Your bank charges a foreign transaction fee whenever a currency conversion is required. If you buy something from a US website with your Australian debit card your bank needs to convert your Australian dollars into US dollars. And it charges you a fee.
The foreign transaction fee is usually around 3-4% of the transaction value. If you made a $300 purchase from an American site, a 3% foreign transaction fee would cost you $9.
This fee gets expensive if you make regular international purchases.
Here are a few Australian bank accounts that don't charge an international transaction fee, or allow you to have this fee waived.
Looking for a credit card instead? Check out these credit cards with no foreign transaction fees.
You usually receive a debit card when you open an everyday bank account. The debit card allows you to access your own money to make everyday purchases in store or online, plus lets you withdraw your own money from an ATM. Some banks offer debit cards with low or even no foreign transaction fees. This means that you can still make purchases using your own money, but you won't be hit with the fee when you make overseas purchases. Most Australian debit cards come affiliated with Visa or Mastercard, so you can look forward to using these internationally while travelling.
The amount you could save depends on how much you're planning to spend overseas. If you're go overseas often, you could save hundreds of dollars (or more) per trip. Take a look at the fictional example below of a short overseas holiday.
You can save $238 when no foreign transaction fees are charged.
I used the HSBC Everyday Global account for my everyday spending. I get 2% cashback for tap & pay purchases under $100 and I can hold CAD for when I go visit my friends and family.— Alanna Glenn, lead publisher (money)
Here are some of the benefits you can expect from using a debit card with low foreign transaction fees:
While using your debit card when overseas gives you quick and easy access to money, it pays to find out just how much you’ll end up paying in other fees and costs:
You get multiple options when it comes spending money overseas, and here’s how debit cards compare to popular alternatives like travel money cards and credit cards:
Credit cards, like debit cards, attract international transaction fees and ATM fees. Credit cards can give you access to extra funds outside of your available debit balance, which can come in handy during emergencies.
Since a credit card gives you access to money you don’t really have, overspending can become a problem and you could end up accruing high amounts of interest if you’re unable to pay your balance in full. Also, be aware that using your credit card to withdraw funds from an ATM, or to buy foreign currency or travellers cheques, is considered a cash advance transaction. These transactions attract an additional fee.
You can compare credit cards with no foreign transaction fees here.
A travel money card gives you the ability to load multiple currencies onto a single card to avoid currency conversion fees, and you can lock exchange rates in place before you travel. Depending on the card you’re using, you may be charged a fee when loading funds on the card or withdrawing money from ATMs.
Make sure you compare your options, though, as different travel money card will offer different exchange rates and load fees. You can compare some prepaid travel money cards here.
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Karen Eley is the founder of Women Talking Finance, which provides money coaching and financial literacy and education services. An experienced and former financial adviser who has worked in financial services industry for 22 years, Karen is a Certified Money Coach (CMC), holds a Bachelor of Accounting and an Advanced Diploma in Financial Planning and CFP.
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The article on banks with no fees on foreign transactions doesn’t mention the competitiveness of the exchange rate used. I switched to HSBC from Westpac to save the 3% foreign transaction fee but have discovered Westpacs FX rate over 2% better – so I’m barely better off. I did several identical transactions to test and the results were reliable
Is there an easy way to find out what each bank uses to determine their FX rate. I suspect HSBC might use an international Visa rate yet Westpac use their own rate. It’s important to know as the transaction fee is just part of the equation
Hi Bruce, the FX rate used by the bank will be available in the PDS. Most often it’s the Visa or Mastercard rate that’s used, but some banks may set their own rates.
Hi, I have an ING ING Orange Everyday Transaction Account and I meet the criteria to have the international fee waived (ie deposit $1000.00 into the Orange Everyday Account and use the card up to five times for payments or purchase etc.) and I am travelling to the UK for a month. I’m just wondering, does this mean I can use it as an eftpos card in the UK (assuming they have eftpos machines that are compatible) with no fees? I use tap and go in Australia all.the.time. I rarely use cash for anything anymore and I will forget how to count pound coins!!
Hi Mary, when you meet the monthly conditions you can use your card overseas like a regular debit card and pay no international transaction fees.
Note that even if you don’t meet the criteria, your ING card will still work overseas in EFTPOS machines – you’ll just be charged an international transaction fee for each transaction.
Thanks,
Alison
I currently have both an ING Orange Everyday account and an Savings Maximiser account. I am planning a trip overseas. Can I use my Everyday Orange (debit) card to book my accommodation online and not pay foreign transaction fees? Also am I able to withdraw funds from an ATM while overseas without incurring a withdrawal fee?
i understand I need to meet the requirement for this card ie. deposit $1000.00 into the Orange Everyday Account and use the card up to five times for payments or purchase etc.
Hi Aldina,
Yes, provided you meet the account conditions then you won’t pay international transaction fees when booking accommodation online. If you meet the account conditions you will also have your first 5 ATM withdrawal fees refunded to you each month – this includes local and overseas ATMs.
Thanks,
Alison
I wanted to draw your attention to information on the Suncorp Everyday Options Savings Account visa debit card. I have had an account with Suncorp for many years, and do have a Suncorp visa debit card. I contacted Suncorp recently about my debit card since I’m travelling overseas later this year. Using this card incurs a fee of 3% on all foreign purchases and withdrawals. You also incur a $5 fee for cash withdrawals per $1000 or part thereof. So the information you have provided is incorrect.
Hi Vicki,
The 3% foreign currency conversion fee does not apply with the Suncorp Everyday Options Account or the Suncorp Everyday Essentials Account – both the products in this guide. However, this fee may be charged when using another Suncorp account.
This is stated on Suncorp’s website for these products, and also in Suncorp’s PDS available on its website. It’s page 25 in this document.
Hope this helps clear up any confusion!
Thanks for getting in touch,
Alison
Does the NAB Platinum visa debit card have any currency conversion fees when using foreign ATMs with this card? Their product disclosure states that no foreign fees apply to purchases but I’m not sure if this covers using an ATM overseas too?
Hi Luke,
Thank you for getting in touch with Finder.
The NAB Platinum Visa debit card has no currency conversion fee but has overseas ATM withdrawal fee of $5.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni