Debit cards with no foreign transaction fees

What is a foreign transaction fee?

Your bank charges a foreign transaction fee whenever a currency conversion is required. If you buy something from a US website with your Australian debit card your bank needs to convert your Australian dollars into US dollars. And it charges you a fee.

The foreign transaction fee is usually around 3-4% of the transaction value. If you made a $300 purchase from an American site, a 3% foreign transaction fee would cost you $9.

This fee gets expensive if you make regular international purchases.

Which Australian debit cards have no foreign transaction fees?

Here are a few Australian bank accounts that don't charge an international transaction fee, or allow you to have this fee waived.

• HSBC Everyday Global Account
• Suncorp Everyday Options Account
• ING Orange Everyday Transaction Account (you can get a rebate on international fees if you meet certain conditions).
• UBank Spend Account
• Macquarie Transaction Account

Looking for a credit card instead? Check out these credit cards with no foreign transaction fees.

How do debit cards with no foreign transaction fees work?

You usually receive a debit card when you open an everyday bank account. The debit card allows you to access your own money to make everyday purchases in store or online, plus lets you withdraw your own money from an ATM. Some banks offer debit cards with low or even no foreign transaction fees. This means that you can still make purchases using your own money, but you won't be hit with the fee when you make overseas purchases. Most Australian debit cards come affiliated with Visa or Mastercard, so you can look forward to using these internationally while travelling.

How much can I save with a no foreign transaction fee debit card?

The amount you could save depends on how much you're planning to spend overseas. If you're go overseas often, you could save hundreds of dollars (or more) per trip. Take a look at the fictional example below of a short overseas holiday.

"I used the HSBC Everyday Global account for my everyday spending. I get 2% cashback for tap & pay purchases under $100 and I can hold CAD for when I go visit my friends and family."

Alanna Glenn

Publisher

Benefits of using a debit card with no foreign transaction fees

Here are some of the benefits you can expect from using a debit card with low foreign transaction fees:

• Save money on international purchases made online. Debit card international transaction fees typically vary between 2-3% of the transaction value. If you often buy things from overseas online, a debit card that charges no foreign transaction fees could lead to significant savings.
• Save money when using your card overseas. The same applies when travelling internationally. If you opt for a debit card with no foreign transaction fees, you can use your card overseas just as you would at home and won't have to worry about transaction fees. Not only will this save you money, but it will save you the hassle of getting a travel debit card just for your trip.
• Global and easy. If you have a Mastercard or Visa debit card you can look forward to using your card in over 200 countries and territories across the world, at ATMs and EFTPOS terminals alike. You can also use your card for online transactions on international websites, from within Australia and when you’re travelling.
• No overspending and no interest accruing. Unlike a credit card, a debit card only allows you to access the cash in your transaction account. This can help keep your spending in check, as you're only spending what you actually have available in your account.
• Keeping it simple. A debit card gives you a simple way to access your own money, no matter where you go. You don’t have to worry about loading foreign currency on to your card, you don’t have to exchange cheques for cash, and you don’t have to worry about applying for a credit card.

What fees are normally involved when using a debit card for international purchases?

While using your debit card when overseas gives you quick and easy access to money, it pays to find out just how much you’ll end up paying in other fees and costs:

• Foreign transaction fee. This fee is a combination of what your card provider charges along with what the payment processor charges. For example, if you have an ANZ Visa card, its foreign currency conversion fee would be a combination of fees charged by ANZ and Visa. You have to pay this fee when you use your card to pay in foreign currency, which your card provider converts into Australian dollars. It is usually between 2-3% of the transaction value.
• Overseas ATM fees. When using your debit card to withdraw money from an overseas ATM, the ATM owner charges a fee, as does your card provider. You can lower your ATM-related costs by withdrawing money from your provider’s international ATM partners, withdrawing large sums to reduce your ATM visits or switching bank accounts to one which charges no or low international ATM fees on its associated debit card.
• Foreign exchange rate margin. Banks make money by adding a margin (or a mark-up) on top of the real exchange rate when transferring one currency into another. Each bank will charge a different margin, so will offer different exchange rates. While this cost is not as transparent, if your bank is offering a poor exchange rate you could be losing money when using your debit card overseas.
• International money transfer fee. If you'd like to send money to someone overseas from your regular bank account in Australia, your bank will likely charge you a hefty fee, sometimes over $20. To avoid this, opt for a dedicated international money transfer service when sending money to someone overseas rather than using your bank.

How do these debit cards compare to travel money cards or credit cards?

You get multiple options when it comes spending money overseas, and here’s how debit cards compare to popular alternatives like travel money cards and credit cards:

Credit cards

Credit cards, like debit cards, attract international transaction fees and ATM fees. Credit cards can give you access to extra funds outside of your available debit balance, which can come in handy during emergencies.

Since a credit card gives you access to money you don’t really have, overspending can become a problem and you could end up accruing high amounts of interest if you’re unable to pay your balance in full. Also, be aware that using your credit card to withdraw funds from an ATM, or to buy foreign currency or travellers cheques, is considered a cash advance transaction. These transactions attract an additional fee.
You can compare credit cards with no foreign transaction fees here.

Travel money cards

A travel money card gives you the ability to load multiple currencies onto a single card to avoid currency conversion fees, and you can lock exchange rates in place before you travel. Depending on the card you’re using, you may be charged a fee when loading funds on the card or withdrawing money from ATMs.

Make sure you compare your options, though, as different travel money card will offer different exchange rates and load fees. You can compare some prepaid travel money cards here.

Pros and cons of using a debit card with low foreign transaction fees

Frequently asked questions

• Will I have to pay a foreign transaction fee if I use my debit card to make a purchase through an international website?

  Yes, you would (unless you get a debit card that waives this fee). This is because your bank would convert Australian dollars to the currency the website charges you.

• If I use my card to book an airline ticket through an international carrier’s Australian website would I have to pay foreign transaction fees?

  You would, in all likelihood, have to pay foreign transaction fees in such a case, even if you’re making a payment in Australian dollars, because this fee applies in instances when the merchant accepting the payment is overseas.

• Can I get a replacement card if I lose my card when overseas?

  Yes. Both Visa and Mastercard offer overseas debit card replacements.

Karen Eley is the founder of Women Talking Finance, which provides money coaching and financial literacy and education services. An experienced and former financial adviser who has worked in financial services industry for 22 years, Karen is a Certified Money Coach (CMC), holds a Bachelor of Accounting and an Advanced Diploma in Financial Planning and CFP.

To make sure you get accurate and helpful information, this guide has been reviewed by Karen Eley, a member of Finder's Editorial Review Board.

Written by

Alison Banney

Editor

Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. See full bio

Alison's expertise

Alison has written 624 Finder guides across topics including:

• Superannuation
• Savings accounts, bank accounts and term deposits
• Budgeting and money-saving hacks
• Managing the cost of living