There are several ways of using Australian dollars overseas.
1. Just bring Australian dollars in cash
In most countries it's very easy to find out exchange stalls where they exchange your Australian dollar into their currency. This is good method if you're traveling developing countries and you do not intend to spend much money, as bringing a lot of cash is somewhat risky to be stolen or lost.
If you travel to economically developed country, such as USA, Europe, or Japan, you can choose either to change the currency in Australia, or to change overseas. As different country will give you a slightly different exchange rate, check which is better option. In my opinion, it doesn't really matter though, since Australian dollar has still significant fame in most countries.
2. Exchange to cash before leaving Australia
If you choose to change cash in Australia, those private stalls in CBD such as Travelx usually have better exchange rate than banks. If the amount is not a lot, and you do not have to worry much about stolen cash during your travel (e.g. using safer transportation, staying in mid-range accommodation), then carrying cash is the best option as it gives good exchange rate and you don't have to be annoyed to find out which shop accepts card or not. Just remember that if it is the currency of developing countries, they might charge much higher commission (which is already applied in the exchange rate). In that case, just bring Australian dollar and exchange overseas is better option.
3. Credit/Debit card
Australian major banks usually have 2~3% surcharge for spending overseas, plus extra $3~$5 for ATM cash withdrawal. Some smaller banks and credit card companies, such as Citibank or 28 Degrees, have free of charge credit/debit card for international transactions. Citibank has vast ATMs across the world where they don't charge any ATM fee. If you care about those small fees (which can be significant if you use more money), it's better to open a new account in those banks or credit card before you leave Australia and put all budget into the account. This is best option if you don't want to carry cash, especially if you stay overseas for long term.
Remind that all foreign currencies except for USD will be changed to USD first and then changed to AUD. It means they charge more exchange commission if the currency is not in USD. Also, do not pay in AUD even if the retailer suggested, since there will be much more exchange omission applied, e.g. AUD->local currency ->USD->AUD.
4. Travel money card
Those travel money cards including QantasCash and Mastercards' Travel Money Card are very similar to credit/debit card in terms of how to spend money overseas. You have to find shops or ATMs accepting Mastercard or Visa, although there is no international transaction fee. The only advantage or drawback of this type of card is that you have to load the money in foreign currency in advance. For example, if you plan to travel to Europe, you should preload money in Euro currency before you use the card in order to get the full benefit. Otherwise, when you didn't have enough fund in that currency, they charge 3%~4% of currency transfer fee for automatic currency change. Also, some banks have 1% re-load fee when you recharge the card. Overall, it is not as convenient as the credit/debit card, nor saving fees.
Especially when you're travelling to those countries where their local currency is not supported by the travel money card (usually developing countries), there is no way to avoid the 3~4% currency transfer fee because you cannot pre-load in the local currency. In that case, it's big loss compared to using the credit/debit card, so just use fee-free credit/debit card in those countries.
5. Exchange rate comparison
People sometimes have misconception about the exchange rate of banks that they use the same exchange rate for any transaction. Actually they apply different exchange rate for different type of transaction, such as exchange in cash, use credit card overseas, use travel money card overseas, etc, even in the same currency. Usually for the major banks, change in cash has the worst exchange rate compared to those electronic transactions. However, as I mentioned above, the small stalls in business district have much better exchange rate even in cash, which is almost same as or better than the electronic transfer rate of the major banks.
As in June 2015, exchange rates from AUD to EUR are almost same among 4 methods I mentioned above, although cash exchange in major banks has weirdly high commission rate. Therefore just choose the most convenient way for you depending on the amount of budget, the duration, and the security of the country.
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