Note: This post will focus on New Zealand residents and how to best navigate the options available to New Zealanders. If you’re from another country, try these blog posts from some fellow nomads: Canada: Best Canadian bank for overseas travel by Wandertooth
USA: Travel banking 101 by Expert Vagabond
Australia and UK: Best banks for world travelers with lowest ATM fees
As a New Zealander, finding the right bank, credit, and debit card options for travel has been quite a frustrating affair. Banks in larger countries are faced with higher competition and are forced to give their customers bundles of perks, while in NZ the banks enjoy a nice oligopoly which leaves us at the mercy of a few big players.
What that means is we never enjoy double and triple frequent flyer point deals, large signup bonuses, zero foreign transaction fees and ATM fee refunds. However, what we can do is arrange our money in a way that will keep our bank fees as low as possible.
In this post I’ll be sharing how I’ve managed to keep my bank fees down while enjoying affordable and easy access to all my money on the road.
Note: This is a long post with a lot of numbers. If you don’t care for the analysis and just want to know what cards/accounts to get, you can skip straight to the bottom.
Part 1: Minimising ATM fees as a NZ traveller
I mostly access my money overseas by withdrawing cash from ATM’s. It’s the most convenient and you usually will get the best conversion rate this way. However, if you don’t set it up right it can be expensive. Here’s an example of when it doesn’t work out so well for you:
Let’s take a look at this.
I wanted to withdraw 10,000 Philippine pesos, which is around $265 NZD. At the time of this withdrawal, the interbank exchange rate (the ‘real’ rate that banks use) was around 38:1, and I was given 38.34, so that’s actually really good (at a money exchanger, you’d lose 2-3% off that at least).
However, let’s look at the fees here:
Service Margin Fee: This is basically a fee they charge for withdrawing foreign currency, and will usually be between 1-2%. In my case, the fee is 1.1%, or $2.93 (that’s actually low for a NZ bank).
Overseas ATM Fee: This is a fee charged for using an ATM outside your banking network. It usually ranges between $5-$10. ASB charges $7.50 for this (quite high).
Local ATM Fee: This is a fee the local bank will charge for using their ATM when you’re not a member of their network. As you can see, I wanted 10,000 pesos, but got charged 10,200. That extra 200 is the usage fee (around $5.50).
So for one $265 withdrawal I’ve been charged $3 in service margins, $7.50 by ASB and $5.50 by the local bank whose ATM I’m using. That’s a total of $16 for one withdrawal. If I do that once a week it’s going to add up to around $700 a year – not cool.
So, how do we avoid this? Two ways:
The Global ATM Alliance
This is a joint venture between several international banks which allows clients to make free overseas ATM withdrawals. In New Zealand, the only current member is Westpac.
They have an electronic account that has no monthly fee and no transaction fees, as long as you cancel your paper statements and don’t go into the branch to do anything. Once you have an account with Westpac, you can withdraw money from any alliance member’s ATMs in the following countries:
- Bank of America (United States)
- Barclays (United Kingdom, France, Spain, Portugal, Pakistan, Gibraltar, Ghana, Kenya, and other countries in Africa)
- BNP Paribas (France)
- BNP Paribas Ukrsybbank (Ukraine)
- Banca Nazionale del Lavoro (Italy)
- Deutsche Bank (Germany, Poland, Belgium, India, Spain and Portugal)
- Scotiabank (Canada, Mexico, Chile, Peru, Guyana, and the Caribbean)
- Westpac (Australia, New Zealand, Fiji, Vanuatu, Cook Islands, Samoa, Tonga, Papua New Guinea and Solomon Islands)
- Westpac Banking Corporation (Australia, Fiji, Cook Islands, Solomon Islands, and Vanuatu)
- Westpac New Zealand Limited (New Zealand)
- Westpac Bank – PNG – Limited (Papua New Guinea)
- Westpac Bank Samoa Limited (Samoa)
- Westpac Bank of Tonga (Tonga)
- ABSA (South Africa)
While this sounds great – it’s actually not so amazing. Westpac waives the overseas ATM fee, but will charge you a ‘foreign currency fee’ of 2.5%. That is more than double what ASB charges!
ANZ in Asia
Even if you do decide to go the Westpac route, you’ll notice the Global ATM Alliance doesn’t cover all countries, and most annoyingly has no banks in the Asia. That’s a serious bummer since Asia is one of the most popular travel destinations for Kiwis. Luckily though, ANZ has branches throughout Asia and other parts of the world, and if you’re an ANZ customer you can withdraw from their ATMs without paying fees. I don’t have much experience with this, but if you do have any trouble with it just know that you’ve got them on record 😉
They have a “Go” account that has no monthly fee or transaction fees, as long as you cancel your paper statements. And as a bonus, they’re the only bank in New Zealand with credit cards connected to the Qantas/Oneworld Frequent Flyer program.
You’ll be able to find their ATM’s throughout Asia, the Pacific Islands, and a few scattered through Europe and the US as well. You can find all of ANZ’s ATMs here.
If you get yourself both an ANZ and Westpac account, you can technically enjoy “free” ATM withdrawals throughout a good portion of the world. However, if you really want to see who gives the best deal, we need to look at the numbers:
New Zealand banks overseas ATM fee summary (updated Oct 2017)
|ATM fee||FX fee|
|ANZ (ANZ ATM only)||$0||2.50%|
|Westpac (Alliance ATM only)||$0||2.50%|
But what we really care about are actual dollar amounts. Here’s what your fees will look like when making the following withdrawals.
(I’ve included the Westpac Global Alliance and overseas ANZ withdrawal amounts in grey at the bottom, as they’re conditional on finding a compatible ATM).
|ANZ (ANZ ATM only)||$6||$13||$25||$50|
|Westpac (Alliance ATM only)||$6||$13||$25||$50|
So if that all looks like jumbo to you, here’s what we see.
If you plan on making small withdrawals of $250 or less, Westpac is probably the best bet. Along with Global ATM Alliance benefits, it has the lowest ATM fee. ANZ is a close runner up, IF you can find an ANZ ATM overseas.
Once you get over $500, it becomes far better to own an ASB card. ASB has a much lower FX fee than all the other major banks. If you withdraw $500, the fees are even less than the “free” withdrawals offered by Westpac and ANZ. If you withdraw up to $1,000 in cash, you’ll save around $10 each time. I usually withdraw the maximum so I can use the ATM as little as possible, so ASB suits me best.
Summary for minimising ATM withdrawal fees:
- For large ATM withdrawals over $500, ASB is the cheapest.
- For small ATM withdrawals, Westpac is the cheapest.
- Try to make a few, large withdrawals to minimise the frequency of fees you need to pay.
Also, if any of you are wondering how you can use your NZ EFTPOS card at overseas ATMs, it works exactly the same as it does back home. As long as your Eftpos card has a PLUS, Cirrus or Maestro symbol on the back, you can use it at almost any ATM in the world. Check the back of your card and you should see one of those symbols, most NZ cards are either PLUS or Cirrus.
Then when you visit an ATM, you’ll see a sticker that shows what cards they accept, it will look like this:
Since those symbols are displayed there, it means your EFTPOS card will work just fine.
Part 2: Prepaid debit cards/travel cards
You may have noticed quite a few ‘travel’ debit cards available in New Zealand lately. They basically allow you to pre load different currencies (around 9 different ones) onto a prepaid debit card, meaning you can make purchases/ATM withdrawals in those currencies without paying the foreign exchange fees. Some also offer free ATM withdrawals.
The 3 main ones are the Air NZ Onesmart, The Travelex Cash Passport and the Loaded for Travel card. I’m going to compare the fees, features and the different exchange rates they give us on a single day (I’ll be using July 22, 2014 as a comparison date). Let’s take a look.
The Air NZ Onesmart card is a Mastercard debit card by Air NZ. Let’s take a look at the rate:
$1,000 gives us $838.60 USD, and considering the interbank rate is 0.8672, that’s a pretty big spread (around 2.8%). However the Onesmart does give you other perks, such as earning Air NZ Airpoints on your purchases and 3 free ATM withdrawals a month. Fees are pretty much nil, other than a $1 monthly fee. Getting the card is free.
Travelex Cash Passport
The Cash Passport is available from Travelex and also from ANZ and Westpac. Here’s the rate:
That’s much better than the Onesmart, which only gave us $838.60. It also offers free ATM withdrawals, but has a bunch of other fees that I’d prefer not to pay ($10 initial load fee, 1% subsequent load fee, $4 monthly inactivity fee, $10 closure fee). Looking at that you’re already guaranteed $20 in fees to simply open and close an account.
Could be better than a Onesmart though, depending on how often you plan on using it.
Loaded for Travel card
The Loaded for Travel card is the prepaid travel card offering from NZ Post/Kiwibank. First let’s check out the rate:
That’s the best so far. However, you’ll be paying $12 just to get the card in the first place and $6 for every ATM withdrawal. That already makes it a bad choice in my opinion, as ATM withdrawals from your EFTPOS card will only cost around $7-$8 anyway. They also charge a $1 monthly inactivity fee, and then a fee when you wish to close the card. That’s a lot of fees, and you know how much I hate fees.
Which card you should get will depend on how you plan on using it, so let’s compare them in detail:
|Onesmart||Cash Passport||Loaded for travel|
|Exchange rate margin||2.8%||1.9%||1.4%|
|Load fee||Free via internet, or $4||1%||1% ($10 max)|
|ATM withdrawal fee||3 free per month||Free||$6|
|Inactivity fee||None (but monthly fee applies)||$4 per month after 12 months||$1 per month after 12 months|
As you can see I can’t give you a definitive answer on the best card here – they’re all good in some places and crap in another.
The Onesmart exchange rate is so crap that I would disregard it altogether – there is no way you would save money using it. That leaves the Cash Passport and the Loaded card.
If you plan on doing mostly ATM withdrawals, take the Cash Passport – they are free and the exchange rate is passable.
If you’re planning on paying for everything with card during your trip, take the Loaded For Travel card. The load fee is capped at $10, and the exchange rate is not bad.
The reason I personally don’t use a prepaid travel card is because I spend a lot of time in places where everything is done in cash – think small cities in Asia and Africa – meaning I get most of my money from ATMs. Therefore I just use my regular EFTPOS card. If you’re planning on visiting mainland Europe or North America however, you could use plastic for most of your trip without much trouble – one of these cards could make sense for you.
Summary for prepaid travel cards:
- Loaded for Travel is the cheapest option if you plan on paying by card a lot (low load fee and good exchange rate). Don’t use for ATM withdrawals.
- Cash Passport is an okay option if you plan on using cash a lot (free ATM withdrawals).
- Onesmart’s poor exchange rates makes it a poor option – I would avoid.
Part 3: The best credit card for NZ travellers
Let’s move onto credit card fees. You’ll want to use a credit card on the road that doesn’t charge foreign transaction fees. Here’s why:
For this particular transaction, I purchased a $111 USD air ticket on Cambodia Angkor Air.
On that date the interbank rate was 0.875, and they gave me 0.873. That’s good. But you’ll also see I got charged fees of $3.18; around 2.5%. Factor that in and the ‘real’ rate I got was 0.851. Still ok but any fee is a bad fee. I personally do not want to add 2.5% to everything I buy, just because I’m using plastic.
Unfortunately there is currently no bank in New Zealand that offers a card without foreign transaction fees, so this is unavoidable (however if you live in Aussie, I would recommend grabbing yourself a Bankwest Zero Platinum Mastercard or a 28 Degrees Mastercard – both have no annual fee and no foreign transaction fees).
Having a credit card is very handy during your travels, so I think it’s a good idea to always have one on you, even if our options aren’t great in NZ. Since there are literally hundreds of different cards available in New Zealand, I’m not going to compare them all. What I will do is compare a few “free” credit cards to see which gives us the best deal.
The following credits cards all have no annual fee and are reasonably easy to get:
|ASB Visa Light||Kiwibank Mastercard Zero||Warehouse VISA||AMEX Airpoints|
|Cash advance fee||$7.50||$6||$2||$5|
|Cash advance interest||22.95%||22.95%||22.95%||21.95%|
Let’s see how that translates into actual dollar amounts. Below is a table of how much it will cost you to use the cards for both ATM withdrawals and regular purchases:
|ASB Visa Light||Kiwibank Mastercard Zero||Warehouse VISA||AMEX Airpoints|
|$250 from ATM||$12.75||$11||$7||$11|
|$500 from ATM||$18||$15||$12||$18|
|$1,000 from ATM||$28.50||$25||$22||$30|
|$2,000 from ATM||$49.50||$43||$42||$55|
|$500 in purchases||$10.50||$9.25||$10||$12.50|
|$2,500 in purchases||$52.50||$46.25||$50||$62.50|
|$5,000 in purchases||$105||$92.50||$100||$125|
For ATM withdrawals, the Warehouse card easily will have the lowest fees (and even lower than most EFTPOS cards!)
For just purchasing stuff on your card in shops and buying train tickets etc, the Kiwibank Mastercard Zero will have the lowest fees.
Another credit card tip: Paying in NZD (if it’s a good deal!)
Sometimes shops and websites will ask if you want to pay in NZD instead of local currency.
This can be a good idea sometimes.
Whenever the shopkeeper asks if you’d like to pay in NZD, always ask what the amount will be. Then pull out your phone and do a quick conversion (I use the Oanda app) and check if it’s a fair amount. Nine times out of ten they will have loaded the amount with a fee. That means even though you’ll avoid FX fees on your credit card, you’ll end up paying more to the shop and it will probably end up costing you more overall.
There are good opportunities to do this though. Take a look at this example.
This is a hotel booking form from one of my favourite booking sites, Agoda. It’s for a hotel in Bangkok:
Their prices are USD listed ($88.55), however they also give me the option to pay in NZD ($102.25).
If I choose to pay in NZD, I’ll be getting a conversion rate of 0.866, compared to the current interbank rate of 0.867. That’s very good, and much better than what Kiwibank will give me if I pay in USD and let them convert it (it was around 2%, remember?)
Therefore I often make online bookings in NZD (assuming the rate is good), which eliminates foreign transaction fees and allows me to save my ATM withdrawn cash for other stuff.
Summary for minimising credit card fees:
There is no ‘good’ travel credit card in NZ (that I know of). However, it’s always good to have one anyway. The cheapest options are:
Part 4: Foreign exchange fees
The next fee and probably the most annoying one is the foreign exchange fee. I’m sure you’ve seen many signs like this outside foreign exchange booths:
The difference between the ‘buy’ rate and the ‘sell’ rate is known as the spread, and is how these guys make money. Basically they buy NZD from you at a cheap rate and sell it to someone else at an expensive one. The bigger the spread, the more you’re getting ripped off.
So how do we get the best rate?
Generally it falls in this order:
- Credit cards (the best)
- ATMs of big banks
- ATMs of small banks (or those random traveller ATMs)
- Money changers in the city
- Money changers in the airport
- Money changers that advertise “zero commission”
What do I use?
Ok, so that was a lot of info. Only now do I realise what a ridiculous amount of time I’ve spent researching this over the years. But it’s also helped me save a bit of money, and here’s the general strategy I use to access my money overseas:
- I have a Westpac Electronic Account (no fees), which I use to withdraw small amounts of money from alliance ATMs (also no fees).
- I have an ASB Streamline Account (no fees), which I use to withdraw larger amounts of money from ATMs.
- I have a Warehouse VISA card, which I use to withdraw money from ATMs if ny debit cards aren’t working (it happens).
- I have a Kiwibank Low Fee Airpoints Mastercard, which I use for all my online NZD payments (such as bookings on Agoda, Hotels.com, and Skyscanner). The annual fee is $25 – however the Airpoints makes it worth it for me.
- I have an Airpoints American Express, which has no fees and has a better Airpoints earn rate than my Kiwibank Airpoints card. I mostly only use this in New Zealand.
- I carry a small amount of USD, and change $50 here and there whenever I am running out of cash and don’t want to buck up for an ATM withdrawal (maybe if I’m only in a city for a few days, etc).
Between these options I manage to keep my bank fees reasonably low, earn a few frequent flyer points and not have too many cards to manage.
What should you use?
This all depends on your travel specifics.
If you’re on a big, round-the-world trip, I would suggest using
- A Westpac EFTPOS for smaller ATM withdrawals.
- An ASB EFTPOS for larger ATM withdrawals.
- If you’re going through Asia, maybe an ANZ EFTPOS – they have ATMs throughout Asia which will allow you to make free ATM withdrawals. They can be hard to find though. I’d mark this as highly optional.
- A Warehouse VISA for ATM withdrawals where your EFTPOS cards might not work (VISA always works).
- A Kiwibank Mastercard Zero as your backup credit card (good idea to carry two, I’ve lost quite a few on the road).
- If you plan on paying for a lot of things with plastic, and will be spending a lot of time in North America or Europe, A Loaded For Travel card might be good too.
If you’re on a shorter trip (say 2 weeks – 1 month), it becomes much less important what card you will use. I would go with a Kiwibank Mastercard Zero for purchases, and a Westpac or ASB EFTPOS card for ATM withdrawals. You could get a Cash Passport if you’re visiting a lot of different places, but for such a short trip I’d probably do everything with cash. That’s a personal preference thing and totally up to you!
It might all seem pedantic, but those fees do really add up. During my travels I’m guessing I’ve paid the banks in the thousands, just for the simple pleasure of having access to my own money that I earned and worked for. Don’t let the banks siphon away your hard earned cash, that should be yours to spend on your travels!
Like I said, we’re not spoilt for choice down here in NZ, but we can do a few things to keep those bank fees as low as possible.
Heading overseas? A few tips:
- I highly recommend using Skyscanner to book your flights. Flying out of New Zealand can be expensive but if you follow some basic tips you can find something affordable and save some money. I have a free guide on using Skyscanner and finding cheap flights here.
- I highly recommend purchasing travel insurance before any trip. If you’re not already covered by your credit card (check!) then I would recommend using World Nomads. They offer affordable coverage with generous limits and it’s super simple – you can literally be covered within two minutes. Prices are on par or even cheaper than many New Zealand companies. I use them often.
- For affordable accommodation while you’re travelling, I highly recommend using Airbnb. You will find many good offers that will be cheaper and more comfortable than hotels and hostels. You can get $25 of free Airbnb credit using this link.