min read
· Posted on
February 21, 2024

How to spend money when you’re overseas

Whether you're a relaxed resort vacationer or a budget backpacker, working out how to spend while travelling can get a little headachey.

What's the key learning?

  • It's a good idea to hold some local currency when travelling, especially in a cash-based country.
  • The general rule of thumb is it's cheaper to exchange to local currency once you're abroad, but outside of airports.
  • Prepaid travel cards can be a super convenient way to travel because they let you lock in an exchange rate, but they can come with many fees.
  • Debit cards can be a budget-friendly way to spend overseas, but you need to be aware of transaction fees and withdrawl fees.
  • Specialised credit cards often come with low or no transaction fees, but if you've already got high bad debts it's best to avoid a credit card.

Winter is well and truly on its way, which means it’s officially the season of Aussies-flock-to-the-other-side-of-the-world-to-soak-up-the-sun.

But one of the trickiest things about travel is trying to get your head around the money side of things like exchange rates, understanding a new currency, and just generally how to pay for stuff.

Let’s run through some of the main options.

Should I take cash overseas? 

It’s usually a good idea to hold some local currency when you’re travelling, especially if you’re going to a more cash-based country. 

But you also don’t want to be carrying large sums - that can be dangerous… especially on a big night out. Or in an unguarded hostel.

But if you do want to carry some cash - you’ll likely need to do a currency conversion. 

Currency conversion does get a bit mathsy but the general rule of thumb is, it’s usually cheaper to exchange to local currency once you’re abroad. That means, if you’re heading to Italy, then you should exchange from AUD to Euro in Italy (rather than in Australia).

Hot tip: It can be tempting to do your conversion at the airport but you’ll almost always get a better conversion rate outside of airports.

What about a travel card?

Travel cards can be a super convenient way to spend, and they’re less bulky on the wallet than cash.

But, you’ve gotta be careful in choosing your plastic to make sure you don’t end up copping tonnes of unnecessary fees.

Most standard bank cards will charge a foreign transaction fee of around 3% every time you spend on the card.

That might not sound like a lot, but it definitely adds up across all your purchases.

You looking at your bank statement and realising how much was spent just on card fees.

But the good news is there are plenty of great travel cards out there where you won’t have to pay hefty fees.

There are three different types of travel cards:

  • Prepaid travel cards
  • Debit ‘Bank’ cards
  • Travel credit cards

Prepaid travel cards

Prepaid travel cards: You load these card with a set amount of money in the currencies you need and then use it just like a debit card. It works kinda like TImezone cards.

A prepaid card can be a great idea if you’re worried about overspending on your budget, because you can only spend what you’ve loaded onto the card. And if you’ve run out of money, you can load on more money.

But, they do come with a lot of attached fees and you’re going to have to do some homework to see if the card is worth it for you.

Debit ‘Bank’ Cards

We know that debit cards work by spending the money that’s in your everyday transactions account. 

They can be a budget-friendly way to spend while travelling, because you’re only accessing your own money.

But, when you’re travelling, debit cards can come with fees such as international transaction fees and international ATM fees - and these can cost a pretty penny.

Some debit cards are specifically designed for travel and have lower fees. 

When looking for the best card, make sure you take into consideration all the fees - in particular, ATM fees and exchange rate fees.

Think: Up Bank, Citibank and Wise for the cards with the lowest fees. 

Credit Cards

Specialised ‘travel’ credit cards come with low or zero international transaction fees and sometimes complimentary travel insurance too.

The main perk? Reward points that you can redeem for travel perks like cheaper flights or airport lounges.

But, getting yourself a travel credit card isn’t a good idea if you’ve got a poor credit score or already have some bad debts on previous credit cards.

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