Handy tips to avoid international transaction fees when travelling or spending abroad

Every time you pay in a foreign currency, whether you're travelling, shopping online or running a business, you could be losing money without even realizing it. Hidden fees, poor exchange rates, and extra charges from banks and payment providers all add up, eating away at your hard earned money.

But here’s the good news; there are ways to avoid these unnecessary costs. In this guide, we’ll walk you through the common international transaction fees to watch out for, tips for how to avoid or minimize them, and smarter ways to spend internationally. And if you’re looking for options that let you pay ZERO transaction fees, we’ve got that covered too.

Understanding international transaction fees for travellers and businesses

When you make a payment overseas or in a foreign currency you may be charged an international transaction fee. This is a fee applied by banks, credit card providers and payment platforms when processing your transaction, often justified as covering the cost of the currency conversion or cross-border processing.

What that charge looks like and how much it costs depends on the bank or provider you used and the transaction type, and it’s not always immediately obvious. For each transaction you could be faced with one or more of these:

• A percentage of the transaction amount
• A fixed fee per transaction
• A mark-up on the exchange rate

Many Australian banks charge a percentage fee for foreign transactions, then add a fixed fee on top of that for ATM withdrawals.

Examples of international transaction fees:

Commonwealth Bank:

Taking one of Australia’s ‘Big Four’ banks as an example, here’s some of the Commonwealth Bank foreign transaction fees their customers are charged when travelling abroad.

It’s easy to see how these fees could add up over the course of a holiday or while conducting business abroad - even for a cash withdrawal worth $100 AUD, Commbank customers are looking at paying international fees of around $8.50!

NAB

NAB is one of those, charging 3.5% for international transactions with a $5 fee on top per ATM withdrawal.³

Australia Post:

Take the Australia Post Prepaid Travel Mastercard. They were offering a rate of 0.6057 USD when converting from AUD, at the same time that Wise was offering 0.6390.⁴ If you were exchange $1000 that’s a difference of over $30 just on the exchange rate.

International transaction fees can quickly add up, affecting both personal travel expenses and business costs when dealing with foreign transactions. These fees can make trips costlier and reduce business profits. Let us explore some effective strategies and tips that could help you make smart, cost-efficient decisions for your international financial activities.

Tips to avoid international transaction fees!

The reality is no one likes paying extra fees, especially when they can be avoided. Whether you’re travelling abroad or running a business with international connections, here’s some practical tips for how to avoid or minimise those pesky international transaction fees. After all, you want to be able to receive, send and spend money without losing out.

Using Wise as your travel card

Travel cards are handy, but depending on the provider you can face markups on the exchange rates, fees for reloading and more fees for currency conversions. Choosing the right travel card is key.

Using Wise as your travel card makes a lot of sense since there’s a small currency conversion fee, no transaction fees and no markup on the mid market rate (what we believe to be the ‘Real’ exchange rate). In addition, a Wise account supports 40+ different currencies, allowing you to convert money from AUD and spend, store or withdraw it as you like.

While Wise offers physical cards, you can also create up to 3 virtual cards which are great for travel so that you don’t have to worry about losing them. Since your Wise physical and virtual cards can be saved on your digital wallets so that they can be used to pay online for tours, airfares and hotels, as well as make contactless payments at restaurants, souvenir shops and for transportation.

ATM withdrawals

Withdrawing cash from an ATM overseas can become an expensive exercise without proper planning. Depending on your provider you can be charged for the withdrawal and the currency conversion; two fees for one action. Be mindful of how many withdrawals you may and consider whether cash is even necessary.

Something else to keep in mind when withdrawing cash abroad is that the ATM operator may charge you transaction fees for using it. A smart way around this is to do a quick search online and find out which ATMs in that country don’t charge foreign cards for using their machines.

For instance, solutions like the Wise card allow you to store funds in local currency and make payments rather than paying in your home currency, which can be quite expensive. What’s better is that the Wise card offers 2 free withdrawals per month to a total value of $350 AUD, after which there’ll be a super-low Wise card fee on each withdrawal.

Settle payments in the local currency

When paying for something abroad you might find yourself presented with two choices:

• Pay in the local currency with your card provider determining the rates and fees
• Pay in your home currency using a Dynamic Currency Conversion.

It could happen at the hotel during check out, while buying a nice souvenir to take home or when withdrawing cash from an ATM. While it might be tempting to pay in your home currency, the best choice is generally to pay in the local currency as it can help you save on the hidden costs and marked up rates that Dynamic Currency Conversions often involve.

This is where a foreign currency account can come in handy. Also known as multi-currency accounts, these can be used to store cash in the local currency of the country that you’re visiting. Buying a baguette or fougasse in France shouldn't cost more than it should!

Make larger purchases to maximize fee efficiency

If your payment provider or bank has flat rate or fixed fees, it can be more cost effective to make larger purchases in one transaction than multiple smaller transactions that each attract a fee.

While travelling one of the most common scenarios where this happens is ATM withdrawals. Many providers have a fixed withdrawal fee as part of their overseas withdrawal charges, so withdrawing a larger sum of cash and storing it somewhere secure rather than making multiple smaller withdrawals can be cheaper.

Cards with no foreign transaction fees

Lots of cards charge a transaction fee when making purchases in a foreign currency. However, there are some options like Wise, UBank, ME Bank, Revolut, and more that don't charge transaction fees when making international payments. This is where choosing the right provider for your travels can make a big difference to your bottom line.

For businesses who’ve got employees travelling in and out of the country this can be particularly beneficial, cutting down on costs every time they use their card for business expenses, their meal allowance or to pay for accommodation.

Skip foreign transaction fees on your next trip with Wise

Paying unnecessary fees when spending in foreign currency can quickly add up, costing yourself or your business more than it needs to. By understanding how these charges work and taking steps to avoid them, you can make your money go further.

Being able to store local currency is one of the best ways to combat international transaction fees. Solutions like Wise allow you to do just that, with the Wise Account supporting 40+ currency balances in a single account and having local account details available for 8+ currencies. Having this allows you to spend money like a local.

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