Australia is the lucky country. Despite what you might experience with your day-to-day transactions, nobody is really trying to scam you out of your money. So, what’s the main advice we hear when we go overseas? Protect yourself, protect your money. Keeping an eye on your AUD is as easy as a fashionable bum-bag or secure wallet. But you could be giving away your money to overseas businesses willingly whenever you swipe that card.
You’ve been given the option: pay in AUD or in the local currency. ‘How convenient’, you think. ‘I’ll pay in Aussie dollars.’ Wrong. After this article, and every time you go overseas, you are going to stop hitting that DCC (dynamic currency conversion) button. Here’s two of the big reasons why.
The obvious one – it costs more. Vendors are not offering you DCC for your convenience; they’re offering you DCC because it puts money back in their pocket. Remember when businesses neglected to make the switch to EFTPOS in the fear of losing profit? Well now they are making that profit back from ignorant foreigners such as yourself.
The exchange rate will always be poor on your behalf when you select AUD. The purchase of a coffee might seem minimal, but you can expect to often pay a 5% increase on your DCC. A $100 night out suddenly hits $105, for no good reason. And how many nights are there in a week? (It’s seven). And how many weeks have you spent abroad tapping that AUD button like a naïve fool? Too many.
Just like the surcharges you find back home for using AMEX or Paywave, foreign businesses are slyly reaching in to your pockets with the DCC. And here is some more bad news: selecting AUD won’t waive the international transaction fee, which averages at 3%, depending on your bank. There’s an immediate 8% surcharge on your purchase. I’m no mathematician, but those numbers ain’t good.
Pro-tip: ING, NAB, and HSBC offer some great cards to avoid this pesky international transaction fee. Compare here: https://www.finder.com.au/debit-cards-low-foreign-transaction-fees
Goodbye Bonus Credit Card Points
Financial institutions have observed that customers who like to travel also like to rack up the frequent flyer points. Who knew? If you’re a world-class traveler, some cards such as the Qantas Premier Platinum Mastercard can offer upwards of a 50% boost to your international purchases.
However, you can wave goodbye to that welcome raise in points once you go with the AUD conversion, even though you are physically in another country. So, if you’ve got the chance, earn more points! Don’t pay in AUD.
Here’s an example of a $1000 day at the shops, paying in AUD in comparison to the local currency:
AUD: $1,080 ($30 international transaction fee + $50 dynamic currency conversion). 1,000 frequent flyer points.
Local: $1,000 (using an international transaction fee-free card). 1,500 points.
We have all ‘misplaced’ cash overseas. Do not allow your electronic funds to go missing as well.