If you're lucky enough to be jetting overseas this summer, you'll also have to deal with one of the more pesky parts of a trip abroad: changing currencies.
Accessing your money overseas involves wading through a sea of fees and other costs, and finding out how much you are being charged is complex, which is just how the banks like it.
The 14 per cent slump in the Aussie dollar this year will make this more painful. But there's only so much you can do about that – even the currency market experts have a pretty miserable track record of predicting the exchange rate with any precision.
So, here are a few ways to limit the hit from the fees charged by banks when spending overseas.
One is to put the credit card away when you're taking money out from an ATM.
Credit cards are handy overseas because they are widely accepted and more secure than carrying wads of cash. But using them to withdraw money is hugely expensive.
As well as the currency conversion fee of about 3 per cent and an ATM withdrawal fee, which most debit cards also charge, taking out money with a credit card typically comes with additional cash advance fee of another 3 per cent or $5, whatever is greater.
Plus the bank will start charging interest on the money straight away.
So if you're taking out cash from an ATM, using your savings will nearly always be cheaper than credit.
For purchases, however, some credit cards can offer a better deal.
It all depends on the currency conversion fee – these are typically between 2 per cent and 3.5 per cent of the purchase price.
Research house Canstar reports that a small number of cards have no currency conversion fee, which means you get an exchange rate that's close to the spot rate quoted on the nightly news, rather than the less generous one most banks offer.
Just make sure you don't pay interest on the purchase, as that will quickly wipe out any savings from a better exchange rate.
If you want to keep to a strict budget or lock in an exchange rate, a pre-paid travel card can also make sense.
There's no currency conversion fee when you make a withdrawal with these, because the exchange rate has already been locked in. But the exchange rates offered are typically on the low side, and they come with even more fees, including one for buying the card, another for reloading it, using it at an ATM overseas, and even a monthly "inactivity" fee if you don't use the card once back home.
For larger transfers to a bank account overseas, you may find that a non-bank is cheaper.
Providers such as World First or OzForex tend to provide better rates, especially if you are changing a larger amount, and are seen as "disrupting" a lucrative business for banks. Indeed, OzForex has been such an effective disruptor that it last month received a takeover bid from Western Union.
There's no foolproof way to cut the cost of changing money overseas, but there are ways to limit the pain.
