So, heading off overseas and plan to use that Credit Card for the majority of your purchases? Here are a few things you might want to keep in mind before you whip out the plastic and begin spending...
In addition to the standard fees and charges that you would pay when transacting in Australia, there are a number of additional fees and charges that you will face if you use your credit card offshore.
Most institutions will charge you a foreign currency conversion fee of around 1% to 1.5% on any purchases you make. They will also generally charge you a margin on the exchange rate, which could be up to an additional 5%.
If you plan to withdraw cash while overseas, doing so on your card can be really expensive, with fees usually ranging between $4 per transaction up to 1.5% of the amount withdrawn. Institutions will typically then charge you interest on the amount advanced immediately, regardless of whether interest-free periods apply to other purchases you might make while in Australia. Exchange rate conversion fees of 1% - 1.5% will typically apply here as well.
Using your debit card to access your savings while travelling is one way to avoid the interest charges associated with withdrawing funds on credit. You will rarely however escape the overseas withdrawal and foreign exchange rate fees as these apply equally to both debit and credit cards. Wizard has recently released the Clear Advantage MasterCard, which does not charge a currency conversion fee. This card also lets you withdraw cash from foreign ATM's at no charge, although you will begin paying interest immediately at 13.15% per annum.
Wizard will allow you to load up your card with funds before you leave meaning you can avoid the interest charge altogether. Note however than many other cards will still charge you interest and cash advance fees if you withdraw pre-loaded funds - making the Wizard card a really good alternative.
Some credit cards offer free travel insurance if you book your trip using their credit card. Some of these policies are quite comprehensive and can therefore provide real value to the frequent traveller, especially when you consider what travel insurance actually costs these days. Typically it is the more expensive cards e.g. Citibank Platinum, that charge a higher annual interest rate and annual fee, that offer such deals.
You may want to consider using a combination of cash and travellers cheques to help avoid many of these fees. Although not as popular today as they once were, travellers cheques can offer greater safety and lower fees than credit cards when travelling.