Australia's Billion-Dollar Holiday Money Sting

Online, November 30, 2011 (Newswire.com) - Australian travellers are being charged $1.4 billion a year for the privilege of spending their money overseas(i), with foreign currency fees and other travel money charges adding hundreds of dollars to the cost of the average overseas holiday.

These findings come from independent finance comparison website Mozo, which today launched Australia's first travel money comparison service to help travellers find the cheapest holiday money options for their needs.

Australians are some of the world's biggest overseas holiday spenders, taking 7.1 million overseas trips in 2010 and splashing out an average $5,000 per trip. (ii)Mozo's number crunchers estimate that spending $5,000 overseas would typically incur almost $200 in foreign currency fees, commissions and other charges(iii).

Mozo.com.au managing director, Rohan Gamble, said, "Our love of overseas travel is creating a lucrative business for the banks and travel money operators, who are slugging Aussie travellers with a confusing array of fees for spending money overseas.

"Our research shows that travel money charges are poorly communicated by the industry and not well understood by the average Australian. It's not uncommon for banks to charge multiple layers of fees and commissions on a single overseas transaction.

"As a result, many travellers are paying through the nose for the privilege of spending their money overseas. Depending on the travel money option and provider they choose, Australians can overpay by as much as $315 in fees when spending $5,000 abroad"(iv).

A recent survey of Australian travellers conducted by Mozo(v) found that a third of holidaymakers were unaware of foreign currency commissions. 20 per cent were unaware of foreign cash withdrawal fees, and a further 20 per cent were unaware of cash advance charges.

30 per cent of holidaymakers said they had received a post-holiday credit card bill or bank statement containing unexplained fees or charges relating to overseas transactions.

Mozo's new travel money comparison service lets travellers compare today's foreign exchange rates and fees from the major currency providers, check the charges involved in using their debit and credit cards overseas and find the best pre-paid travel card for their needs.

Australians can now compare travel money options and cut the cost of their overseas holiday by visiting mozo.com.au/travel-money.

How to cut the cost of your travel money

1. Shop around for the best foreign currency rates
Pre-ordering your foreign currency and collecting it from your nominated bank branch or foreign exchange outlet usually results in the best rates. Don't leave it too late and exchange your cash at the airport as the rates and commissions are some of the worst around.

2. Beware 'commission free' foreign currency
"No commission" doesn't always mean no extra cost to you, as most providers build a profit margin into their buy and sell rates which is separate to any advertised commission. Some have higher margins than others, so it pays to compare before you exchange.

3. Don't get stung by card fees
Some credit and debit cards sting you with big overseas transaction fees and miserable foreign exchange rates. If you like to use a credit or debit card as your main form of payment when travelling, get a card that has no foreign exchange fees and no overseas ATM withdrawal fees such as the 28 Degrees MasterCard from GE Money or the Citibank Plus Visa Debit.

4. Consider pre-paid travel cards
'Top up' travel money cards which can be pre-loaded with your chosen currency are becoming increasingly popular with travellers looking for a convenient and secure alternative to cash. Be sure to check exchange rates when comparing prepaid cards and watch out for additional fees for things like recovering your cash post-holiday.

5. Don't tap your plastic for cash if you run out
Getting a cash advance using your credit card at an overseas ATM is hands down the most expensive way to obtain cash while on holiday. You'll incur an overseas cash advance fee, a foreign exchange fee and interest on your cash advance from day one, at a very hefty rate. A handful of credit cards will let you put the card into credit before you leave and make fee-free withdrawals overseas, but be sure to check your card allows this before considering this strategy.

For information or interviews please contact:
Kirsty Lamont, Mozo Marketing Director
P (02) 9037 4372 / M 0400 411 148

About Mozo.com.au
Mozo is Australia's leading online finance comparison and reviews service. Our independent database covers over 150 banking, insurance and investment providers, and our award-winning comparison tools help more than 250,000 Australians find a better banking or insurance deal each month. Mozo powers the 'Compare, Ditch & Switch' service for Choice and has partnerships with some of Australia's largest online publishers, including Fairfax Digital and Telstra Bigpond.

(i) Calculation based on 7.1 million trips and $195 in foreign currency fees, commissions and other charges per trip.
(ii) Tourism Research Australia, "State of the Industry 2011", October 2011. Average Australian spends $5,183 per overseas trip
(iii) Based on an average total spend per trip of $5,000. Assumed spend of $3,000 on a typical credit card and 10 ATM withdrawals totalling $2,000 using a typical debit card. ATM operator fees have been excluded from this analysis
(iv) Calculation based on the difference between the most cost effective and the most expensive method of spending money overseas. Analysis completed using exchange rates and fees as at 18 November 2011 and a per trip spend as per footnote 3.
(v) Mozo conducted an online survey of 500 Australian holidaymakers in November 2011.