Don’t Get Ripped Off With Foreign Currency

Don’t Get Ripped Off With Foreign Currency

Mixed currency
Travelling means dealing with unfamiliar currencies, and if you’re not careful you can spend a lot more than you expect because of the relative differences in value. Here’s some tips to ensure you don’t end up blowing your budget.

Picture by Paul Maguire

Getting foreign currency is a lot more straightforward than it used to be, especially in the age of credit cards and ATMs. If you run out of cash while overseas, it’s easy enough to hit the nearest ATM — though you’ll pay a pretty hefty service fee for doing so. The exchange rate on credit cards often beats anything you can get for actual cash, making them a good choice for higher-value purchases.

However you source your money, what hasn’t changed is the need to keep track of how you spend, a task that can often get neglected in the excitement of travel. Here’s some of the tips I’ve personally found useful during my global travels.

Constantly remind yourself: things are different

Once you’re immersed in a foreign country, it’s easy to forget to make a mental translation of the costs. Remind yourself than your £2 cup of coffee is costing $4.00 — not a rip-off, but not the bargain your Aussie-dollar-habituated brain might lazily assume otherwise.

It’s also worth remembering that straightforward price translation doesn’t always work — goods and services can cost hugely different amounts even when you factor in the conversion, and sometimes you have to grin and bear it. Eating out in South-East Asia sounds ridiculously cheap to Australians; making mobile phone calls in Africa appears to be a total rip-off; your cheap US meal is a rort once you tip the surly wait staff. Accept that there’ll be variations — but if something seems too expensive, then hold off on the spending if you can.

Use your phone for conversions

Making those mental calculations can be tricky, but given that you’re likely to be travelling with your mobile phone, it’s also unnecessary. While you can get hold of plenty of smart phone applications specifically for currency conversion, in practice a calculator is just about as helpful.

If you’re worried about your phone being stolen (a reasonable fear in some highly-trafficked cities), then head to the nearest $2 shop before you go and buy yourself a cheap calculator. No drama if it gets lost, and it will do the job just as well.

Simplify the maths with ratios

It’s easy to keep track of costs if where you’re visiting has close to a 1:1 conversion (hello Canada!), or if it’s a simple conversion (like the UK, where £1 roughly equates to $2AU as I write this). But what if you’re dealing with something less pleasant, like the Euro (1 Euro is worth about $1.75).

That doesn’t lend itself to easy mental calculations for most of us. Aside from using your phone or calculator, one good strategy (as suggested in this article) is to perform a series of simpler calculations. In this case, multiplying the Euro price by 7 and then dividing by 4 gets you the right result. The super-lazy approach is simply double the price — an overestimate, but one that will stop you going shopping-crazy.

Don’t waste too much time chasing exchange rates

If you’ve planned a long-term trip, then it’s easy to get caught up in the drama of exchange rates. Should I change some money now, or will there be a better deal closer to when I depart? As with hotel booking, it’s painfully easy to overthink this. Unless you’re a currency professional, it’s generally sensible to do your exchange at your local bank or the like in the week before you depart. (Avoid doing it at the airport, as the rates are rarely as good.)

Exchange first, set a budget and stick to it

If all that maths stresses you too much, take a simpler approach. Book and pay for all the main elements of your holiday (transit and accommodation) in advance. Work out how much you can afford to spend per day in Australian dollars, convert that, and you’ve got a daily budget.

How do you organise your currency needs before going on holiday, and then keep track of your spending when you hit the road? Share your ideas in the comments.

Lifehacker’s weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


  • My tip is to not sweat the details, it doesn’t matter if the US$ rate today is 84C or 82C – works out the approx rate – in this case divide 1 (as in Aussie Dollar) by 83 (as in US cents) and you will get (approx) 1.2 – if you add a couple of cent it is 1.25 Then all you do is add a quarter of the cost to the srticle and you have a rough idea of the ‘real’ cost

  • The friends I met up with in Tokyo earlier this month toted all their credit card purchases on their HTC Android smartphone. That gave them a quick overview of how much they spent on their credit cards. Cash was left to low cost items such as food (excluding restaurants) and drinks, small consumable items (like asprin, toothbrushes, etc.) and public transport.

    One thing I think people grizzle about is how expensive things are, and then start cost cutting. There’s nothing wrong with managing expenses, but when it becomes obsessive, you can really ruin your trip (business or recreation.) I use the give/take method. For example, I’ll eat anything, so I tend to eat at cheap places or fast food joints. This gives me money to do other things, like go to museums, take a trip out of the city, etc, or do a bit of extra shopping. If I want my trip to be a culinary experience, perhaps I’ll skimp a little on accommodation so I can afford the fancy restaurants.

  • One more thing to remember is to carefully read up on your credit card and ATM card fees in regards to overseas purchases and withdrawals. In most cases each credit card purchase will result in a fee and/or a % of the purchase, on every purchase. American Express is notoriously bad with fees when overseas. Usually you have to go for the expensive platinum cards to avoid these fees.

  • Using credit cards overseas will probably cost around 3% of the purchase amount (plus a fixed dollar fee if withdrawing cash at ATMs). The 3% is applied to the Visa/MasterCard/Amex conversion, which is usually done at very good wholesale exchange rates. As one of the comments points out above, some credit cards have lower fees (Wizard is zero, and the Earth card only charges 1%).

    Getting hard currency before you leave usually means a poorer (retail) exchange rate and a fixed fee as well. Be careful with “commission free” deals as the commission is usually just built into the exchange rate (which is never as good as the Visa/MasterCard/Amex conversion).

    Also be wary of ‘pre-loaded’ currency cards like the Travelex Cash Passport or ANZ Travel Money. There are fees for everything (even for not using the card!). Unless you think the exchange rate is gonna plummet, I would stick to credit/debit/eftpos.

  • some great tips there.

    I always rely on credit and debit cards whenever possible — just bear in mind that VISA/AMEX work pretty much everywhere, mastercard is difficult and even with an international branch of your own bank, you may have trouble getting a cash withdrawal.

    if you use your cards for purchases, you don’t need to carry that cash, which is safer and easier. just keep some other money in a safe place on your person ‘just in case’. then keep a small amount of local currency in your wallet for places that don’t accept cards.

    Australia seems unique in terms of merchants charging card usage fees on purchases — consumers get a bit screwed here.

    another thing to consider is a gold / platinum card — if you’re going on a long or expensive trip, the added cost $100-250 (for a year of use) is often worth it, given the free travel insurance you get if you buy your tickets with it (you could easily pay far more for insurance through your travel agent), plus you get increased purchase insurance.

  • Not all of the preloaded cards are bad. CBA Travel Money charges a fixed fee for ATM withdrawals, about AU$3-4 and you don’t pay anything for standard mastercard purchases. Having your card preloaded means knowing exactly what your budget will be.

  • The Travelex Cash Passport is a complete rip-off. Aside from the fees (from Travelex AND the ATM owner), not that many machines will actually accept them. In fact when I was travelling, even Travelex machines wouldn’t accept them. I couldn’t find a single machine or outlet at Heathrow that would accept them.

  • I agree with the first comment. The Wizard Clear Advantage Mastercard charges no international transaction fees and gives a good exchange rate. If you put the card into debit before you leave you can use on on any ATM that accepts mastercard and take cash advances with absolutely no fees (or use internet banking to pay it off as you travel so you dont incur interest on cash advances). I have used in Europe and Japan and saved heaps in fees when compared with the pre-loaded travel cards e.g. Commbank and Travelex.

  • I have just returned from a trip to Asia and used Comm Bank Travel Money Card for cash withdrawals, and their Gold Mastercard for purchases. Very convenient but what a rip-off, Can’t believe the costs and charges they levied. Looking elswhere.

  • You got me PAPPY … i was about to get a comm/bank travel money card ..they told me today 6th jan 10 that Atm withdrawals instantly convert my money in my account to the currency required at no charge unlike other ozi banks which charge between 1.7 to 2.9 percent for each conversion …and some charge a fee on top .
    i was also told each ATM withdrawal has a $ 2.20 au charge (most countries) and is widely accepted around the world.
    this is in stark contrast to what other ozi banks charge …for most it’s around $ 5.00 plus per transaction.
    Anyway i would be interested to know why you think it’s a rip off.
    So if anyone knows of a better deal than that ( travel money card ) please let me know so i can pass it on to others …so the banks get screwed not us.

  • I have been doing some legwork for a trip later in the year.
    ANZ Travel Money Card – $11 to purchase, only holds a single currency
    CBA Travel Money Card – superficially similar to ANZ – BUT am told – purchase card for $15
    I can load the card with Aussie dollars (1% relaod charge) – and when the exchange rate is right switch without charge to hold the USD and $Canada (up to 6 currencies) on the same card (ANZ only lets you carry one currency – although they have slightly better exchange rates).
    Big thing to watch whether it is these cards or Mastercard or VISA is what exchange rate they are using which always seems to be a 2-3% margin to the spot market, ie spot market today about AUD$1=US$0.92 but the quoted rates are about US$0.89 or going back to AUD US$0.95 buys AUD$1

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