The challenge of spending abroad

Spending money overseas should be simple — you earn in one currency, you spend in another, and the bank handles the conversion. But the way you spend abroad determines how much you pay in fees and how good an exchange rate you get. The difference between the best and worst methods can be 5–10% of your total spending — on a $3,000 trip, that's $150–$300.

This guide covers the best ways to spend money overseas, what to avoid, and how to minimise fees.

The three ways to spend abroad

When you're overseas, you have three main ways to pay:

1. Cash: exchange AUD for the local currency before you go or when you arrive
2. Card: use your Australian debit or credit card, or a travel card
3. Mobile payments: Apple Pay or Google Pay linked to a card

Each has different fees and exchange rates. Let's look at each.

Method 1: Cash

Cash is still necessary in many destinations — small restaurants, markets, and rural areas often don't accept cards. But how you get the cash matters.

Before you go

• Order from your bank: most Australian banks allow you to order foreign currency. The rate is usually 1–3% below the mid-market rate, plus a fee. Convenient but not the cheapest.
• Use a currency exchange service: services like Travelex or Crown Currency Exchange. Rates vary — compare before you buy. Airport booths have the worst rates.
• Travel card with cash withdrawal: load the trip currency onto a travel card and withdraw cash from ATMs when you arrive. This often gives the best rate.

When you arrive

• Use ATMs: withdraw local currency from an ATM at your destination. This usually gives a better rate than exchanging cash. But check your card's foreign ATM fees — a travel card has lower fees than a standard bank card.
• Avoid airport exchanges: airport exchange booths have the worst rates and highest fees. If you need cash immediately, withdraw the minimum from an airport ATM and get more later.

How much cash to carry

• Carry some, not all: a mix of cash and card is safest. Carry enough for a few days of small expenses, and use card for larger payments.
• Don't carry too much: if you lose it, it's gone. Travel insurance may cover lost cash, but only up to a limit.
• Keep it safe: use a money belt or a secure pocket, and don't carry all your cash in one place.

Method 2: Card

Card is the most convenient way to pay overseas, but the card you use determines the fees.

Standard Australian debit/credit cards

Most Australian bank cards charge:

• Foreign transaction fee: 2–3% of the transaction amount
• ATM withdrawal fee: $5 per withdrawal, plus a percentage
• Exchange rate margin: 1–3% below the mid-market rate

On a $100 purchase, you might pay $2–$3 in foreign transaction fees, plus the exchange rate margin. Over a trip, this adds up.

Travel cards

Travel cards (Wise, Revolut, bank travel cards) are designed for overseas spending:

• Low or no foreign transaction fees: often 0%
• Exchange rate close to the mid-market rate: the margin is usually 0.5% or less
• Low ATM fees: often a small fixed fee or a percentage, much lower than standard cards
• Load multiple currencies: you can load the trip currency in advance and lock in the exchange rate

The recommendation

Use a travel card for most overseas spending. It's cheaper than a standard card and more convenient than cash. Load the trip currency in advance if you want to lock in the exchange rate, or load AUD and convert as you spend if you want flexibility.

Credit vs debit

• Travel credit card: offers purchase protection and often better exchange rates. Good for large purchases (flights, hotels). But cash advances attract interest immediately — don't use a credit card for ATM withdrawals.
• Travel debit card: linked to your own money, no interest. Good for ATM withdrawals and everyday spending.

Many travellers carry both: a travel credit card for large purchases, and a travel debit card for cash withdrawals.

Method 3: Mobile payments

Apple Pay and Google Pay work overseas if your card is loaded. The fees and exchange rate are the same as the underlying card — so if you've loaded a travel card, mobile payments are just as cheap. If you've loaded a standard bank card, you'll pay the same foreign transaction fees.

Mobile payments are convenient and secure (Face ID/Touch ID), and they work anywhere contactless is accepted — which is most places in developed countries. But always carry a physical card as backup, in case your phone dies or a merchant doesn't accept mobile payments.

The biggest trap: dynamic currency conversion

When you pay by card overseas, the terminal may ask: "Would you like to pay in AUD or in the local currency?" This is called dynamic currency conversion (DCC), and it's a trap.

Always choose the local currency

If you choose AUD, the merchant's bank does the conversion — at a rate that's almost always worse than your card's. You might pay 3–5% more than if you'd chosen the local currency.

The rule

Always choose to pay in the local currency. Your card (especially a travel card) will do the conversion at a much better rate. The only exception is if you're not sure what the exchange rate is and you want certainty — but even then, the local currency is usually cheaper.

This applies to ATMs too: if the ATM asks whether you want to withdraw in AUD or the local currency, choose the local currency.

Other fees to watch for

ATM fees

• Your card's ATM fee: check before you go. Travel cards usually charge a small fee per withdrawal; standard bank cards charge $5+.
• The local ATM's fee: some ATMs charge a fee on top of your card's fee. Look for fee-free ATMs (major banks in most countries have them).
• Withdraw larger amounts less often: to minimise per-withdrawal fees, withdraw enough for several days rather than small amounts daily.

Account fees

• Monthly account fees: some bank accounts charge a monthly fee. If you're travelling for months, consider switching to a fee-free account.
• Inactive account fees: if you're away for a long time, check whether your account charges inactivity fees.

Card replacement fees

• Lost or stolen card: replacing a card overseas can be expensive and slow. Travel cards often offer emergency card replacement; check before you go.

How to minimise fees: the summary

1. Use a travel card for most spending — it has the lowest fees and best exchange rates.
2. Always pay in the local currency — never accept dynamic currency conversion to AUD.
3. Withdraw larger amounts less often to minimise ATM fees.
4. Carry a mix of cash and card — cash for small expenses, card for larger ones.
5. Keep a backup card separate from your main card, in case one is lost or stolen.
6. Avoid airport exchanges — use ATMs when you arrive for a better rate.
7. Don't use a credit card for cash advances — the interest is immediate and high.

Step-by-step: setting up your travel money

1. Get a travel card

Order a travel card (Wise, Revolut, or your bank's travel card) at least 2 weeks before you go. Load it with AUD, or with the trip currency if you want to lock in the rate.

2. Notify your bank

Tell your bank you'll be overseas, so they don't block your card for suspicious activity. Most banks allow this through their app.

3. Get some local currency

Order a small amount of the destination currency from your bank, for the first day or two (taxi, tips, small purchases). Don't get too much — you'll get a better rate from an ATM when you arrive.

4. Set up a backup

• A second card: from a different provider, in case the first is lost or stolen
• Emergency cash: a small amount of USD or EUR, which are accepted in many countries as a fallback
• Online access to your accounts: so you can transfer money or block a card if needed

5. Track your spending

Use a travel budget tracker to monitor your spending in the trip currency. This keeps you within budget and aware of the fees you're paying.

Country-specific tips

Japan

• Cash is king: many small restaurants and shops still don't accept cards. Carry more cash than you would elsewhere.
• IC cards: get a Suica or Pasmo IC card for trains and convenience stores — load it with yen and tap to pay.
• ATMs: 7-Eleven and post office ATMs accept foreign cards and have good rates.

Europe

• Card is widely accepted: contactless is common. A travel card with EUR loaded is convenient.
• Cash for small expenses: markets, small cafes, and rural areas may need cash.
• ATM fees: check your card's fees; European ATMs may charge a fee on top.

Southeast Asia

• Cash is essential: cards are less widely accepted, especially outside cities.
• ATMs are common: but may have withdrawal limits. Withdraw the maximum to minimise per-withdrawal fees.
• Bargaining: in markets, prices are often negotiable. Have small notes for bargaining.

United Kingdom

• Card is dominant: contactless is everywhere, even for small purchases. A travel card is all you need.
• Cash is rarely needed: but carry a small amount for tips and small expenses.

Common overseas spending mistakes

• Using a standard bank card. The foreign transaction fees and exchange rate margin are higher than a travel card. Switch before you go.
• Accepting DCC. Always pay in the local currency. The merchant's conversion is worse than your card's.
• Exchanging at the airport. Airport exchange booths have the worst rates. Use an ATM when you arrive.
• Using a credit card for cash advances. Interest is immediate and high. Use a debit card for ATM withdrawals.
• Not having a backup card. If your only card is lost or stolen, you're stuck. Carry a second card from a different provider.
• Not tracking spending. It's easy to lose track of spending in a foreign currency. Track daily to stay within budget.
• Withdrawing small amounts often. ATM fees add up. Withdraw enough for several days at a time.

How Payday Compass helps

The Payday Compass app Travel Money module helps you manage overseas spending:

• Track expenses in the trip currency: record what you spend, with automatic conversion to AUD
• See your remaining budget: know how much you have left, in both currencies
• Track the exchange rate: see how rate changes affect your budget
• Connect to your home budget: see how your travel spending fits within your overall finances

For a quick check on your trip budget, use the free payday calculator.

Summary

The best way to spend money overseas is with a travel card — it has the lowest fees and the best exchange rates. Always pay in the local currency, never accept dynamic currency conversion to AUD. Carry a mix of cash and card, withdraw larger amounts less often to minimise ATM fees, keep a backup card, and avoid airport exchanges. Set up your travel money before you go: get a travel card, notify your bank, get a small amount of local currency, and set up a backup. Track your spending in the trip currency to stay within budget. The difference between the best and worst methods can be 5–10% of your total spending — on a $3,000 trip, that's $150–$300 you can save just by choosing the right way to pay.

To track overseas spending with multi-currency support, try the Payday Compass Travel Money module.