Beware the sting when travelling on your credit card

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For convenience when travelling, the credit or debit card really can be a fantastic piece of plastic for quick, secure and convenient access to cash overseas. Once the credit card was also the most cost-effective way to shop and access cash on foreign jaunts. Not anymore.

The fees and charges on overseas card use have leapt in recent years making the credit card more expensive than travellers' cheques for access to spending money. Cash advances are never cheap but taking one when overseas will incur a fee of $4 or up to 1.5 per cent of the amount withdrawn each time. Your bank will then start charging interest on the advance amount immediately, irrespective of any interest-free period. Then on top of all that there is also foreign currency conversion fee of 1 to 1.5 per cent.

While a cheaper option for cash is the debit card, charges can be steep here too, depending on the bank. Visa debit and ATM cards offer a convenient, interest-free way to access your own savings accounts for cash when travelling. But ATM withdrawal and foreign exchange fees still apply. Overseas withdrawal fees range from $1.25 to $4 per transaction although some gold cards waive the fee.

So it's usually best to use your credit card for purchases but not for accessing cash from the hole in the wall. While the cash advance from an overseas ATM might be a good last resort in an emergency, travellers' cheques are generally the way to go. Fees on buying travellers cheques are generally 1.1 to 1.5 per cent. There is also a retail margin built into the exchange rate. There is also a wide variation in charges when cashing them at the other end. Amex cheques can be cashed free at AMEX offices or 87,000 partner bank outlets but try cashing a cheque at a hotel, airport or tourist haunt and prepare for a shock.

The charges you'll face on overseas card transactions:

• Cash advance: $4/1.5% fee, plus immediate interest
• Foreign exchange conversion fee on purchases & cash w/drawals: 1-1.5%
• Exchange rate retail margin: up to 5%
• OS ATM withdrawal: 0-$5
• OS emergency card replacement: $15-$300

Remember too the standard penalty charges that might take travellers by surprise:

• Exceeding credit limit - up to $35
• Late payment - up to $35