Saving on credit card fees while overseas

There are several ways to avoid or reduce fees charged to your accounts and cards while accessing money overseas.

OVERSEAS trips can be as fun as they are expensive.

It can be said that some of these costs are avoidable, largely the fees and charges that come with accessing your money whilst overseas.

And whether it’s EFTPOS, ATM withdrawals or at a currency exchange booth, smart travellers can save hundreds, potentially thousands, on fees and charges while abroad.

What you need to know is the fees you can avoid and how to minimise the fees you can’t.

Credit cards

If you use a normal credit card to pay for expenses overseas, you’re going to get a good lesson in fees that you will never hope to repeat.

The main offender is the currency conversion fee.

Also known as a foreign currency conversion fee, foreign transaction fee or cross currency conversion fee, this is charged when a lender converts Australian dollars into a foreign currency to pay for a transaction.

Often the credit card provider will pocket two or three percent of the transaction value for providing the currency exchange facility.

The simplest way to avoid this trap is to use a card which doesn’t have a conversion fee.

Only a handful of cards have this unique feature, such as the GEM 28 Degrees MasterCard, the Bankwest Platinum credit card range and the Aussie Platinum Low Rate Card.

These cards also come with the nifty benefits of complimentary travel insurance - saving you some sweet pennies before you depart.

How you get stung*

- Local ATM operator fee: $2
- International ATM fee: $5
- Cash advance fee: 1.50%
- Cross currency conversion fee: 3%
- Interest charges: 20%

A common sting for consumers is withdrawing cash from an ATM. This triggers a cash advance fee, local ATM operator fee, international ATM fee and interest, charged from the day the withdrawal is made.

Another way to approach this situation is to load a debit balance (or use your debit card).

This approach saves you the interest and cash advance fee. The Aussie Platinum Low Rate Card, for example, allows you to pre-load your card with a debit balance to escape these fees.

Currency exchange rates can’t be locked in, even with a pre-loaded debit balance. The rates will be your providers rates for the currency on the day.

Using a credit card is not the wisest option for the fee-shy traveller. But if you have to, make sure that you know exactly what you’re getting yourself into.

Debit card transaction accounts

While these accounts spare you interest and cash advance fees, there are still a trio of fee nasties to avoid.

Foreign ATM fee, local ATM operator fee and cross currency conversion fee can all still apply with many products.

The Citibank Plus Transaction Account is an account that waives cross currency conversion fees and foreign ATM fees (local ATM operator fees still apply).

How you get stung*

- Foreign ATM fee (charged by your institution): $5
- Local ATM operator fee: $2
- Cross currency conversion fee: 3%

A tip to avoid the local ATM operator charge is to look for your bank’s global partner ATMs. Contact your provider to find out which ATM alliances they have in place.

For example, Westpac have an agreement with Deutsche Bank and Barclay’s Bank for local ATM operator charge free services in countries from the United Kingdom to Zimbabwe.

Choices made before you take a trip abroad will be the biggest factor in how many fees and charges accompany your overseas spending. Planning ahead will save you big dollars in needless fees and charges.

Jeremy Cabral is a publisher for the websites CreditCardFinder.com.au and SavingsAccountFinder.com.au

*These fees are approximate and differ from institution to institution. Please read the terms and conditions of the products featured in this article before you apply to ensure it is suitable to your personal circumstances.

View the original article here

What to look for in a credit card

Our four Generations columnists Source: National Features

REWARDS points, interest-free days or low rates - what should you look for in a credit card?

> Gen Y - Justine Davies

AH credit cards. How ever did previous generations survive without those personal lines of credit at interest rates of up to 20 per cent?

There are more than 200 different credit cards on the market now and the right one for you is going to depend on your spending habits. Here's my rule of thumb.

Rewards points: A rewards program can suit high spenders, but check the annual fee attached to the program first. Our analysts have calculated that, once you take into account the annual fee charged on most rewards cards, you need to spend around $18,000 a year in order to benefit from the reward. Some banks are starting to introduce debit cards with rewards attached Citibank and Bankwest both have them which could be a cost-effective option.

Interest-free days: If you're a savvy shopper who doesn't spend enough to justify a rewards program but does pay their card off in full each month, a long interest-free period can help you make the most of your money. That way, you can potentially buy on credit, leave your cash sitting in a savings account or mortgage offset account and then pay your card off a few days before interest would start accruing.

Low rates: With the average credit card carrying an ongoing balance of $3000, a low rate card will suit most. If you don't pay your card off in full each month, then forget interest-free periods (because you don't use them) and forget rewards points (with the generally higher interest rate) and go for a low-rate card instead. That way, you're paying the least amount of interest possible, which will help you pay the card off sooner.

Justine Davies is finance editor and commentator with financial research and ratings firm Canstar.

> Gen X - Bruce Brammall

IT'S time to lay the (credit) cards on the table. We've had a national "sorry" day. I believe it's now time for a national, annual "thank you" day. And today is perfect! One week after April Fool's Day!

Our credit card "fools" need some recognition. They shout the rest of us, who use credit cards properly, hundreds of dollars in free perks every year.

Who is thanking whom? On Thank You Day, credit card "transactors" are handing out free hugs to "revolvers". Bless you!

Transactors pay off their credit cards each month. They never pay interest. Like Dire Straits, they get money for nothing by way of rewards points. They pay off their credit cards from their offset accounts on the last day.

Revolvers don't pay off their credit cards each month. Most months, they pay interest. At up to 25 per cent.

By paying exorbitant interest rates, revolvers pay for the entire system, including all the free points, and holidays, enjoyed by transactors.

Sure, revolvers get points too. But if you pay interest on your card, understand that the interest rate is not only ridiculous but means you're also shouting the person sitting next to you. Rewards points, on average, are worth about 0.5 per cent of a purchase. Spend $1000 and the points you earn are worth, roughly, $5.

Given the above, it's pretty simple.

If you pay off your credit card in full every month, take interest-free days and rewards programs. If you don't, then get a card with the lowest fees and interest rate you can find.

Happy Thank You Credit Card Fools' Day!

Bruce Brammall is the author of Debt Man Walking (debtman.com.au) and principal adviser with Castellan Financial Consulting.

> Baby Boomers - Mark Bouris

YOUR personal habits will dictate what's most important to you in terms of credit card features. To keep it simple, you usually want a good combination of a low interest rate, a high interest-free period and low or no annual fee.

Generally, credit card users fit into one of two categories:

Person A uses a credit card for household and work-related expenses. They pay their balance in full every month and always pay during the interest-free period. If you're Person A, the most important features for you are a longer interest-free period (55 days or more) and a low (or no) annual fee.

Person B uses their credit card frequently and they often have to pay the balance off over several months. Without a credit card, they would have trouble managing their expenses. If you're Person B, what you really need is a no-frills low interest rate card, and generally you can find one with a rate of 10-13 per cent.

A lot of people are wooed by rewards, but make sure you know what you're getting into. If you spend $1000 or less on your card per month, chances are the card's annual fee is higher than the value of the rewards. If you're a Person B type, do not be swayed by rewards. Many of the better programs come with interest rates of 19 per cent or more, which means you'll likely pay much more in interest than you'll gain in rewards value.

Canstar released a report last month that compared 109 cards and 139 reward programs based on three levels of spending: $1000, $2000 and $5000 a month. It can be downloaded off their website. It's amazing how much you can save just by shopping around and finding the right fit.

Mark Bouris is executive chairman of wealth management and advice firm Yellow Brick Road.

> Retirees - Kerrin Falconer

RETIREES will recall an era before credit cards. It was a time when you had to get to the bank before close of business on Friday afternoons.

There were no ATMs. Bills were paid by cheque and when buying from a retail store you needed cash the cold, hard variety.

If you couldn't afford it, you generally couldn't get it. The extent of debt was usually a mortgage and maybe an overdraft if you owned a business.

More than 40 years later, hardly anyone pays cash for anything over $10 and credit card debt is a massive $48 billion. Cards that are well managed and kept on a short leash can be beneficial but for those who are prone to losing track of spending, due dates and payments, debt can accumulate faster than Cyprus can close its banks.

So the first thing to work out is if you should have a card at all. Not all credit cards are created equal, so if you have a card it should suit your own personal spending habits and financial situation, which means you need to do your homework.

Some come with annual fees, others with interest-free days, reward points and all have varying interest rates. Comparing features is like comparing private health insurance offerings as easy as flying to the moon.

If you pay off the total amount each month, then a card with a long interest-free period may be best. If you don't usually pay off the debt each month, a low interest rate card may work best.

Websites such as moneysmart.gov.au and ratecity.com.au have some valuable information and rate comparisons.

Kerrin Falconer is a finance writer with more than 15 years of financial planning experience.

View the original article here

Be sharp about your credit cards

Cutting credit card cost doesn't always require some scissors. Source: National Features

CUTTING up your credit card can seem a drastic way to solve a spending problem, particularly when you consider the convenience and reward points that a well-managed card can deliver.

Fortunately, there are ways to cut your credit card costs before grabbing the scissors.

MyBudget director Tammy May says it is vital to keep track of due dates, limits and payments to avoid getting stung. "Prioritise which credit card gets the biggest payment. The highest interest card should be paid off first," she says.

"Avoid cash advances because they attract much higher interest that can sometimes be up to 29 per cent.

"The biggest tip is to spend less than you earn."

May says every day she sees people running into credit card trouble, often because of a large unexpected expense.

Others use credit cards to fund their lifestyle and their income to make the minimum repayments. "Eventually the income is not enough to cover the minimum payments."

James Hutton, head of consumer cards at ANZ, says paying the balance in full each month is the ideal way to avoid interest, but simply making more than the minimum repayment can help.

"If you have multiple credit cards you should think about consolidating debts onto a no or low interest card," he says.

"Always make regular repayments and consider setting up a direct debit if you're worried you'll forget the repayment dates."

Savingsguide.com.au founder Alex Wilson says people can get trapped by not understanding the workings of a card's interest-free day period, which is effective "from the start of the bill cycle as opposed to the date of purchase".

"That leaves a lot of people vulnerable without realising it," he says.

Wilson says cutting up the credit card is common among people who realise they are not disciplined enough.

"The biggest trap is not to be pulled in by marketing gimmicks. It's often better just to go for a low rate that will save you money in the long run."

View the original article here

Visa to outlaw hefty credit card fees

Visa is the first company in Australia to ban excessive usage surcharges. Source: Herald Sun

HEFTY credit card surcharges could be on the way out after Visa became the first company to ban Australian retailers from slapping on the fees.

New rules come into force today, which Visa says it will use to restrict surcharges to as little as one per cent.

Among the biggest culprits accused of using surcharges as a revenue source are taxi companies, who place a 10 per cent surcharge on customers who pay with their credit card.

Airlines and large retailers with mrket power have also been accused by consumer group Choice of over-the-top fees.
However independent eftpos provider Tyro Payments says the major banks were also to blame, imposing unnecessary fees on struggling small retailers, who then pass the costs onto customers.

"The truth is many small businesses are being forced to fund the lucrative loyalty programs of the major banks, by absorbing these costs," Tyro spokesman Mr Jost Stollmann said in a statement.

If MasterCard, AMEX and Diners Club follow Visa's suit it would save Australian consumers an estimated $350 million a year based on spending on card transactions last year, Mr Stollmann said.

The new rules follow a Reserve Bank of Australia review and give credit card companies the power to force retailers to limit what they charge consumers to use credit and charge cards.

Tyro Payments said more than 36 per cent of Australian businesses, or 100,000 companies, impose some type of surcharge on a customer's bill, leaving 64 per cent or 200,000 - the majority - doing the right thing.

AMEX and Diners Club card transactions attract surcharges of 3-4 per cent and Visa and Mastercard about 2 per cent, according to the RBA, compared to the banks' service fees of only 0.85 per cent.

Businesses who refuse to comply with the lower charges face warnings, fines and possible termination under the legislation.

View the original article here

Visa to outlaw hefty credit card fees

Visa is the first company in Australia to ban excessive usage surcharges. Source: Herald Sun

HEFTY credit card surcharges could be on the way out after Visa became the first company to ban Australian retailers from slapping on the fees.

New rules come into force today, which Visa says it will use to restrict surcharges to as little as one per cent.

Among the biggest culprits accused of using surcharges as a revenue source are taxi companies, who place a 10 per cent surcharge on customers who pay with their credit card.

Airlines and large retailers with mrket power have also been accused by consumer group Choice of over-the-top fees.
However independent eftpos provider Tyro Payments says the major banks were also to blame, imposing unnecessary fees on struggling small retailers, who then pass the costs onto customers.

"The truth is many small businesses are being forced to fund the lucrative loyalty programs of the major banks, by absorbing these costs," Tyro spokesman Mr Jost Stollmann said in a statement.

If MasterCard, AMEX and Diners Club follow Visa's suit it would save Australian consumers an estimated $350 million a year based on spending on card transactions last year, Mr Stollmann said.

The new rules follow a Reserve Bank of Australia review and give credit card companies the power to force retailers to limit what they charge consumers to use credit and charge cards.

Tyro Payments said more than 36 per cent of Australian businesses, or 100,000 companies, impose some type of surcharge on a customer's bill, leaving 64 per cent or 200,000 - the majority - doing the right thing.

AMEX and Diners Club card transactions attract surcharges of 3-4 per cent and Visa and Mastercard about 2 per cent, according to the RBA, compared to the banks' service fees of only 0.85 per cent.

Businesses who refuse to comply with the lower charges face warnings, fines and possible termination under the legislation.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here