Save on international transaction and overseas ATM fees with a bank account designed for travel.
A travel bank account is an account that doesn't charge any international transaction fees or overseas ATM fees. What's the catch? In most cases, you will need to use an ATM that is within the specified global network. We explain these further below.
How does a travel transaction account work?
It's very similar to your normal bank account, but it doesn't charge certain fees such as an international transaction fee and/or an overseas ATM fee. Only a few banks offer these features in Australia: Westpac, Citibank and Bankwest.
You open the bank account just like any other in Australia. So if you're a new customer, you will need to complete the 100 points ID check to open the account. Once the account is opened, you deposit your holiday funds into the bank account. There is no need to convert the funds into a different currency since Australia debit cards only hold Australian Dollars. When you travel, you will need to contact the bank to let them know you're going overseas so your account doesn't get locked.
What happens when you use your debit card overseas
Your normal bank account will usually charge an international transaction fee when you purchase something overseas. This fee is charged when Australian Dollars is required to be converted to another currency. So if you've opted for a debit card that doesn't charge international transaction fees, you can save money every time you make purchase overseas.
For ATM withdrawals
Your normal bank account will usually charge the following fees: (warning, there's a lot!) overseas ATM fee, international transaction fee and in most cases, the ATM itself will charge a third party fee. So if you opt for a bank account that doesn't charge either an overseas ATM fee or an international transaction fee (or even both) then you save money.
Unfortunately, there no bank account in the market that doesn't charge overseas ATM fees for all withdrawals. There are usually a set of rules that specify which ATMs you can use to take advantage of free withdrawals. For the Citibank Plus account, you can only use Citibank branded ATMs. For the Westpac Choice, it's their specified global ATM alliance.
Now you know how it works - here's your checklist before you leave
- You have checked the terms and conditions of the bank account so you know which ATMs will provide fee withdrawals
- You have done your research as to where these ATMs are located in the country you're visiting
- You have notified the bank that you're going overseas
- You have asked your bank for a plan B in case you need to receive an SMS from your bank (this doesn't apply if you have global roaming turned on)
- You have saved the bank's emergency contact number in case you lose your card overseas
- You have deposited the relevant funds into the debit card at least 3 days before you leave
Alternative travel money options
Access to money while travelling is important. Thankfully, banks have come a long way since the days of traveller's cheques. There are now plenty of options to travel without taking a big pile of cash with you. If you prefer to travel light, you can use a debit card (attached to a travel transaction account), a credit card, a travel money card or a traveller’s cheques.
A number of people tend to use of combination of these, but there are no hard and fast rules on which combination works best.
If you're deciding which way to go, here's what you need to know about the options available to you.
- Credit cards. Using a credit card overseas makes sense if you need access to credit, and in such a scenario you should look for a card that charges little or no international transaction fees. Plus, a credit card can come in handy if you need more funds than expected in the case of an emergency. However, avoid overspending and keep in mind that everything you buy will need to be paid back (sometimes with interest).
- Travel cards. A travel card can be a good way to load multiple currencies on one card. Plus, you can avoid the negative impact of fluctuating exchange rates by locking the rate in at the time of loading. Keep in mind though that loading and reloading your card can incur a fee and it can take up to a few days for the funds to appear on your card.
- Traveller’s cheques. While each traveller’s cheque comes with a unique number and is not difficult to replace if misplaced, the bulkiness of carrying around multiple cheques does not work in their favour. In addition, you have to cash these cheques before you get access to funds.
The key difference is that a travel card is a pre-paid card that can be loaded with multiple currencies. This can be useful if you are travelling to multiple places in one trip. The card can be reloaded, however it can incur a fee. On the other hand, you can continue to access your regular account with a debit card without having to pre-plan or convert any cash beforehand. The drawback is that depending on the account you have, withdrawals, transactions and currency conversions could attract fees - which can all add up.
How do I compare travel transaction accounts?
Not only should you look at the standard features and fees associated with a travel transaction account, but you should also ensure that it meets your foreign transaction needs:
- How widely does the financial institution operate? Travel transaction accounts are generally offered by larger financial institutions that operate in several overseas markets. Some notable examples include Citibank and Westpac.
- What fees does the bank charge? As you may have noticed by now, most banks will charge you a fee for buying things overseas, whether it's online or in-store. A travel transaction account will waive one or more of the following fees: international transaction fees, currency conversion fees or international ATM fees.
- Security features. If your debit card is stolen overseas, your financial institution should be able to provide the emergency services you need. This includes emergency card replacements, or a 24/7 security hotline you can call.
- Overseas ATM access. You are going to find that some of these accounts may be limited in their ATM network abroad, while with others you can choose from thousands of ATMs around the world - so ensure the provider has high accessibility in overseas countries.
- Available countries. While travel transaction accounts are provided by banks with operations overseas, you should still check to ensure that they are located in areas or countries that you travel to often.
- International money transfers. As an added bonus, it could also provide you with an inexpensive and convenient method of transferring money overseas. Check the available currencies, costs and speed at which you can make an overseas money transfer with each account.
Although ATM access and international transfers are a standard feature of a travel transaction account, it does not necessarily mean that they are provided without fees. Check to see how much these services cost and compare those fees across different banks and accounts on the market.
What else should I consider when using a travel debit card?
Before you get a debit card, know that not all are the same, even if they come with Visa and MasterCard affiliations. As a result, the following aspects require your consideration as well.
- Global ATM alliance. When you use your debit card to withdraw money from ATMs overseas, you might have to pay ATM fees. The good thing is certain Australian financial institutions have ATM alliances with international banks, giving their customers fee-free access to their ATMs. Westpac debit cardholders, for instance, can access Barclays branded ATMs across Europe for free, and Commonwealth Bank customers can find Commonwealth Bank ATMs across Asia.
- Contactless purchases. You can find MasterCard and Visa debit cards that make use of contactless technology, reducing your time spent at the cash register. You can use such cards to make contactless payments for purchases of less than $100 at merchants who support this technology.
- Travel insurance. Some debit cards come with complimentary travel insurance. Depending on what you’re eligible for, these may come in handy if you lose or misplace your luggage or find yourself confronted by a medical emergency or flight cancellation.
- Visa and MasterCard benefits. Visa and MasterCard debit cards give cardholders access to a range of special global offers and promotions.
What are the benefits of using a travel transaction account?
- Access. Not only will you have access to ATMs abroad, you will also find an extensive network inside of Australia to use to help with your daily transactions when at home.
- Using your own money. Since you're using a transaction account, you'll only be using your own funds. No credit check is required for these account and you don't need to worry about getting into debt.
- Convenience. Being able to make a withdrawal overseas for a low or no fee makes it easier as you won’t have to worry about traveller’s cheques or currency conversions.
- Pay less in fees. Travel transaction accounts will provide ATM access and money transfers abroad as a part of their features and typically the fee will be waived.
- Money transfers. These accounts are also ideal for the individual who has family living outside of Australia or business interests that they need to wire money to frequently.
What are the risks?
Your funds are generally protected by financial institutions that are covered by the Australian Government guarantee scheme, but there are still some things you should avoid with travel transaction accounts:
- Security. Since the debit card is linked to your transaction account, if it's stolen overseas then there's the risk of your funds being taken out of the account without your permission. Ensure that your financial institution has security measures in place to prevent this from happening.
- Non-partner ATMs. You might also be able to use the debit card at ATMs outside of the network, but you will be charged for using these foreign ATMs. Make sure that you know which ATMs are a part of the bank’s network before you apply for a travel transaction account.
Common questions asked about travel transaction accounts
My family is planning to migrate to Australia soon. What are some options/banks for international money transfers and setting up accounts in Australia?
In addition to internationally recognised transfer companies like Western Union and MoneyGram for overseas transfers, there are a number of Australian banks that will help you to get your finances in order when you move here. There are several banking options available for new migrants to Australia. Our Migrant Banking page provides information on your options and lets you compare accounts.
How will I make an overseas money transfer from Australia with my travel transaction account?
Money transfers will typically be done by making the deduction straight from your account. With some banks you can then choose to have the money sent to another account or scheduled to be picked up at a money transfer office. If it’s going to an account with the same bank, the transfer will be instant, but there will be a delay of three to five business days if you are sending the money to another financial institution.
Will the recipient have to pay a fee to receive a money transfer from Australia?
No, there are generally no charges to the recipient unless you are sending it to their account which is held by another bank. In that case, their bank may charge for completing the transaction.
What happens if I lose my debit card while I am overseas?
If you contact the issuing financial institution they will be able to provide you with a new one. This is usually not a free service, and the cost of the replacement card will be deducted from your account.
What information do I have to provide to initiate an international funds transfer using my bank account?
You’ll have to provide the recipient’s complete name and address, the recipient’s bank’s name and address, the recipient’s bank account number, and the amount you wish to transfer.
Do I have to pay any ongoing fees to use a debit card when overseas?
Using a debit card when overseas does not attract any additional account keeping fees, barring from what you have you have to pay to maintain the account in question.
finder.com.au's featured travel transaction accounts
|Product name||Travel features|
|Citibank Plus||$0 Foreign transaction fee and free withdrawals from Citibank ATMs overseas|
|Westpac Choice||Free withdrawals from ATMs within the Westpac Global Network overseas, includes: Westpac NZ, BMP Paribas and Barclays|
|Bankwest Platinum Debit MasterCard||No overseas ATM withdrawals charged by Bankwest, third party fees may still apply|