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Spending money overseas is very different from doing so in Australia, as you’ll have to consider exchange rates, currency conversion fees, the culture of the country you’re visiting and more.
In this article, we will compare five different methods of spending money overseas: cash, credit cards, debit cards, travel money cards, and personal loans. By understanding the pros and cons of each method, you can make an informed decision and enjoy your trip with peace of mind.
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With the cost of living still sky-high at the time of writing, Aussies have to make some hard choices when it comes to travel. Australian Bureau of Statistics (ABS) figures from April 2023 show that the number of Australians travelling overseas has yet to return to pre-pandemic levels, and the price is the biggest reason.
More ABS data shows that the cost of international travel was up more than 12% in the 12 months to June 2023. The high price of flights and accommodation has seen around two-thirds of Australians with holiday plans cancel or postpone their travel so far this year.
Despite the high costs, as many as 85% of us still have holiday intentions over the next 12 months. Choosing the correct method of spending your money overseas can be an excellent way to reduce unnecessary expenses and save.
The following table shows the average cost of trips to popular destinations among Aussie tourists, according to data from Budget Your Trip. These figures are for one person only.
Two weeks (AUD) | One month (AUD) | |
---|---|---|
USA | $6,026 | $12,911 |
UK | $4,127 | $8,843 |
New Zealand | $2,979 | $6,383 |
Indonesia | $1,305 | $2,797 |
Japan | $2,845 | $6,096 |
Good old cash, nothing beats that. Ideal for your day-to-day expenses like food and shopping, cash can be handy to have on you, especially since some countries depend on it a lot more than Australia. Japan is one example of a tourist-heavy destination that predominantly uses cash for many transactions.
While cash can be convenient, carrying large wads of money can be a security risk. Tourists are easy targets for thieves and pickpockets, so you must store it in a safe place or a secure bag attached to you.
Travel credit cards are a type of credit card that comes with low (or no) foreign exchange fees. They may also come with perks and benefits that suit frequent travellers, such as travel insurance, airport lounge access, a high rate of frequent flyer points, 24/7 concierge access worldwide and more.
However, using your credit card in another country can result in your expenses quickly adding up. You don’t want to get stung with a massive bill at the end of your holiday!
Debit cards are very similar to credit cards here and overseas, although there are a few key differences. Rather than having a line of credit up to a set credit limit, your debit card is linked to your bank account. You can only spend what you have in there, so it’s often a good idea to start a savings account specifically for your holiday.
As well as not charging interest, some debit cards geared towards travellers offer $0 ATM fees and $0 foreign currency conversion fees in certain countries. Just make sure you tell your bank you’re heading overseas. Otherwise, they might ping your transactions as suspicious!
You can pre-load currency onto travel money cards before you go overseas. Ideal for those travelling through multiple countries who’ll need to withdraw cash a lot, these cards can let you lock in an exchange rate at the time of purchase. Any money you load onto this card will use the exchange rate at the time (plus a margin charged by the card provider).
Once overseas, you can use this card to withdraw money from an ATM. Just watch out for any fees charged, such as ATM withdrawal fees or fees for inactivity (withdraw any remaining money after your trip!).
Personal loans are a prevalent method of paying for travel and holidays, whether domestically or overseas. In June 2023, nearly $50 million worth of loans were given to Australians from banks and lenders for travel purposes. This figure peaked at almost $70 million in 2006!
Technically, a personal loan doesn’t let you spend money overseas. Instead, you apply for a lump sum loan amount from a lender and, if approved, repay that amount over time in instalments plus interest. You could then put some of these funds towards a holiday by booking flights, accommodation, and other planned activities.
Jacaranda Finance offers holiday loans with fixed interest rates, so you’ll know exactly how much your repayments will be each time, helping you budget and avoid overspending overseas.
There’s no ‘best’ method of spending money overseas. Whether a credit card, debit card or prepaid travel card is right for you will come down to your individual needs and circumstances, as well as some external factors like:
And more. Generally, it’s good not to rely on just one method of accessing money overseas. Instead, you should consider whether multiple options are right for you so you have a backup. For example, you could:
If you have several ways to pay, then you’ll always be ready no matter where you are.
The information on this website is for general information only. It should not be taken as constituting professional advice from the website owner - Jacaranda Finance. Jacaranda Finance is not a financial adviser, and the content on this page does not take into account your objectives, financial situation or needs. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances.
Jacaranda Finance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly by use of this website.