow cardholders to withdraw from ATMs without being charged. Do some research to see if there are any partnership banks at your overseas location.
Avoid using your credit card when taking money out overseas. Not only could you be charged an ATM fee, you’ll also start paying interest on the withdrawal straight away. This can really sting your travel savings, especially if you make multiple withdrawals.
For information on avoiding other fees while travelling visit mozo.com.au.
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