Credit Cards With No International Fees

1. Savings on transaction fees

One of the primary reasons to opt for a no foreign transaction fee credit card is the potential savings on fee-free international purchases. With these cards, you avoid additional charges that typically range between 2% and 3% of the transaction amount for purchases made in a foreign currency. Over time, these savings can accumulate, making a notable difference in your overall expenses.

For example, if you spend only $2,000 a year shopping at online stores based overseas, not having to pay 2.5% in foreign transaction fees would save you $50. And if you go on an overseas trip, your accommodation, meals, and activities are likely to add up to much more.

2. Convenient international use

No foreign transaction fee credit cards are convenient for international travellers and for online shoppers. Travellers don't need to carry local currency or travel cards, or deal with instant currency conversion, which all adds up to a hassle-free payment experience wherever you go.

Additionally, these cards offer the flexibility to transact in various currencies without worrying about hidden fees. They can be the best cards for overseas travel.

No foreign transaction fee credit cards operate in the same way as standard credit cards. If you were to lay a credit card with no foreign transaction fee beside one that does charge a fee on foreign currency conversions, there would be no way to discern the difference visually. The difference is only obvious when comparing two sets of monthly statements, one of which will have an extra line below each foreign currency or overseas transaction, showing the additional charge.

This type of card is particularly useful for international travellers, frequent flyers and shoppers who regularly deal with overseas merchants.

Although there is no additional fee on currency conversions in the case of no foreign transaction fee cards, the bank's currency conversion rate may not be as competitive as the mid-market rate, which means that your savings on foreign transaction fees may be eroded by the less favourable exchange rate.

• Rewards program. Consider whether the card offers rewards points, cashback, or other incentives for your spending. Consider how these rewards align with your needs and preferences. If you're travelling a lot, find out what their overseas earn rate is — it's often higher than it is for domestic spending. For a card which does charge foreign transaction fees, this higher overseas earn rate may compensate for the fact that you have to pay the fees.
• Overseas ATM fees. Check whether the card issuer also waives fees for withdrawing foreign currency cash from an overseas ATM. Even if your card issuer doesn't charge a fee for overseas ATM withdrawals you may still probably pay a cash advance fee, and the ATM operator may charge a separate fee which will be passed on to you by your card issuer.
• Global Alliance ATMs. Banks in the Westpac Group (Westpac, St.George and BankSA) are part of the Global Alliance ATM network, which means that you can use their cards to withdraw cash fee-free from overseas ATMs operated by, for example, Bank of America, Barclays, BNP Paribas and Deutsche Bank.
• Avoid Dynamic Currency Conversion. Merchants may offer to charge you in AUD at the point of sale. This Dynamic Currency Conversion often includes a hefty markup and very likely an unfavourable exchange rate, negating the benefits of your fee-free card. Always choose to pay in the local currency.
• Annual fees. While some no foreign transaction fee credit cards may have no annual fees, others do. However, cards with no annual fee and no foreign currency conversion fee are not particularly uncommon.
• Interest rates. Pay attention to the interest rates of these cards, especially if you plan to carry a balance. Look for competitive rates that suit your financial situation.
• Additional benefits. Given the travel focus, pay attention to other travel-centric features such as travel insurance and airport lounge access. These features could be even more valuable than the lack of foreign transaction fees.
• Security and support. Ensure the card offers robust fraud protection and responsive customer service, particularly for emergencies abroad.

If you use your credit card to withdraw cash from an ATM when travelling overseas, you could be up for many more fees apart from the foreign transaction fee, unless your card T&Cs specifically state that they won't be charged. These are some of the fees you could incur:

• A fee charged by your card issuer for using the overseas ATM, typically $5.
• A cash advance fee charged by your card issuer, often a minimum of $3.
• Interest at your card's standard rate, possibly 20% p.a. or more, since your withdrawal is a cash advance. Interest will be charged every day until you repay the advance.
• An additional fee charged by the operator of the overseas ATM.
• Even a balance enquiry conducted at an overseas ATM may incur a charge.

Here's your list of dos and don'ts to help you avoid racking up punishing foreign transaction fees:

• Use a credit card with no foreign transaction fees when travelling overseas.
• Use a credit card with no foreign transaction fees when making purchases online in foreign currencies, or when purchasing from an online merchant whose transactions are processed outside Australia. You could choose a no foreign transaction fee credit card which also has no annual fee, and use it as a backup card just for your foreign purchases.
• Preload a travel money card with the foreign currencies you need before you travel.
• Exchange a reasonable amount of AUD into foreign currency before you leave Australia, in case you run into places where cards aren't accepted.
• Don't use your credit card to withdraw cash from an overseas ATM, unless it's an emergency and you have no other option.
• Don't use your credit card to check your account balance at an ATM. Do it via online banking instead.

Josh and Emily planned ahead before their two-week trip to Thailand. This is how much they saved on foreign transaction fees.

Emily booked accommodation and activities online, well ahead of time, using a no foreign transaction fee credit card. She spent a total of $3,457, saving the $121 she would have paid if she'd used a credit card with a 3.5% foreign transaction fee.

Before they left for Thailand, Josh loaded AUD 2,000 worth of Thai baht onto a travel money card, choosing a day when the exchange rate was favourable. During their holiday they used the card to spend the baht equivalent of AUD 1,514 at restaurants, bars and shops, saving a further $53 they could have incurred if they'd paid with a credit card that charged a 3.5% foreign transaction fee. Back in Australia, they were able to convert the remaining baht on their card into AUD.

Emily also changed AUD 175 into baht cash currency before they left. They used it to buy souvenirs at market stalls that wouldn't accept either their credit card or their travel money card. Because they planned ahead, they avoided a potential $10 in overseas ATM fees, cash advance fees and currency conversion fees, which they would have incurred if they'd needed to withdraw cash from an ATM to pay for their souvenirs.

Emily and Josh saved a total of $184 on their Thai holiday by avoiding foreign transaction fees, spending it on themselves instead of handing it over to a bank.

This case study is intended as a representative example.