If you are thinking of travelling overseas this upcoming holiday season, then now is the time to start finalising your plans.
Peak travel season comes with peak pricing, so a little organisation can go long way towards helping you save on overseas travel costs. Hot-spot destinations like Japan, North America, Bali and Canada are notoriously expensive over the Christmas season. The lower level of the Aussie dollar makes this even more true for Australians.
But before you book anything, read our number one tip to save money on your next overseas holiday.
Pay for your hotel via an international money transfer
When booking overseas accommodation, especially online, you are typically only presented with one payment option - a credit card. But before you hand over your card details, don't be afraid to contact the hotel to find out if they will accept direct bank deposits as a form of payment. This is usually never offered in the first instance or hidden somewhere in the contract details.
If your hotel accepts direct international bank transfers this is one of the biggest ways you can help save on overseas travel costs. This is especially true if you use an online money transfer company to send funds to their bank account.
Why Direct Bank Transfers Are Better
Whenever you use your debit or credit card to pay for something in a foreign country your card issuer will charge you a foreign transaction fee. If your card carries these fees, and most do, expect to pay about 3.0% of the value of the transaction.
But that's not all. Then there is the currency conversion fee. That's the fee that is charged by your card issuer to convert your Australian dollars into the foreign currency you require to pay the hotel. These fees can range between 2.5% - 4.0% of the value of the transaction.
So, in the best-case scenario using your Australian bank card to cover an overseas hotel bill will cost you 5.5%... in the worst case, it could be as high as 7.0%.
Paying your hotel directly using an online money transfer company is an easy way to save on most of the charges you'd incur by using your foreign bank card.
Online money transfer companies will generally always offer more competitive exchange rates to convert your AUD to foreign currency. For example, FlashFX charges a flat margin of 1.5% to convert between currencies. Compare that to the 2.5% - 4.0% exchange rate fees charged by the card companies.
Even better, specialist foreign currency transfer companies tend to have much lower transaction fees than the banks. Some businesses, like FlashFX, don't even charge customers fees for their transfers.
An Example to Prove the Point
Let's use an example to see how much you can save by paying for your hotel via an international money transfer rather than your Australian credit card.
Your hotel bill for your upcoming trip to America is $2,000 USD. You have two options:
**Option 1: Pay for The Hotel with Your Credit Card **
Using the information about overseas card purchases we just discussed, let's go through the charges for this example.
$2,000 USD X 3.0% Foreign Transaction Fee = $60 USD
$2,000 USD X 3.5% Foreign Exchange Rate Fee = $70 USD
$60 USD + $70 USD = $130 USD
$130 USD = $177 AUD (using a current AUD/USD exchange rate of 0.7350)
So, using your credit card for your hotel bill is going to cost you nearly $200 AUD in fees and exchange rate charges. If your hotel bill is larger than $2,000 USD, this fee is only going to increase.
**Option 2: Pay for the Hotel via Direct Transfer with FlashFX **
FlashFX charges a flat 1.5% exchange rate fee for all international money transfers. They do not charge transaction fees.
$2,000 USD X 1.5% Exchange Rate Fee = $30 USD
$30 USD = $41 AUD (using a currency AUD/USD exchange rate of .7350)
In this example, you could save $136 AUD by using FlashFX to pay for your hotel bill instead of your Australian credit card!!
Rethink how you pay for overseas accommodation
While using your credit card may be a convenient way to pay for your overseas accommodation it is often the costliest. Because the fees are calculated as a percentage of the total amount, the bigger the bill the more money you will pay away in credit card fees. Remember, don't be afraid to ask the hotel if they will accept direct deposits - it could save you hundreds of dollars in fees!
FlashFX is an online money transfer company that wants to help you save on your next overseas holiday. We charge a flat 1.5% exchange rate fee and our transaction fees are ZERO.
Visit our website to see live exchange rates on our currency calculator. Sign-up is easy and account verification only takes a couple of minutes.
FlashFX. Helping you save on your next overseas holiday