Why get a credit card with no international fees?
Why are there international transaction fees on some credit cards?
Card issuers usually charge international credit card transaction fees in return for converting your Aussie dollars into whatever currency you’re paying in using your card.
This fee is a standard part of how most credit cards work and will apply whether you are physically using your card overseas, or paying with an overseas merchant while in Australia.
International transaction fees are actually made up of two components:
- A fee charged by the card processor (e.g. Visa or Mastercard) for processing the foreign exchange.
- Plus a fee on top of that charged by the card issuer (your bank or credit card provider).These fees are designed to cover the additional cost of processing a transaction in a currency other than AUD, but often with a healthy profit built in for the card issuer.
However, this fee is waived by some card providers on some travel credit cards. Other cards offer more points on international purchases which may offset some of the transaction fee if applicable (e.g. some credit cards earning Qantas points).
How much could you save with a no-international-fee credit card?
Analysis by Money.com.au shows the average credit card foreign transaction fee in Australia is 2.58%.
Based on the average amount each credit card account spends on overseas purchases per year (around $2,017 according to RBA data), the average saving by opting for a credit card with no international transaction fees is just over $52 per year.
Of course, those who spend large amounts overseas (e.g. business credit card users who travel a lot) will pay more than average and will benefit more from considering a 0% international transaction fee card.
The table below shows what you’d save on various international spend amounts with a no international fee credit card versus the average fee for all cards.
| International spend amount | Possible saving |
|---|---|
$500 | $12.90 |
$1,000 | $25.80 |
$1,500 | $34.20 |
$2,000 | $51.60 |
$2,500 | $64.50 |
$5,000 | $129 |
Based on the average international transaction fee of 2.58% among the credit cards analysed by Money.com.au.
What other international credit card fees could I be charged?
Here’s a roundup of the main credit card fees you could be charged for using your card overseas:
Foreign transaction fees
Charged for converting your AUD into the currency you’re buying in. It’s charged by your card provider.
Overseas ATM fee (ATM operator)
A further fee charged by the operator of some ATMs overseas if you access cash using an Aussie card.
Overseas ATM fee (card issuer)
A fee charged by your card issuer if you use an overseas ATM overseas to withdraw cash using your credit card. This will be on top of the ‘cash advance’ fees you’re likely to be charged for accessing cash with your credit card (this applies whether you’re in Australia or abroad).
Dynamic currency conversion surcharge
This isn’t a fee as such but it’s an additional cost you’ll likely incur if you select the ‘pay in AUD’ option at a point of sale or ATM if you’re given the option to pay in local currency or pay in AUD. This extra cost is applied by the overseas merchant or ATM operator.
How to save on international credit card fees
1
Choose a credit card with no international transaction fees
There are more than 20 to choose from, some of which offer low interest rates and a low annual card fee.
2
Don’t use your credit card at overseas ATMs
Unless it's an emergency of course. You'll still pay fees if you withdraw cash using a debit card, but less than you would with a credit card.
3
Pay in the local currency
Don’t accept the “do you want to pay in Australian Dollars” option if presented with it. This is usually a significantly worse deal.
4
Have back up payment options
Having a debit card and some cash on hand will mean you can use your credit card only in scenarios where you can minimise fees.
Choose your ATM wisely if you need cash overseas
Brad Kelly, Credit Cards Expert
"If you do need to use an overseas ATM, be picky. The fees can vary hugely depending on the operator, regardless of whether it’s a debit or credit card you’re using. Sometimes the ATM at the back of the little convenience store on the corner will be cheaper than the big local bank. And check if your card provider has a network of overseas partner ATMs. For example, Westpac customers can use Global Alliance network ATMs in almost 40 countries with no ATM withdrawal fees."
Brad Kelly, Credit Cards Expert
How to choose a credit card with no international fees
- Check if there are any criteria for getting the 0% foreign transaction fee. For example, ING waives the fee on its credit cards but only if you also have an ING everyday account and meet certain minimum requirements of usage.
- Pay attention to what transactions are covered by the 0% foreign transaction fee. In many cases purchases at a point of sale (or online) will not be a subject to a fee, but ATM withdrawals will be.
- Make sure you get a low interest credit card if think you will carry a balance on the card. A low interest rate card that does charge a foreign exchange fee, may still work out better than a high-rate card with no international fees.
- Minimise the annual card fee as much as possible. Some cards waive the annual fee if you spend a minimum amount each statement period. There are only no annual fee credit cards where the fee is waved permanently.
- Check what extra perks the card offers. If it's a frequent flyer credit card that comes with access to an airline rewards scheme, airport lounge passes and complimentary credit card travel insurance, this could add to the value you get from it. Just be wary of paying excessive fees on the card to access these benefits.
