What’s the best way to spend money in Australia?

by , Money Researcher Money 26 August 2013
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You’ve booked your flights and accommodation, packed your bags to the brim and got your passport. All you need to do now is sort out your spending money – but what’s the best way to spend your money abroad?

Map of Australia with flag and currency

When it comes to currency for your holiday, trip, or break abroad, it is often hard to think beyond holding hard cash in your hand.

The traditional method is to buy your travel money on the high street. However, you might not necessarily get the best deal this way.

So you may prefer to order your currency online – a method proving to be increasingly popular among organised holidaymakers thanks to the competitive exchange rates on offer. However, foreign exchange is not a regulated service so there is no protection for your money if the online currency provider goes bust, meaning you might not get your money back.

Big trip down under

But depending on the trip and how long you are going for, carrying large amounts of cash on your person might not be a good idea, especially if the total is more than would be covered under your travel insurance policy if it was lost or stolen. That is something one Which? member is concerned about as they prepare to go to Australia. They said:

‘My wife and I are going to Australia for four weeks. I have no idea how much money to take as we will probably be flying internally a couple of times, and will need to pay for accommodation etc. I have a debit card but no credit card, and I don’t really fancy taking large amounts of cash, either in sterling or Aussie dollars. What is the best way to take the money?’

So, what would you suggest is the best thing to do? Let us know your thoughts below, and soon we’ll tell you what we’d do as well.


Add your comments


David Hannay

Just been this Summer for 5 weeks. Debit card was best – Barclays have a deal with a partner bank and Nationwide have low charges for withdrawals. Took dollar travellers cheques just in case and never used them (free refund with some prioviders). Australia is as (or better) well provided with cash machines as the UK. Just make sure you have several cards spread around the members of your party, travel insurance and tell your bank that you’ll be using it there. Particularly important if using Amex as they block ‘suspicious’ transactions. Took a small amount of AU dollars for taxis etc on arrival.



Barclays’ arrangement with Westpac allows you only to avoid the £1.50 cash withdrawal fee. You still pay a hefty 3% “Non-Sterling Transaction Fee” on both purchases and cash withdrawals; see http://www.barclays.co.uk/Helpsupport/Usingcashmachinesabroad/P1242558955276


Patricia Hanson

As I have family in Australia and now visit for around 8-9 weeks at a time, I have set up a bank account in Australia – this covers my costs while I am there and enables me to give money presents to family members when I am not. I use a currency exchange company to save on the banks high charges and have an Australian debit card, so reducing the cost of transactions on my UK card. I don’t have to pay in a regular monthly amount, just top up as and when.

This won’t work for people taking a one off holiday, but there must be quite a lot of people who go to see family regularly.



For spending in countries where I don’t have a local bank account, I use a combination of Halifax Clarity MasterCard and Santander Zero MasterCard, both credit cards. I gave up using Visa cards for foreign transactions several years ago because of Visa’s 1% charge for non-European transactions. Both cards give MasterCard’s rate with no fees added. MasterCard’s rate is close to the interbank rate, and is often better than the interbank rate if MasterCard’s net flows on a particular day are in the opposite direction of your own expenditure. Neither card charges for cash withdrawals, but they do charge interest from the date of the cash withdrawal so you need to pay off any cash withdrawals, e.g. via a mobile banking app, on the day of the withdrawal to avoid a few pence in interest charges.



Do not change cash between currencies; instead use cards for purchases and cash withdrawals. An electronic form of payment is inherently cheaper than changing banknotes because extraterritorial cash is expensive to handle. When you use a card, Visa or MasterCard obtains a wholesale interbank rate and no money crosses borders. GBP is paid between UK bank accounts and the foreign currency is paid between bank accounts within the foreign country. When you change cash, either in the UK or abroad, one currency will always be extraterritorial, i.e. outside its home country. If you change cash in the UK, the foreign cash will be extraterritorial, or if you change your cash abroad, the GBP will be extraterritorial. Physical cash is inherently expensive to handle, extraterritorial cash even more so.

In the wholesale banknote trading markets, cash is consequently traded at a premium or discount compared to electronic funds, and the premium or discount depends on several factors. For example the physical state of the banknotes is relevant; in Russia and other parts of Eastern Europe a pristine state is expected. The denomination is also relevant because smaller denominations are more expensive to transport. Another factor affecting some currencies is the issuer of a banknote; for example there are multiple issuers of GBP and HKD banknotes, and Scottish banknotes have a lower wholesale value than Bank of England banknotes. Added to these wholesale costs are the retail costs incurred by bureaux de change, such as employing staff, operating premises in high footfall locations and the potential movement of the wholesale interbank rate while a bureau de change holds the cash. Forget taking cash between countries unless you want to pay unnecessarily for these many costs through a worse exchange rate.

Although Visa and MasterCard obtain a wholesale interbank rate, many UK card issuers subsequently add a percentage fee (often up to 3%) for non-GBP transactions. Given that the card issuer does not partake in the foreign exchange element of the transaction, any such fee is not for foreign exchange but a fee for nothing, feasible because many consumers are less sensitive to or observant of fees when the transaction currency and billing currency are different. You can avoid such fees by using one of the top cards for overseas spending, e.g. Halifax Clarity.


Pommie Pete

I regularly go to Aus for 3 months at a time. I find that a starter amount of Aus dollars and a currency card (a cash passport whichIi got from Tesco) worked a treat. Most cash machines do not charge for issuing cash on the cash passport and it can be topped up online if you need to.
I bought a low value card initially and topped it up each time the exchange rate improved.


nick davies

I really can’t understand why the question is still asked, and that people still faff around with travellers’ cheques or buy huge amounts of currency before they go. I’ve used cards for cash and purchases for decades now. OK so you might save a bit on transaction costs or you might not but is it worth the stress of working it out? Or indeed the stress of losing all that cash? Or finding yourself somewhere where no-one will honour a sterling travellers cheque?



I always take a travel card and a small amount of cash (for taxi from airport, etc) to tide me over. I hate carrying a lot of cash and can’t understand why people take huge amounts of currency with them in cash! As long as you compare rates before you go in plenty of time, you can get a good rate with a travel card. http://www.money.co.uk/prepaid-cards/travel-prepaid-cards.htm a list of the top travel money cards and any applicable charges. http://www.icicibank.co.uk/personal/travel_solutions.html for rates etc.



If you are staying for a reasonable amount of time, on arrival open a basic bank account with Commonwealth Australia. Then transfer funds from your UK bank directly into it. We have done this 4 times and the cost from our account with our UK bank is less than £10 for any amount up to 25K. Obviously take some cash for the first few days to tide you over. Sydney is vastly more expensive than London in every way.


Stephen Hicks

I would warn people to look out for Dynamic Currency Conversion – DCC. You are in Australia and buy something in £AUS. You pay by credit card and the “helpful” merchant converts this into £GBP.
Almost inevitably the exchange offered will be a poor one and you will be worse off compared to paying in $AUS, especially if your credit card does not charge a FX loading fee.

VISA and Mastercard rules says that the customer MUST be offered the choice, but my recent experiences suggests that an increasing number of shops are not doing this.

Hi all,

Thank you for your comments and contributions – there are some great suggestions and good points made by all.

For what it’s worth, we think a decent credit card that waives it’s foreign loading fee is a good option for card purchases. NFH mentioned the Halifax Clarity MasterCard and we think this offers the best all-round solution as it charges 12.9% on all transactions and doesn’t charge for cash withdrawals. However, it doesn’t have an interest free period for cash withdrawals so you need to make sure you can pay your bill off in full each month to avoid or reduce the amount you pay in interest.

A good alternative is the Travelex Cash Passport prepaid card for Australian dollars. The card is free to load by debit card, and does not charge a fee for withdrawing money. Prepaid cards should not be used to pre-authorise car hire or hotel payments, though, as the process ring-fences money on the card, which cannot then be used. If you are unlikely to use the card again within a year, it’s best to close it as the provider will charge $4.50 each month it’s not used after 12 months inactivity.

Thanks again for your contributions – they are much appreciated by us and the members who ask the questions :-)


Julian T Rowe

MyTravelCash and Caxton FX are probably the best foreign cash cards.

They offer exchange rates that are pretty similar to HSBC etc. but they also add 2.99% transaction charge which is added to the exchange rate of the MasterCard Currency Conversion rate (or the Visa one if Caxton) – https://www.mastercard.com/global/currencyconversion/

For long stays, in Australia it is recommended to open a ‘migrant account’ – we did this for my daughter’s student exchange with Commonwealth Bank online in an instant. It charges AUS$11 to receive monies. Basically this avoids the additional 3% transaction fee everytime and costs as little as £4 to do if online and £30 by phone (with HSBC) – other High Street banks are likely to be similar. Hope this helps.

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