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Using a UK credit card for your Aussie Holiday or Visa

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I wrote this on Perth Poms on the 5th October, the rates have changed for the worse.


Not sure if this is common knowledge but whilst investigating the best way to pay my visa fee I came across a couple of credit cards that are excellent for buying things in foreign currencies, even the big no-no of taking cash out.


They are the Halifax Clarity and Santander Zero (I think this one is only available to Santander customers) and they charge no transaction fee for foreign purchases, you also make your purchase at the Visa or Mastercard book exchange rate which more or less tracks the markets. This can mean a substantial saving on something like purchasing a visa or spending while on holiday.


Some examples based on yesterday's rates - the rate according to x-rates.com was 1.63268 and xe.com has it as 1.6349


If your transaction for your 176 visa (AUD2960) cleared yesterday using one of the cards I mention then it will convert at the Mastercard exchange rate of 1.642133 and will therefore cost you £1802.53.


If you had used a Barclaycard, for example, for the same transaction it would cost you £1852.10 after they applied their foreign commission of 2.75%, this equates to an exchange rate of 1.59818.


If you had used your Visa Debit card issued on your current account then although you are getting a base exchange rate of 1.620733 by the time your bank adds its foreign transaction fees and commission you will be paying £1877.80, an equivalent exchange rate of 1.57631. If you have a Santander Zero current account you won't incur the fees so get the Visa exchange rate unadulterated.


It's also great for spending while you are away, the exchange rate Travelex are offering today is 1.5673 online (buy at the airport and you'll get even less). If you were to convert £500 to australian dollars you'd be getting $783.65, if you spent that much on your Clarity or Zero card then you'd be facing a bill of £477.21.


All this assumes that you pay your card off in full as soon as your payment is due (you get up to 56 days interest free credit with cards). If you can do this then there is one more way to save.


It's always been a given that you never, ever take cash out on a credit card whilst abroad as you get hammered on fees and the interest starts building instantly. This still holds true but if you were to use the Clarity or Zero cards abroad then you might still be better off if you are smart. The Clarity only charges 12.9% APR on cash transactions (same as purchases) or 1.075% per month which means that if you took your £500 out in Australia from a fee-free cashpoint machine then you would get $821, if you paid it off within 30 days then that would cost you £8.75 in interest giving an equivalent exchange rate of 1.61375 which is still much better than you'll get on the high-street, pay it off the day you take the cash through an internet banking payment and it becomes even cheaper


The downside to all this is that you are effectively becoming a currency speculator, if you buy cash from then high-street and take it on holiday then your exchange rate is locked in, if you buy on holiday you get the book rate on the day your transaction is settled which could be lower if there is a run on the pound - of course you may also gain if the dollar continues to fall. It maybe worth buying some currency beforehand with a buy-back guarantee, you can use the internet to check the day rates and take it from there.

IELTS General 09/07/11 | CASA Skills assessment applied 28/06/11 - Positive 8/08/11 | WA SS applied for 09/08/11 - Approved 15/08/11 | 176 application submitted 02/10/11 | PCC 12/10/11 | Medicals Finalised 26/10/11 | CO 9/11/11 | Visa 29/11/11

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