How to choose a travel credit or debit card

How to work out whether a credit card or debit card will meet your travel money needs while overseas – a Travel Guide from Canstar.

You’ve planned your trip, the towns and cities you will stay in, the sights and seas you hope to find… Now all that’s left is to make sure you’ll have enough moolah to get you around and safely back home again.

Bringing a travel credit card and a travel debit card along for the ride is one sure-fire way to make sure you’re ready for almost any situation. In this article, we explain what to look for when choosing a credit card and a debit card suited for international travel.

Compare Travel Credit and Debit Cards

Should I use a credit card or debit card to travel?

It’s often worth bringing both a travel credit card and a travel debit card on your journey.

Thanks to high interest rates, a credit card can quickly become an expensive way to pay for a holiday if you don’t pay it off within the interest-free period. Debit cards can be a lower cost option as long as you don’t overspend and blow your budget. But credit cards do get a “very good” sticker when it comes to pre-authorisations for booking a hotel or hire car.

We’ve talked previously about whether a travel credit card, travel debit card, travel money card, or even cash would be the best option for different travel needs. You can read more about that here.

Look for the right card for your profile

Here at Canstar, we divide travellers looking for a travel money option into three distinct options or profiles to find out which cards are best suited to different types of travellers. Keep in mind that this is general advice only and does not take into account your own personal situation or finances.

1. Credit card – Occasional Overseas Traveller

What travel money does an Occasional Overseas Traveller need?

Occasional Overseas Travellers are looking for a credit card to take with them on an overseas trip. It may be a once-off trip or they may travel only once per year. They are expected to spend about $5,000 on a card during the trip.

There are many benefits to using credit cards (rewards programs, complimentary travel insurances, etc.) which make this an attractive option for countries where paying in cash is not as necessary, such as the USA, New Zealand, or the UK. This could allow travellers to pay off their holiday expenses upon returning home and take advantage of interest-free days, rather than using all of their savings at the time they make their purchases.

Such a traveller may be suited to a travel credit card with a low annual fee and low cost to use the card. Check out our table below for a sample of the current $0 annual fee travel cards that our database features for occasional travellers.

Compare Travel Credit Cards for Occasional Travelers

2. Credit card – Regular Overseas Traveller

What travel money does a Regular Overseas Traveller need?

Regular Overseas Travellers are looking for a credit card for travelling overseas on a regular basis, at least a few times per year. They are expected to spend about $10,000 in travel-related expenses on a card during the year. We consider rewards points earned on spending for this profile.

A frequent flyer in this profile may even be able to take advantage of many benefits using a rewards credit card such as flight upgrades, lounge access, complimentary travel insurances, and the like.

Such a traveller may be suited to a travel credit card with low cost for international transactions, possibly with a rewards program attached.

3. Debit card – Overseas Traveller

What travel money does an Overseas Traveller need?

Overseas Travellers are looking for a debit card to access their own money when travelling overseas. They are expected to spend about $5,000 on a card during the trip.

For example, if you are travelling to a country that is largely a cash based economy (e.g. South East Asian countries), you would want to be able to readily access cash. Having the ability to withdraw cash from local ATMs for low or no cost would be highly important so that you are not lumped with cash advance fees and you don’t need to travel with a lot of cash on your person.

Such a traveller may be suited to a travel debit card, or possibly even a travel money card. See a sample of the current travel debit cards available on our database with 0% currency conversion fees, and $0 account keeping fees.

What if I fit into multiple profiles?

Most people do. This is because credit cards and debit cards serve very different needs. If you ever want to withdraw cash from an overseas ATM, for example, you’ll probably want to use a debit card rather than a credit card. Meanwhile, if you need to book or pay for a stay in a hotel or hiring a car overseas, credit cards are more useful for that purpose.

Group of travel friends

 

Look for a low cost card

Essentially this means looking for a card with no annual fee, no currency conversion fee, no ATM fees, and no cash advance fees.

To find the overall cost of taking a card on an overseas trip, Canstar assesses multiple different costs as follows…

How much does it cost to hold a travel card?

Travel cards don’t have to cost a fortune. After all, there are 28 travel credit and debit cards in our ratings this year that do not charge an annual fee, so it is possible.

The most common annual fee is between $51-$150.

Number of Cards in Each Annual Fee Price Bracket

(Whole Market)

$0 28
$1 – $50 50
$51 – $150 75
$151 – $300 27
$301+ 10
Source: www.canstar.com.au. Data collected 17 August 2016.

 

As for the minimum and maximum fees, they can be anything from $0 up to $700 per year.

Annual Fees (Whole Market)
Min $0.00
Average $100.92
Max $700.00
Source: www.canstar.com.au. Data collected 17 August 2016.

 

On the other hand, if rewards are important to you and you can afford to pay the interest rate on a travel rewards credit card, it might be worth paying an annual fee. Our ratings show that it’s only worth paying an annual fee if you can earn more benefit back in rewards than you paid for the fee.

How much does it cost to use a travel credit or debit card overseas?

Fees for using the card overseas can include currency conversion fees, ATM fees, cash advance fees, and the exchange rates on offer.

Purchase fees on travel debit cards

Your run of the mill debit card is just an ordinary transaction account, and as such, the majority of them will not allow you to load currencies other than AUD on them. When using your debit card to make purchases overseas, your bank will therefore usually charge you a fee for making a purchase in a foreign currency.

This purchase fee is most often a percentage fee based on the cost of the purchase…

Percentage Fee for Purchases Overseas (Debit Cards)
Min 0.00%
Average 2.63%
Max 3.65%
Source: www.canstar.com.au. Data collected 17 August 2016.

 

… but the fee can sometimes be a fixed fee charged per purchase:

Fixed Fee for Purchases Overseas
(Debit Card)
Min $0.00
Average $0.81
Max $5.00
Source: www.canstar.com.au. Data collected 17 August 2016.

Currency conversion fees on travel cards

Currency conversion fees are a fee charged any time you make a transaction in a foreign currency using a credit or debit card programmed for Australian dollars. Our ratings this year found there are some travel credit cards and debit cards on our database that do not charge a currency conversion fee.

Currency Conversion Fee (Whole Market)
Min 0.00%
Average 2.80%
Max 3.65%
Source: www.canstar.com.au. Data collected 17 August 2016.

 

We also took a closer look at what fees you can expect from products according to the star rating we’ve given them.

These are the currency conversion fees charged on cards on our database if you are an Occasional Traveller:

Occasional Traveller – Currency Conversion Fee
5 Star 4 Star 3 Star 2 Star 1 Star
Min 0.00% 0.00% 0.00% 2.85% 3.00%
Average 2.50% 3.65% 3.65% 3.65% 3.30%
Max 1.51% 2.61% 3.01% 3.14% 3.06%
Source: www.canstar.com.au. Data collected 17 August 2016.

 

And these are the currency conversion fees charged on cards on our database if you are a Regular Traveller:

Regular Traveller – Currency Conversion Fee
  5 Star 4 Star 3 Star 2 Star 1 Star
Min 0.00% 0.00% 2.50% 2.95% 2.95%
Average 1.80% 2.39% 3.03% 3.16% 3.24%
Max 3.00% 3.40% 3.65% 3.65% 3.40%
Source: www.canstar.com.au. Data collected 17 August 2016.

ATM fees on travel debit cards

An ATM fee is a fee charged to use an overseas ATM. This is a fee charged by your card provider, above and beyond any fee charged by the ATM operator itself, or a fee charged to make a cash withdrawal (see below: cash advance fees).

ATM fees on travel debit cards can be charged as a fixed fee per withdrawal…

Fixed Fee: Withdrawing Cash From Overseas ATMs
(Debit Card)
Min $0.00
Average $3.86
Max $5.50
Source: www.canstar.com.au. Data collected 17 August 2016.

 

…or a percentage fee based on the amount of cash you withdraw.

Percentage Fee: Withdrawing Cash From Overseas ATMs
(Debit Card)
Min 0.00%
Average 2.47%
Max 3.65%
Source: www.canstar.com.au. Data collected 17 August 2016.

What does all of that equate to in real terms? As the majority of institutions charge both a fixed fee and a currency conversion fee (a percentage of the withdrawal amount), it is difficult to answer the question as it depends on your withdrawal size.

So how much will it cost a traveller to withdraw, say, $200 AUD in a foreign currency from an overseas ATM?

Total Cost of $200AUD Withdrawal from Overseas ATM
(Debit Cards)
Min $0.00
Average $8.80
Max $12.30
Source: www.canstar.com.au. Data collected 17 August 2016.

 

The only deposit account with no ATM fees (no fixed fee and no currency conversion fee) available on our database at the time of writing is the Citi Plus Account.

Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular credit product. If you decided to apply for a (type of product) you will deal directly with a financial institution, and not with Canstar. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, important notes and additional information.

 

Cash advance fees on travel credit cards

A cash advance fee is a fee charged to withdraw cash from an ATM using a credit card, i.e. making a “cash advance”.

On top of this fee, if you’re making a cash advance (withdrawing cash from a credit card), you will likely be paying interest on that amount from the day you withdraw it. Not all cards start charging interest on cash advances from the date of withdrawal, but most of them do.

International ATM Cash Advance
(Credit Card)
Fixed Fee
Min $0.00
Average $3.38
Max $5.00
Percentage Fee
Min  0.00%
Average  2.30%
Max  4.00%
Please note that additional currency conversion fees and cash advance interest rates may apply.

Source: www.canstar.com.au. Data collected 17 August 2016.

 

 

In addition to the high cost of getting a cash advance using a credit card, some credit card products actually do not allow cash advances at all, such as the AMEX range.

Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular credit product. If you decided to apply for a (type of product) you will deal directly with a financial institution, and not with Canstar. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, important notes and additional information.

Exchange rates on travel cards

Exchange rates are the amount of one currency you can trade (“exchange”) for another. There’s not much we can do about whether the Aussie dollar is low or high when you want to travel, but it’s not too hard to compare exchange rates. Look for the card with the best rates on offer for your destination of choice.

 

Other fees on travel cards

Other fees and charges can include an international card replacement fee if you drop a card in the ocean and need a replacement immediately, and an over-the-limit fee if you go over your card’s credit limit.

 

Compare Travel Credit and Debit Cards

 

Travel friends sight seeing

How much are the rewards worth?

For cards with a rewards program, we also assess how many reward points you can earn for spending on the card. This is only a benefit if you can earn more rewards back than the overall fees you pay for the card: Rewards vs. Price.

Some credit card products provide enough bonus points for making purchases overseas to partially or fully offset their currency conversion fees, while others may offset their annual fee.

Other features to look for

Complimentary travel insurance included when you use your credit card for your overseas travel can be a delightful free bonus – as long as it covers as much as a standalone travel insurance policy would. Make sure that you know how to activate that insurance; some cards require you to buy your flights or tours using the card, while others only require that you register your travel dates online. Check out this list of credit cards that provide complimentary travel insurance (correct as at August 2016).

Airport lounge access is a nice bonus perk offered on some cards, providing access to the airline’s lounge while you’re waiting for your flight.

If your trip is a relatively long one, you will need to investigate how many interest free days are offered by various cards before choosing the right one for your situation. You should also compare interest rates.

 

Compare Credit Card Interest Rates

 

you can read our annual Travel Credit and Debit Cards star ratings report to find out more about how these cards work.

 

Find out more about Travel Credit and Debit Cards

 

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