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Top 8 Tips for Saving Money on International Bank Fees

Fri, 05/05/2017 - 12:29

Saving Money on International Bank Fees

When you're travelling overseas, using your regular debit or credit bank card to manage your travel money often seems like the easiest option. But all too often, this convenience comes at a price. If you're happy to pay that price, well, then you're good to go. But many people are unaware of the international bank fees they may be charged when using their bank cards overseas.

If you're one of these people, but would rather know what fees you might be charged by your bank when travelling (and how to try avoid them), then read on!

What Fees Are Charged?

There are a number of different charges issued by the New Zealand  banks for using your card overseas, depending on the type of card you are using and the type of transaction. You can read all of the details in our blog post "The Truth about using your Bank Card Overseas", but, as a quick summary, you can expect the following fees: 

Currency conversion fee

Charged when you use your debit or credit card to pay for something in a currency foreign to the default currency of your card, because your bank has to convert New Zealand dollars into the foreign currency you require. It's usually around 2.5% of the NZD transaction value

Overseas ATM fee

Charged by your bank for using an ATM outside of their network, overseas

Local ATM Owner's fee

Charged by the owner of the overseas ATM for using their machine for an international transaction. You may sometimes be charged both of these ATM fees for one transaction

Cash Advance Fee

If you withdraw money from your credit card your bank will charge you this fee, on top of the above ATM fees. This is because you are essentially borrowing money from the bank. AND, you will also be charged interest on top of this fee and its usually super high for a cash advance

Dynamic Currency Conversion (DCC) fee

Sometimes when you use your own bank card to pay for things overseas, the merchant gives you the option to pay in the local currency or in your own currency (NZD). It seems logical to select to pay in NZD - that way you won't be converting money into a foreign currency and can avoid the currency conversion fee. Unfortunately, logic doesn't make it correct. It's actually the opposite case here - you still pay the currency conversion fee no matter which option you choose, but if you choose to pay in NZD instead of the local currency, the merchant charges a DCC fee to cover the cost of using a third party to offer you this option

These fees may not seem like a lot at the time, but if you use your card often, the fees can really add up, and it could land up costing you hundreds, or maybe even thousands, of extra dollars on top of your holiday costs.

So, if you could avoid these fees, wouldn't you want to?

Top 8 Tips to Avoid International Bank Fees

There are a few ways you can avoid these fees and keep that money in your pocket/bank account instead of giving it to the bank, and these are the top 8 tips we have to share with you:

1. Don't use your bank cards.

Probably the easiest way to avoid these bank fees is to just use other travel money options, like cash or a prepaid travel money card. Or you can do some research and find a debit or credit card that has no or low foreign transaction fees or ATM fees. BUT these may come with other fees that are higher, so make sure you compare all of the details! 

2. Don't withdraw money using your credit card.

That's the easiest way to avoid the hefty cash advance fee you will be charged if you do. Alternatively, you can load money onto your credit card so that your account has a positive balance. Then when you withdraw cash it's your own money versus the bank's money, or you can withdraw cash using your debit card.

3. Use an ATM connected to your bank

Some banks are part of a Global ATM Alliance, and if you use an ATM overseas that is connected to your bank's partnership Alliance, you may find the ATM fee waived or reduced for you. For example, Westpac New Zealand is part of the Global ATM Alliance^, so you can avoid the International ATM  fee by using an ATM connected to Westpac Australia, Barclays Bank (UK) or Bank of America (USA), to name a few.

4. Find ATMs that don't charge a local owners fees

In Europe, many of the ATMs don't charge that local operator fee, so then you'll just have the fee from your own bank (unless you can avoid it by doing the above).

5. Always choose to pay in the local currency

If you're given the option, always opt to pay in the local currency rather than in NZD while overseas. That is the only way to avoid the DCC fee.

6. Minimise your ATM withdrawals

If you do need to withdraw money, you can minimise the fees you will be charged by withdrawing the maximum amount the ATM will let you take out. Just make sure to keep any surplus cash safe after your withdrawal until you need it.

7. Use ATMs attached to banks

If you use standalone ATMs, like those in hostels, hotels, convenience stores or airports, you are likely to be charged a much higher ATM fee than you would if you used an ATM attached to a bank. That's because you are essentially paying for the convenience of that ATM location.

8. If you use foreign cash, be smart about where you exchange it

There's no point opting to get foreign cash instead of using your bank card (to avoid fees), if you land up paying fees to purchase your foreign cash. Instead, look for a foreign exchange company that doesn't charge fees for your FX transaction (like us), and avoid exchanging your money at the airport, where you are likely to be charged a fee or commission for your transaction. But, with a little bit of preplanning and cost comparison, you can get a great deal on your foreign exchange before you go.


As you can see, with just a little bit of thought, planning and research, there are ways to avoid (or minimise) paying international bank fees when you're travelling - after all, you didn't save all of that holiday money just to give it right back to the bank did you?

If you'd like some help picking the right travel money options for your holiday, or need to exchange your cash before you go, our team of FXperts are on hand to help you out. Just visit your nearest Travel Money NZ store and let us do the hard work for you! 


^Westpac is part of the Global ATM Alliance network. Further information is available on their website.

This blog is provided for information only and does not take into consideration your objectives, financial situation or needs.  You should consider whether the information and suggestions contained in any blog entry are appropriate for you, having regard to your own objectives, financial situation and needs.  While we take reasonable care in providing the blog, we give no warranties or representations that it is complete or accurate, or is appropriate for you.  We are not liable for any loss caused, whether due to negligence or otherwise, arising from use of, or reliance on, the information and/or suggestions contained in this blog.