Daily Telegraph, 11 December 2006
AS the holiday season nears, it is not just the Christmas cheer which threatens to send you broke.
If you are planning on going overseas, either on holidays or long-term, get advice before changing Australian dollars for other currencies and check what extra charges you may rack up on your credit cards.
According to calculations based on government migration figures, up to $200 million a year may be lost through poor foreign exchange rates and associated bank charges, says foreign exchange risk management company HiFX Australia's Spencer Wilcox.
Almost 250,000 Australian residents left in 2004/05 to settle permanently abroad or to take up high-paid jobs in places such as Singapore, Hong Kong, China, Dubai, the US and Europe.
Mr Wilcox says people are often unaware of the risks associated with changing money or moving funds across borders. "Effectively, there is a right time and a wrong time to transact a currency exchange as the currency market is volatile," he said.
These services can also be particularly helpful if you have regular payment obligations in Australia, such as mortgage repayments. Mr Wilcox says services allow Australians to send money back without incurring bank charges.
They also allow them to eliminate currency fluctuation risk by fixing the exchange rate for between six and 24 months. Or they can minimise exchange rate risk by using an exchange rate guarantee (ERG). "With an ERG, you secure the right, but not the obligation, to buy your currency at a pre-agreed exchange rate for a future date," Mr Wilcox says. He said the future-dated currency rate is fixed in advance by paying an upfront premium similar to an insurance premium.
Meanwhile, those popping away for a holiday are advised that international travel is a "fee jackpot for credit card providers".
Wizard Home Loans chairman Mark Bouris says that credit cards with fees for overseas purchases and ATM withdrawals will reap tens of millions of dollars in the next few months. "Unbeknown to users, many credit cards charge up to 2.5 per cent of the purchase amount and $4 for each ATM withdrawal made by Australians travelling overseas," he says.
Check out your insurance policies TRAVELLERS should read the fine print of their travel insurance as not everything is covered by them.
Claims of loss or damage may be denied if:
- YOUR airline stops trading
- YOU cancel because of fear of terrorism
- YOU have medical conditions
- YOU go to countries against the advice of the government
- YOU do adventure or hazardous sports
- YOUR luggage is left unattended
- YOU are aged over 80