Credit cards with no or low foreign transaction fees are designed to help you save money when you’re travelling overseas or shopping online with an international retailer. Most credit cards charge a fee for each international transaction you make (up to 4%), so choosing a card with the lowest fees possible could equate to savings of hundreds of dollars every year.
Use this guide to find out which credit cards are available and how to compare your options. We also go through different travel money expenses and how you can minimize them so that you get the most out of your money when you’re overseas or shopping online.
Compare the following key factors so you can find the low fee credit card that suits your needs.
- Currency conversion fees. While most credit cards charge a fee worth between 2–4% of each transaction made in international currency, a card with a low currency conversion fee waives helps you cut costs.
- Overseas ATM withdrawal fees. Getting cash out of an ATM overseas can also attract a fee of $2 or more. Choosing a card which doesn’t charge for international ATM withdrawals can allow you to avoid this charge.
- Cash advance fees. Even if you get a credit card that offers $0 ATM fees overseas, using it to withdraw cash means that you’ll be charged interest at the cash advance interest rate, which is higher than the purchase rate on most credit cards.
- Annual fees. Most credit cards charge an annual fee, which could be anywhere from $20-$400 a year. Ideally, the benefits you get from the card should outweigh the price of the annual fee.
- Purchase rates. If you’re using your card to make overseas purchases but won’t be paying back your balance in full each month, you’ll need to take the purchase rate into consideration. Cards with reward programmes and other benefits typically have a higher interest rate, but a low rate card will help you save on interest.
- Other travel benefits. Some cards offer additional travel benefits, such as complimentary travel insurance, airport lounge access or bonus Airpoints for your spending. Make sure you meet any requirements listed to take advantage of these perks, otherwise they won’t add to the value of the card.
Yes, in New Zealand there is one card that offers no international transaction fees when you shop online or overseas. The Flight Centre Mastercard is appealing for frequent travellers for this reason as well as the ability to earn Flight Centre Rewards on purchases and long term finance deals at a range of retailers.
How much can I save with a 0% foreign fee card?
To give you an idea of the potential savings a credit card with 0% foreign fees offers, let’s say you spend $5,000 while you’re travelling overseas. If you had a card that charged a 2-3% fee on each foreign transaction, you’d pay around $100-$150 more for your spending.
A card with 0% foreign transaction fees would add $0 to your account balance. As well as saving you money on your spending, this would also cut down on interest charges and could help you pay off your balance faster.
If you’re having trouble choosing a card, check out our recommendations based on features that might be important to you.
No transaction fees: Flight Centre Mastercard
The Flight Centre Mastercard is the only credit card currently in New Zealand that doesn’t have foreign currency conversion fees. It does have a higher purchase rate and cash advance rate, but comes with benefits such as:
- Long term finance deals at a range of retailers and healthcare providers.
- Earn reward credit as you shop, dine out and get petrol, plus double points when you use your card at Flight Centre. You can redeem your reward credit for flights, accommodation and tour packages at Flight Centre.
Lowest fee: Credit cards from Westpac
Westpac has the lowest currency conversion fee of 1.4% for its credit cards. The next lowest is ANZ, with a fee of 1.8%.
Westpac issues Mastercard rather than Visa and offers Airpoints, Platinum, hotpoints, low rate and business cards.
When you make a purchase or transaction in a foreign currency using a New Zealand credit card, the total amount needs to be converted into NZ Dollars. The conversion process varies based on factors including the card provider and whether it’s an American Express, Mastercard or Visa product.
Currency conversion exchange rates are updated on a daily basis. Please note that most banks use an exchange rate that’s less competitive than the standard rate.
How will an exchange rate appear on my credit card statement?
Say you were on a trip to New York and used your New Zealand credit card to pay for a pair of shoes worth US$100. If the exchange rate between US dollars and New Zealand dollars was US$0.74 per NZ$1, then this transaction would be converted to NZ$135.14. So, instead of your credit card statement showing a transaction of US$100, it would show one of NZ$135.14.
What exchange rate will I receive?
Depending on the card you’re using, you will receive the exchange rate set by Mastercard, Visa or American Express. Cards might convert the foreign currency amount to USD before converting it to NZD (unless your transaction is already in USD) at the daily exchange rate, or convert your foreign currency amount directly to NZD at the daily exchange rate.
Foreign currency exchange calculators
- Mastercard. You can compare the daily exchange rate using Mastercard’s currency conversion calculator. Simply select your settlement date, base currency (NZD) and Mastercard will show you the daily exchange rates.
- Visa. With Visa’s currency converter, you can select the currency of your card and the currency of your transaction, add any applicable bank fee and check the exchange rate for different dates.
What is Dynamic Currency Conversion?
Dynamic Currency Conversion (DCC) allows you to pay directly with NZ dollars at an overseas merchant, instead of converting the payment to a foreign currency. If you have travelled overseas, you may have been offered the choice of paying in the local currency or in NZ Dollars. By choosing to pay directly with New Zealand Dollars you will attract the DCC fee.
- How much is the DCC? The DCC ranges from 3-10%, so it’s sometimes more affordable to pay in the local currency instead.
- Is it a good idea to use DCC overseas? If the NZ Dollar has improved significantly against the foreign currency, you may still save money after incurring the DCC fee.
It’s often useful to have several ways to access money when you’re overseas. As well as a credit card, consider some of these other travel money products:
- Foreign cash. Having cash on hand when you’re travelling overseas can help you pay for any purchases where cards are not accepted (such as transport tickets). Using cash is also an easy way to avoid foreign transaction fees.
- Debit card. Your everyday Mastercard or Visa debit card can also be used overseas, wherever these brands are accepted. Just keep in mind that currency conversion fees may also apply for a debit card and be aware of the potential complications if your account’s security is compromised while you’re away.
- Prepaid travel money cards. A prepaid travel card allows you to load and spend funds in multiple currencies to use online or instore just like a credit card. This means you can spend your own cash and avoid currency conversion fees when spending in a supported currency. One card available to Kiwis is the Cash Passport by Mastercard, which you can order online before you travel.
Payment methods to avoid for foreign currency transactions
- PayPal. While PayPal offers a convenient way to send and receive money, it does have higher transaction fees. These are higher than any bank fees and can be as much as 4.5% of your transaction value. One thing to watch out for is that PayPal doesn’t list it’s fees separately like you see on your credit card or bank account statement. Instead, you’ll just get one total for the transaction.
- Prezzy Cards. You can use a Prezzy Card just like a credit card, only the money has been preloaded. If you have one of these cards and you use it for an overseas transaction, you’ll be charged 3.5%.
In most cases, fees of some sort are unavoidable with foreign currency transactions. However, there are some ways that you can save:
- Just because a bank has a low transaction fee for its credit card, doesn’t mean the debit card will be the same. Some banks use different rates for each card type so make sure to check with your bank and use the card with the lowest rate.
- You can save on PayPal transaction fees by making sure that you check ‘convert with card issuing bank’. Doing this will mean paying the fees that your bank charges rather than PayPal’s own higher transaction fees.
- If you use multiple currencies, a TransferWise account is one option to consider. TransferWise is like having bank accounts in multiple currencies with the ability to get paid using local bank account numbers. While not a credit card, the debit card that comes with the account has low foreign transaction fees.
If you’re a frequent traveller or regularly shop online with international retailers, a credit card that has 0% foreign transaction fees could help you keep your costs to a minimum. Just remember to compare a range of options and look at the other features available so that you can find a credit card that really suits your needs.
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