Credit and debit cards
Using your credit or debit card overseas is one of the most convenient options for accessing money on the go and you can feel secure knowing that your card provider is keeping an eye out for suspicious, potentially fraudulent activity, and that you'll be reimbursed if the worst does happen and your card is stolen (so long as you've abided by your card provider's conditions of use; for example, kept your PIN secret and reported the theft of your card immediately).
The major downside of using credit and debit cards overseas is fees. Most credit and debit cards will charge foreign-transaction fees (generally a percentage of the total) when you make purchases overseas, although some card providers waive these on certain card types (Bankwest's platinum- level cards, for example). Debit cards are generally subject to a foreign ATM fee when you withdraw cash overseas - this is often a flat figure, so taking out larger amounts less frequently can be a good idea. And, just as at home, withdrawing cash from a credit card will attract a hefty cash-advance fee so avoid this unless it's an emergency.
If you're a frequent traveler, you may want to seek out credit and debit cards designed for travellers. GE Money's 28 Degrees MasterCard, for example, has no international transaction fees on purchases, no currency conversion fees and no annual fee (as of the beginning of this year, it does attract a fee of 3 per cent or $4 - whichever is greater - for cash advances). In terms of debit cards, the Citibank Plus transaction account, which comes with a Visa debit card, is popular with travellers. Billed as Australia's only fee-free bank account, cardholders can make free withdrawals at all of Citibank's more than 20,000 ATMs in about 40 countries worldwide and the account does not attract foreign- transaction fees.
Regardless of which card you take, check its expiry date well in advance of setting off. If you're taking a credit card, consider whether your current credit limit is sufficient. Going over your limit can attract fees and it's no good planning to pay for accommodation at a cost of $3000 if your card limit is only $2000. Also check the daily limit on your debit card - often you're not allowed to withdraw more than $1000 per day.
Notify your card provider that you're heading overseas to avoid inadvertently raising a red flag with their fraud detection department and having your card frozen, and ensure they have a phone number to contact you on in case they want to query any transactions while you're away. You should also make note of your card provider's overseas contact number - if your card is stolen or compromised, you should let them know as soon as possible.
For more advice on using credit and debit cards overseas, consult your financial institution - many offer brochures and information online about accessing your money while you're away.
If you want to lock in an attractive exchange rate ahead of time, pre-loading foreign currency on to a travel card may be the way to go. Travel cards work in a similar way to debit cards in that you're spending your own money, which you've pre-loaded, eliminating the risk of an unexpectedly large credit card bill when you arrive home. Generally you'll benefit from no transaction fees on purchases and some cards do not charge fees for using international ATMs. Some cards also come with a free backup card in case yours is lost and you may feel more secure knowing your card isn't linked to your bank account, unlike a credit or debit card.
The downside of travel cards is the fees, some of which can catch unwary travellers off guard. Some cards will have fees for issuing the card, for loading or re-loading money, or if your account is inactive for a certain amount of time. Some will charge fees to transfer unspent cash off the card after your holiday ends, or for converting money on your card to a different currency.
There are many options on the market, so it's worth shopping around - Choice magazine has warned that, if you're not careful, the fees on a travel card can potentially outweigh the costs you might have incurred using your regular debit or credit card.
Most travel cards now allow you to load multiple currencies on to the one card - this can be as many as 13, as for the Commonwealth Bank Travel Money Card. However, the selection of currencies available on most cards is relatively restrictive, so if you're travelling to South America or Africa, for example, they may not be suitable for you.
Indeed, travel money cards can vary considerably, not only in terms of available currencies and fees but also the limits for individual loads, the card balance and daily ATM withdrawals, and the methods available to you in terms of buying, loading and accessing your card, and for accessing customer service. Different cards may suit different needs: many banks offer travel money cards, along with Australia Post and foreign exchange companies including Travelex and OzForex.
Some airline frequent-flyer programs now offer membership cards which can function in the same way as a pre-paid travel card while allowing you to earn points on purchases. Qantas' Frequent Flyer membership card and Virgin Australia's Velocity frequent flyer card have both been favourably reviewed.
For obvious reasons, it's unlikely you'll want to take your entire holiday spending money with you in cash but, regardless of your other arrangements, it's worth having some hard currency to use at your destination before you depart. You can hunt around for the best rate and buy this from a bureau de change or bank before you leave (many banks also allow you to pre-order foreign currency online). Buying it at the airport before departure is convenient but the exchange rate can be considerably less than favourable.
Some travellers find that using cash helps them to keep track of their spending - handing over notes and coins feels more "real" than swiping a card - and if you're mainly using a debit or credit card which is subject to foreign transaction fees, this can help to minimise such charges. And if you're going somewhere where tipping is customary, you'll need some small notes on hand.
Try to avoid taking out more foreign currency than you're likely to spend and being stuck with it at the end. You'll have to pay fees to convert it back to Australian dollars and may struggle to convert some currencies once you arrive home - I have a stash of leftover Zambian kwacha from a trip eight years ago to prove it.
Avoid accessing internet banking from public computers (e.g. internet cafes) and be cautious when banking over unsecured wi-fi connections.
Be aware that even if your card offers free ATM withdrawals overseas, individual ATM service operators may charge a fee.
Many larger overseas retailers may offer you the chance to pay in Australian dollars when using your credit or debit card - this is known as "dynamic currency conversion". It's usually best to pay in local currency: paying in Australian dollars will not necessary help you avoid foreign transaction fees and will generally mean accepting a less-favourable conversion rate.
Ensure you've more than one way of accessing your money - having a minimum of three, such as a credit card, travel or debit card and cash, seems sensible. Keep them in different places so that if your wallet is stolen, for example, you won't be left high and dry.