Foreign Currency Can Be Costly
Money Magazine - August 2007 Issue - Andrew Willink’s Column
Planning a trip overseas is great fun and for most people it means stretching their dollars to the max to gain the very best value when traveling. Naturally, planning to finance your overseas holiday will include compensation for the value of the Aussie dollar in other continents. There could be, however, an unexpected surprise ready to deflate your holiday high soon after you get home. It’s called a foreign currency conversion fee and it works something like this.
When you use your credit card to make a purchase or a cash advance in another currency in another country, your card issuer charges a fee to convert the foreign currency to Australian dollars. And that’s not all. Your card scheme - MasterCard, VISA or American Express - will also charge a fee to convert the same transaction. In total the typical foreign currency conversion fee, according to RateCity, is around 2.5% of the purchase price which is $2.50 per $100 or $25 per $1000.
The surprise factor comes into play because many consumers are unaware of foreign currency conversion fees. While some credit card issuers outline the overseas purchase price and fees on their statements, others do not and simply incorporate the fee as part of the purchase price, thus drawing no attention to the fee. It is usually discovered when the consumer goes looking after realizing the amount of money carefully planned to cover the trip falls a little short.
That’s the bad news. The good news is that you can do something about foreign currency conversion fees. A handful of credit cards absorb this fee, making it possible to wave goodbye to foreign currency conversion fees. The cards to look for are from the Adelaide Bank, earth, NSW Teachers Credit Union, Savings & Loans Credit Union in South Australia and Wizard Home Loans.
For those lucky enough to see travel on the horizon, cards with no foreign currency conversion fees are the way to go. Bon Voyage.
Andrew Willink, Executive Chairman
www.ratecity.com.au
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