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How to avoid getting ripped off overseas

Australians love using credit cards when travelling overseas, but many run into trouble. (Image: Getty)

Many Australians take their credit cards overseas for convenience – but an expert has warned it could easily cost them thousands if they don't take the right precautions.

Travellers' cheques are becoming obsolete and travel currency cards are racked with high fees. So it can make sense to use the credit card – provided it has the right features.

Founder of comparison site Creditcard.com.au, Roland Bleyer, has told Yahoo Finance the eight must-follow rules for choosing and using a credit card overseas:

1. Do not pay overseas transaction fees

Most credit cards slug fees on every transaction made outside Australia. 

"Australians spend over 1 million dollars a day just on foreign transaction fees on credit cards," said Bleyer.

"These fees range from 2 to 4 per cent per transaction. So it can add up when traveling and spending a decent amount of money."

But there are cards that amazingly don't charge any foreign transaction fees. 

Latitude Financial's 28 Degrees has been a popular one among savvy Australian travellers, although its features have degraded – such as slugging fees on manual repayments and ATM withdrawals – the last few years. 

Bankwest Zero Platinum and ANZ Rewards Travel Adventures are other examples without foreign charges.

2. Watch the currency conversion rates

The best credit cards for overseas use Visa or Mastercard wholesale currency exchange rates. Most cards, however, charge a commission on top to make money off travellers. 

"You should always check what conversion rate your bank will use with the card," said Bleyer. 

"Most should peg to either the Visa or Mastercard exchange rate. Though many might tap a fee on top of this. This could increase the cost by 4 per cent."

3. Get free travel insurance

Many credit cards offer free travel insurance to the holder, which is handy for travellers. But you must fulfil certain criteria for the insurance to become active for the trip.

"Before you buy tickets or pay for accommodation, review what is required to be eligible with the card that you have," Bleyer told Yahoo Finance.

"Additionally, look at how long you can be covered up to and whether it is suitable for the type of trip you are planning."

If you're unsure whether the coverage is right for your trip, Bleyer said you can contact the insurance provider directly.

A card that combines free travel insurance and no foreign transaction fees is gold for regular travellers.

4. Notify your bank to avoid card blocking

Most banks have fraud detection software that may block the card from use once it detects an overseas transaction.

"This can cause major trouble as a credit card may be a very important source of funds," said Bleyer.

"Make sure you tell your bank where you are going and for how long. That way they are unlikely to block it when these transactions come up."

5. Reduce impact of fraud and theft 

There are some simple precautions to take while travelling to stop scammers stealing your credit card details or reduce the damage if they do.

"Never carry all your credit cards or money sources together at the same time, where possible, in case you lose your wallet," Bleyer told Yahoo Finance.

It's best to have some emergency cash, access to a bank account and multiple credit cards – all kept in different places to your wallet, like a hotel safe. 

The other tip is to have alerts set up in your banking app to notify you of payments. This will allow you to detect fraudulent transactions in real-time.

"This way if any fraudulent activity starts to hit you can block you card straight away," said Bleyer.

"Try to select a card that will allow you to instantly block the card through the app. Sometimes you will be hit more than once from the same provider. This instant alert allows you to deal with it swiftly."

6. Reduce impact of ATMs taking your card

If an ATM thinks a fraudulent transaction is attempted, it will "swallow" the card for security purposes. The chances of this happening increases overseas because the machine might be confused by an Australian card or the traveller may misunderstand instructions.

The best way to protect against this, according to Bleyer, is to use ATMs attached to banks.

"These will be monitored for fraud or skimming regularly. Additionally, you will be able to contact the bank to get the card back.

"With certain ATM providers it may be difficult to contact. In this case, you will need to cancel or block your card ASAP."

7. Check the buyer protection terms

Many credit cards have a "buyer protection" insurance feature, which will compensate you if you fall for a dodgy retailer or seller.

But the terms and conditions of such protections vary between cards and through time.

"It's always important to review the features of your credit card before you travel," said Bleyer.

"Many insurance offerings may change. Therefore, you may not be covered where you thought you would be. Checking your buyer protection insurance, if you have it, will make sure you are up-to-date with the benefits and how to claim."

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