Before the modern world of technology, spending money overseas usually called for travellers cheques or physical cash. I still remember the bewitching unfamiliarity of getting my hands on Spanish Pesetas on holidays as a child, before they adopted the Euro. I always remember one of the coins had a hole in the middle like a little golden doughnut. 

Then came the travel cards with irritatingly shit exchange rates in return for the convenience of not having to carry cash, and of course, you’d only ever dare use your domestic bank card in a real emergency (and be charged a fortune for the international transaction and conversion.) Nowadays, though, there are so many options for overseas currency spending – but which should you choose? Credit card? Debit card? Travel card? Cash? Let’s compare.

Credit Card

Using a credit card for your overseas spending is a smart move in terms of payment protection, chargeback features, fraud detection and in come cases complimentary insurance and points. Credit cards tend to have greater protection for fraudulent transactions or loss of funds – for example if your airline goes bankrupt or your card is cloned. That said, check your credit card’s international transaction fees, exchange rates and cash withdrawal fees before you travel. Some banks use a wholesale exchange rate, like the Visa wholesale rate, which in my experience has served me well. It’s as good as the best rate I could get elsewhere, so you’re not losing out by paying in your home currency. Many banks now don’t charge an international transaction fee, but check this first. If your credit card won’t charge you for overseas transactions and uses a favourable conversion rate, it may be your best bet for overseas spending. Withdrawing cash on your credit card tends to attract a high cash advance rate domestically, so check what your withdrawal rate will be overseas, if you want to take cash out. There may also be a fee per withdrawal.

Pros

  • No need to convert currency before you go

  • Generally good fraud protection and payment protection

  • May include travel insurance

  • Don’t need to convert unused currency when you return

Debit Card

Using your usual debit card overseas is a relatively new concept, but it is helpful for those who don’t have a credit card – or don’t like using credit. It does mean you can’t overspend if you don’t physically have the money, and it still relieves you of having to carry cash. You’re less likely to have insurance, points or other features with your debit card, however. With cards like the ING Orange Everyday Account, though, you’re getting the Visa wholesale exchange rate, and all international transaction fees are rebated. The bonus of a debit card is being able to withdraw cash with less or no fees, when compared to a credit card. ING will also rebate all ATM fees, and since it’s not a credit card, there isn’t a cash advance rate applicable. 

Pros

  • No need to convert currency before you go

  • Often no ATM fees

  • Potentially favourable exchange rate

  • Often no international transaction fees

  • No need to convert unused currency when you return

  • Can’t overspend like you can with credit

International Travel Card 

Through our research before our US trip, many of the international travel currency cards in Australia just don’t compete with the banks anymore. The exchange rates were pretty poor, and the perks of free cash withdrawals and no international fees are offered more widely with your bank now anyway. While there are some options that get you extra perks (like the Velocity Global Wallet where you can earn 3 points per equivalent AUD spent overseas), we struggled to find any benefits that outweigh the convenience, protection and low fee experience we got with our ANZ Travel Adventures Credit Card and ING Orange Everyday Card… except for one.

Newly launched in Australia, the Transferwise global borderless debit card not only has all the fee-free and exchange rate perks of our bank accounts, but it also gives you a billing address in any of their listed countries – great for paying for things online where a local billing address is required. While with this card you do need to convert your currency before you go, the benefit is you can lock in rates while they’re in your favour. When you spend on your credit or debit card overseas, you’re stuck with the live rate at the time you’re traveling, which may or may not be beneficial. If the exchange rate is particularly good before you travel, it might be worth putting some money on a Transferwise card to lock that rate in while you can.

Pros:

  • Lock in the rate before you go

  • Generally no cash withdrawal fees or international transaction fees

  • Good for multi-currency travel

Diversify your travel money

In my opinion, the best way to maximise all the perks of each different overseas currency option is to diversify. Sticking to one credit card, one debit card, one travel card or just plain old cash does open you up to risks. If your card or cash is lost or stolen while you travel, you’ve got a problem. By spreading your overseas spending money across 2-3 options, you can soak up the perks of each one, and ensure you’ve always got access to money. Don’t store all cash and cards together, either. Keep one in your bag and one in your pocket, or one in your hotel safe and one out with you, for example. 

For our US trip, we used the Transferwise card, an ANZ Travel Adventures card and my ING Orange Everyday card. In the weeks leading up to our trip, the AU dollar to US dollar conversion fluctuated immensely. We transferred money to our Transferwise card in US dollars in $1000 bundles, to take advantage of the high rates, and then brought the rest with us on my debit card, and paid for bigger purchases like hotels on my credit card. We then took about $600 in cash. This meant we paid zero fees, got the best rates, could get cash out when we needed it, and had the benefit of ANZ’s complimentary travel insurance.

This blog post is not affiliated with or endorsed by any products mentioned.

Information contained in this article is general in nature and based on the opinion and experience of the author only. Consider if a product is right for you and seek qualified financial advice to suit your circumstances.