How to make credit and debit cards work for you

For overseas travellers, one of the biggest con jobs is when the merchant suggests you pay the bill in Australian dollars instead of local currency. This enables them to load the exchange rate.
For overseas travellers, one of the biggest con jobs is when the merchant suggests you pay the bill in Australian dollars instead of local currency. This enables them to load the exchange rate.

Recently a reader highlighted a problem that is affecting many retirees. She and her partner have long had a credit card with the principal card in his name, and hers held as a supplementary.

She had read my advice that both partners have a card in separate names, because if either the primary card or the supplementary card is lost or stolen, both cards are cancelled. This could be particularly challenging if you are travelling overseas.

Her problem was that no bank would give her a credit card. They were a retired couple living on their superannuation, but their taxable income was zero. For credit assessment purposes they were unemployed with no taxable income.

The solution is a debit card. No credit application is required – the card simply allows you to access the funds you hold in the bank account that is attached to the card. In my experience the perfect card is an ING Direct Orange Everyday account, which I have been using for years. Their Visa debit card has no fees, and provided you deposit at least $1000 every month, all withdrawals from ATMs in Australia, and throughout the world, are free of fees.

For years my favourite overseas credit card has been the 28° MasterCard. It has no annual fees, no commission charges, and the exchange rate is extremely competitive. However, they do charge $0.95 every time you make a payment on the card, and they also charge the greater of $4 or 3% of the amount withdrawn, if you take cash from an overseas ATM.

I have just returned from four weeks overseas, and to achieve a valid comparison, I used both my 28° MasterCard and my ING card. There is really nothing between them on the exchange rate, but the ING card has a brilliant app that means you can keep track of your spending, and know within a minute or so the Australian equivalent you have been charged when you make a transaction.

It’s like carrying around a bag of cash. The balance shows in real time on the app on your phone, and if you need a quick 50 Euro you just go to the nearest ATM and withdraw it on the spot with no fees.

For overseas travellers, one of the biggest con jobs is when the merchant suggests you pay the bill in Australian dollars instead of local currency. This enables them to load the exchange rate. Last weekend we were checking out of our hotel in Hong Kong. They gave us a choice of HK$11564 or AUD$2300.50.

I did a quick check on the rate using the XE app on iPhone and it told me the wholesale rate was $2082.85. I then chose to pay the bill in HK dollars using my ING card: within seconds the debit showed up as just  AUD$2081.90 – quickest $219 I have ever made.

I was amazed to discover all the hidden fees that travellers suffer. Because ING refund all commissions on this account, it first discloses the commission that has been charged and then shows the credit when ING refund it. There are numerous fees and rebates on my ING statement, but they all appear to be around 3% of the transaction. For example, on a transaction that converted as AUD$276 the fee rebate was $6.91.

But I did get caught. My Uber account is linked to my American Express card, and I forgot to change it to my ING card when we left Australia. It was not until I received my American Express statement that I discovered Amex were charging around 5.5% commission on all those tiny Uber transactions.

So I am a convert. My ING card has become one of my favourite travel tools. This card doesn’t cost money, it saves it.

  • Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. noel@noelwhittaker.com.au