Travel credit and debit cards: unpacking the fees and features

While you’re overseas, everyday expenses – from eating out, to catching public transport, to paying for activities – can add up quickly. On top of this, you may face fees and charges through the way you spend your money.

An Australian Competition and Consumer Commission (ACCC) report, released this month, found Australian consumers travelling abroad were often paying more than they needed to, due to high fees and poor conversion rates attached to a range of currency conversion services.

The report advised consumers to consider all components of the prices attached to services such as travel money cards, debit cards, credit cards and currency conversion vendors at airports, including the exchange rates and fees they charge.

The ACCC also warned that using one supplier for travel money products out of loyalty could cost Australians.

When it comes to overseas purchases, the report found debit and credit cards were generally cheaper to use than foreign cash exchange services and travel money cards, particularly cards that don’t charge international transaction fees.

So, what should you consider when choosing a product for your overseas travels? If you do plan to use a credit or debit card, then it may be a good idea to first understand how these cards work while abroad and how they compare to each other when it comes to the fees and features that could apply.

How do credit and debit cards work overseas?

For the most part, debit and credit cards work pretty much the same overseas as they do in Australia, with debit cards letting you use the money already in your account and credit cards letting you borrow money up to your credit limit. The main point of difference when using these cards abroad is the added international fees and conversion fees which may apply.

Fees and features: travel credit cards

As a part of Canstar’s annual Travel Credit and Debit Card Star Ratings, we’ve looked at the minimum, maximum and average fees for the credit cards we rate, to give you an idea of what you might pay when using these cards overseas.

The table below shows that based on our database, the annual fees for 5-Star travel credit cards for occasional travellers (those who take one overseas trip a year) tended to be significantly lower than the market average, with a difference of over $70.

Travel Credit Card Costs – Occasional Traveller
Market Minimum Market Average Market Maximum 5-Star Product Average
Annual Fee $0.00 $119.66 $700.00 $47.10
Currency Conversion Fee 0.00% 2.74% 3.65% 1.03%
Cost of $5,000 Spend* $0.00 $136.74 $182.50 $51.63
Source: Canstar Research – Based on all credit cards rated for Occasional Travellers in Canstar’s September 2019 Travel Credit Cards Star Ratings. Currency Conversion Fee indicative of the fee charged as a percentage of the purchase amount at a point of sale overseas. *Cost indicative of the Currency Conversion Fee applied to a total point of sale purchase of $5,000.

Canstar Research also found there were a number of credit card providers on our database that have reduced or completely removed currency conversion fees from their products. As a result, the research team said these credit cards can be significantly cheaper for consumers to use overseas.

Another fee that Canstar Research said is also important to consider when using a credit card abroad is a cash advance fee. This fee is commonly charged when a customer withdraws cash using their credit card at an ATM or in store while overseas.

The research team said these fees can be costly, as card users are likely to encounter the cash advance fee as soon as the withdrawal is made, as well as being charged with interest on the money withdrawn. To avoid such fees, customers may consider using an alternative, such as a debit card, instead of their credit card if they want to withdraw cash while away.

In addition to assessing the different credit card fees and charges for the Travel Credit and Debit Card Star Ratings, Canstar Research also considered the value of a number of card features offered by providers for use overseas.

travel credit and debit card ratings lounge access
Source: Jacob Lund (Shutterstock)

Canstar’s Senior Research Analyst Josh Sale said consumers should carefully consider whether the benefits of any complimentary add-on features will outweigh the costs of using the card.

“In general, cards that come with extra perks such as rewards programs, concierge services and complimentary travel insurance do tend to come with higher costs than other cards available in the market,” Mr Sale said.

“However, there are some exceptions to this general rule, with a number of 5-Star credit cards offering low or no annual fees in addition to some of these features.”

Mr Sale said if you are offered complimentary travel insurance with a credit card, it may also be wise to carefully read and understand your policy documents before committing to the product or relying on the insurance on offer, in order to know what is and isn’t covered.

Fees and features: travel debit cards

According to Canstar Research, the main fees to be aware of when it came to using your debit card overseas were monthly account keeping fees, ATM withdrawal fees and point-of-sale transaction fees.

As with travel credit cards, there is a distinct difference between the market-average fees and the fees charged by 5-Star Rated debit cards. For example, consumers could save over $40 for $2,500 worth of EFTPOS purchases overseas and over $40 for withdrawing $2,500 from an overseas ATM, if they choose a 5-Star product.

Travel Debit Card Costs
Market Minimum Market Average Market Maximum 5-Star Product Average
Monthly Account Keeping Fee $0.00 $2.63 $35.00 $0.00
EFTPOS Currency Conversion Fee 0.00% 2.53% 3.65% 0.95%
ATM Currency Conversion Fee 0.00% 2.53% 3.65% 0.95%
International EFTPOS Access Charge $0.00 $1.14 $5.00 $0.00
International ATM Access Charge $0.00 $3.38 $5.50 $0.23
Cost of a $2,500 EFTPOS Purchase Overseas1 $0.00 $64.32 $96.25 $23.86
Cost of a $2,500 Overseas ATM Withdrawal2 $0.00 $66.56 $96.25 $24.09
Source: Canstar Research – Based on all debit cards rated in Canstar’s September 2019 Travel Debit Cards Star Ratings. Currency Conversion Fee indicative of the fee charged as a percentage of the purchase amount at a point of sale overseas. 1. Cost indicative of the Currency Conversion Fee applied to a total point of sale purchase of $2,500, plus the international EFTPOS access charge. 2.  ATM Withdrawal fees calculated based on the overseas ATM currency conversion fee for a withdrawal of $2,500, plus the international ATM access charge. Any additional fees charged by the ATM provider are not included.

Mr Sale said it was also becoming more common for providers to allow customers to transact completely fee-free overseas, with many familiar brands such as Macquarie Bank, Citi, ING and UBank offering this feature through a number of products.

“However, one fee that can be difficult to avoid is third-party ATM charges, which are charged by the owner of the ATM that you are using overseas,” Mr Sale said.

When comparing the debit card features on offer, Canstar Research said consumers should look out for free ATM access abroad and the ability to easily manage your card online or on your mobile.

How about currency conversion rates?

Currency conversion rates and how they are applied are also an important consideration for travellers looking to use their debit or credit card overseas.

If you choose to pay in a foreign currency, then the transaction amount is usually converted using the exchange rate on the date that transaction is debited to your account. This rate is often determined by the card scheme you use (such as Mastercard, Visa or American Express).

Mr Sale said the exchange rates on offer for most credit and debit cards were generally close to the market rate and as a result were likely to be more favourable than those of a travel money card where an exchange rate margin is applied by the provider.

However, when using a debit or credit card, it is unlikely you will know the market exchange rate at the time you make a purchase, which could make it difficult to budget for these conversions while travelling. As such, having a general idea of the current rates before heading off may help in your trip preparations.

2019 Travel Credit & Debit Card Star Ratings

Canstar has unpacked the fees and features on a range of travel credit and debit cards on our database, to find which products provide outstanding value for customers.

After assessing a total of 203 credit cards and 102 debit cards from 76 institutions, Canstar is pleased to announce the winners of the 2019 Travel Credit and Debit Card Star Ratings.

These Star Ratings involve a sophisticated rating methodology, unique to Canstar, that compares both cost and features across credit cards and debit cards, with a particular focus on the cards’ overseas fees and features.

Canstar assesses three different customer profiles in the Star Ratings. They are:

  1. Travel Credit Cards – Occasional Traveller (for those who travel as a once-off or once a year)
  2. Travel Credit Cards – Regular Traveller (for those who travel on a regular basis or at least a few times a year)
  3. Travel Debit Cards

The following travel credit and debit cards received a 5-Star Rating in 2019 (listed in alphabetical order by provider name):

5-Star Travel Credit Cards

Travel Credit Cards – Occasional Traveller
Bank Australia – Visa Credit Card
Bank First – Visa Classic Credit Card
Bankwest – Breeze Platinum Mastercard
Bankwest – More Platinum Mastercard
Bankwest – Qantas Platinum Mastercard
Bankwest – Zero Platinum Mastercard
Coles – No Annual Fee Mastercard
Coles – Rewards Mastercard
Commonwealth Bank – Low Fee Gold Mastercard
First Option Bank– Low Rate Visa Credit Card
FlexiGroup – Skye Mastercard
Horizon Bank – Visa Credit Card
ING – Orange One
Latitude Financial Services – 28 Degrees Platinum Mastercard
Macquarie Bank – RateSaver Card
ME – frank credit card
MOVE Bank – Low Rate Credit Card
Teachers Mutual Bank – Credit Card
UniBank – Visa Credit Card
Westpac – Lite Card

Source: Canstar Travel Credit and Debit Cards Star Ratings 2019.

Compare Travel Credit Cards

Travel Credit Cards – Regular Traveller
ANZ – Rewards Travel Adventures Card
Bankwest – Breeze Platinum Mastercard
Bankwest – More Platinum Mastercard
Bankwest – More World Mastercard
Bankwest – Qantas Platinum Mastercard
Bankwest – Qantas World Mastercard
Bankwest – Zero Platinum Mastercard
Commonwealth Bank – Low Fee Gold Mastercard
HSBC – Platinum Credit Card
HSBC – Platinum Qantas Credit Card
Macquarie Bank – Black Card Macquarie Rewards
Macquarie Bank – Black Card Qantas Rewards
Macquarie Bank – Platinum Card Macquarie Rewards
Macquarie Bank – Platinum Card Qantas Rewards
QANTAS – Qantas Premier Everyday

Source: Canstar Travel Credit and Debit Cards Star Ratings 2019.

Compare Travel Credit Cards

5-Star Travel Debit Cards

Travel Debit Cards
Citi – Global Currency Account
Citi – Plus Transaction Account
First Option Bank – Access Saver
HSBC – Everyday Global Account
ING – Orange Everyday
Macquarie Bank – Platinum Transaction Account
Macquarie Bank – Transaction Account
Macquarie Credit Union – Cheque/Card Account S5
Macquarie Credit Union – General Savings Account
NAB – Platinum Visa Classic Banking
Regional Australia Bank – eFree
UBank – USaver with Ultra

Source: Canstar Travel Credit and Debit Cards Star Ratings 2019.

Compare Travel Debit Cards

For more information on how Canstar researches and rates travel credit and debit card products, read our methodology below.

View Research Methodology

Cover image source: Beboopai (Shutterstock)

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