Using your debit card or credit card on overseas transactions

Updated January 2018
TLDR Credit Cards ​Overseas Fee Summary
  • Using your credit card on overseas purchases (either online or when outside of New Zealand) will cost 1.85-4.5% on top of what you spend depending on what card you have. 
  • Best and worst way to pay - Kiwibank offers the cheapest overseas fee (1.85% on purchases), PayPal offers the worst (4.5% on purchases)​
  • Picking the right card will save you money immediately - the more you spend in foreign currency, the more you will save.
  • If you do pay by PayPal, you can avoid their poor foreign exchange rates and get the best rate with your bank by following our tip to avoid PayPal fees
​Going abroad or spending on foreign websites? Who you bank with and how you pay makes a big difference in how much you spend. Every overseas transaction incurs a “Currency conversion charge” – you pay this on any transactions you do in a foreign currency, such as spending when you are overseas or buying goods or services online from an overseas eCommerce shop.

In New Zealand, you’ll pay between 1.85% and a whopping 4.5% (depending on who you bank with and how you pay). We found that two popular payment methods, PayPal and the PrezzyCard, charge you a lot more than standard cards. 

Our Guide to Lower Overseas Credit Card fees 
This step-by-step guide covers what your card currently charges you to use it on any foreign purchase, as well as the cards and payment methods to avoid and a few tips to save big. 

Best Debit and Credit Card for Overseas Purchases

Winner

Kiwibank Credit Cards
Kiwibank offers the cheapest conversion fee, at 1.85%, for all of its credit cards.
1.85%
Kiwibank Details and Fees

Runner Up

BNZ Debit Cards and Credit Cards
The BNZ beats all the other banks with 2.25% for all of its credit cards.
2.25%
BNZ Details and Fees

Summary: Credit card overseas fees

Kiwbank wins with 1.85%, Major Banks Fixed at 2.5%

Kiwibank Credit
Cards		 BNZ Debit Cards
and Credit Cards		 ANZ, TSB, Wesptac
Credit Cards and Debit Cards		 Kiwibank Debit
Cards		 Heartland Bank
Debit Cards and Credit Cards		 SBS Bank Debit
Cards		 PrezzyCard (Debit
Card)		 PayPal (paid with
PayPal balance or Debit/Credit Card)		 $ saving, KiwiBank vs PayPal
%
Currency Conversion Fee		 1.85 2.25 2.5 2.5 2.6 2.8 3.5 4.5
US$150 Purchase
4.02
4.89
5.43
5.43
5.65
6.09
7.61
9.78
5.76
US$500 Purchase
13.41
16.30
18.12
18.12
18.84
20.29
25.36
32.61
19.20
US$2500 Purchase
67.03
81.52
90.58
90.58
94.20
101.45
126.81
163.04
96.01
Fees correct in January 2018, obtained from ANZ, TSB, ANZ, Westpac, Kiwibank (debit card), Westpac (debit card), BNZ, Co-operative Bank

Worst Cards

SBS Bank (Debit Card)

Transaction Fee: 2.8% fee (debit card purchases)
SBS’s Debit Card’s overseas currency fees are 24% higher than the BNZ’s debit card and 10% more than every other bank.

Worst Payment Methods

PrezzyCard

Transaction Fee: 3.5%
The PrezzyCard has been discussed in our PrezzyCard guide and given its function as a debit card, we found the 3.5% fee to be the highest fee of any card and close to twice the standard 1.85% fee for credit cards charged by its parent, Kiwibank.  
​

PayPal

Transaction Fee: Up to 4.5%
There is a common misconception that PayPal offers Kiwi a low cost overseas payment service. Popular to that belief, it has the highest fees of any bank or payment provider. In short, use Paypal for an overseas purchase and you can pay close to three times what Kiwibank credit card costs to process the same transaction.

PayPal isn’t transparent with its overseas fees, but a simple test we made in an attempt to pay for three purchases in three currencies; AU$200, US$200 and £200. Each purchase suggested we convert at the PayPal rates of:
  • $1.00 NZD = $0.863415987 AUD vs $1.00 NZD = $0.903787 AUD (Standard rate) - calculating a 4.5% difference
  • $1.00 NZD = $0.664478304 USD vs $1.00 NZD = $0. 0.690856USD (Standard rate) - calculating a 4.0% difference
  • $1.00 NZD = £0.505143878 GBP vs $1.00 NZD = £0.527961 GBP (Standard rate) - calculating a 4.5% difference

Avoid PayPal Fees Altogether With One Simple Click

​However, if you prefer to pay by PayPal, you can avoid these fees and only be charged your bank by clicking on “convert with card issuing bank”.

​This simply means that PayPal will charge your bank the foreign currency amount and your bank will charge you its fee (1.85% to 2.8%) of the amount to translate it into NZD, avoiding the 4-4.5% charged by PayPal. 

The only difference you'll see is a foreign currency charge in your card statement and the fees your bank charges.

Our View:

  • There is a HUGE difference what the banks charge for something as simple as making an overseas purchase. 
  • Banks use the same market rate when buying the foreign currency when paying for your purchase; the only reason for the huge  1.85%-4.50% fee range is due to each bank’s pricing decisions.
  • ANZ, TSB, Wesptac charge 35% higher on international transactions than Kiwibank’s credit card
  • PayPal and the Prezzycard’s conversion fees are 143% and 89% higher respectively than the lowest available. 
​

Our Advice:

  1. If you make a lot of international purchases or travel overseas a lot, consider getting a Kiwibank credit card – it’s 1.85% charge is the best by a mile and shows the other banks up big time.
  2. If you use PayPal, you can big by avoiding PayPal’s own foreign exchange rates/ripoff and clicking “convert with card issuing bank”. This dodges the 4.00-4.50% fee and brings them down to what your bank charges. 
​

How Much Money Are We Talking About?

​The percentages we’re talking about add up. Buying something for US$500? You’ll be $5 better off with a Kiwibank credit card than a Westpac or ANZ credit card for example. It may not sound like a lot, but the differences always add up over time.