International transaction fees: what you need to know and how you can avoid them

4 October 2022

In today's interconnected world, international travel and online shopping have become commonplace. However, hidden costs such as international transaction fees can quickly add up, impacting your financial well-being. This article aims to shed light on what international transaction fees are, why they matter, and provide practical tips on how to avoid them.

Understanding International Transaction Fees:

When using your card for purchases outside your home country or making online transactions in a foreign currency, you may encounter international transaction fees. These fees, typically charged by card issuers or banks, are a percentage of the transaction amount and can range from 1% to 3%. While seemingly small, they can accumulate significantly, especially for frequent traveller's or individuals who frequently engage in cross-border online shopping.

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Why International Transaction Fees Matter:

International transaction fees can take a toll on your finances in several ways. Firstly, they add an extra expense to your purchases, effectively increasing the overall cost of the transaction. Secondly, if you frequently travel or make international online purchases, these fees can accumulate and impact your budget over time. Understanding how to minimise or avoid these fees altogether is crucial for saving money and optimising your financial resources.

Tips to Avoid International Transaction Fees:

Choose cards without foreign transaction fees:

  • Start by researching cards that offer zero foreign transaction fees. Many financial institutions now offer cards specifically designed for international travellers or online shoppers, eliminating the additional charges associated with foreign transactions. Prioritise cards that not only waive transaction fees but also offer other travel-related benefits like travel insurance or rewards programs.

Notify your bank or card issuer:

  • Before embarking on international travel, inform your bank or card issuer about your plans. By doing so, you reduce the risk of your transactions being flagged as suspicious activity, which could lead to unnecessary fees or card freezes. Providing your travel dates and destinations ensures that your financial institution is aware of your legitimate foreign transactions.

Consider local currency transactions:

  • When abroad, opt to pay in the local currency rather than your home currency. Selecting the local currency allows you to bypass dynamic currency conversion, which often comes with inflated exchange rates and additional fees imposed by merchants. Paying in the local currency ensures that you benefit from the exchange rate set by your card issuer, which is typically more favourable.

Explore alternative payment methods:

  • Depending on your destination, it may be worthwhile to explore alternative payment methods that minimise international transaction fees. Digital payment platforms like Yondr can offer competitive exchange rates and low or no foreign transaction fees, making them attractive options for international transactions.

Research merchant policies:

  • Before making an online purchase from an international retailer, familiarise yourself with their transaction policies. Some merchants absorb the international transaction fees themselves or offer alternative payment options that waive these charges. Prioritising these merchants can help you avoid unnecessary fees and reduce your overall expenses.

International transaction fees can be a hidden drain on your finances, but armed with the right knowledge and strategies, you can minimise or even eliminate them. By choosing a card like Yondr without foreign transaction fees, notifying your bank about your travel plans, paying in local currency, exploring alternative payment methods, and researching merchant policies, you can save significant amounts of money on international transactions. Stay informed, plan ahead, and take proactive steps to avoid these fees, ensuring your financial resources are used efficiently while enjoying seamless international experiences.

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Things you should know

YONDR MONEY Pty Ltd ABN 11625732569 holds AFSL number 545391 and is authorised to provide general financial product advice to retail and wholesale clients. Any advice you receive from Yondr is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.


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