No-Fee Debit Cards

Most debit cards in Australia come with no monthly or annual fees, and with no cost to the customer to take out a card. However, in certain situations, there may be costs involved with using a debit card. Some of the things to look out for when using your card in Australia are:  

Fees for using your card at an EFTPOS terminal

Debit card issuers Visa and Mastercard charge retailers to use their EFTPOS terminals. In turn, some shops and restaurants pass on this cost to their customers in the form of a surcharge. This means if you use cash to pay for your goods, it’ll cost the same amount, but if you pay by card, there may be an extra cost added to the total. 

Card surcharges are becoming less common in Australia as digital banking replaces the cash economy, but some restaurants and cafes still do add a surcharge if a card is used for payment. 

This surcharge is often around 0.5% to 1% of the transaction value if a debit card is used, or between 1% and 3% if a credit card is used as the payment method. Legislation passed in 2016 prohibits retailers from charging excessive surcharges, so they’re only permitted to recover the actual cost charged by their bank or terminal provider.  

However, it’s important to note not all retailers add a credit or debit card surcharge, so watch out at the checkout or payment desk for notices informing you about any surcharges that may be applied. 

Fees for overdrawing on your account 

Fees for debit cards used in Australia usually only apply if the card is overdrawn. On face value, a debit card should never be overdrawn, as if you try to withdraw more money than you have in your account, the transaction will be declined due to insufficient funds. However, payments can sometimes take time to process or take place almost simultaneously, meaning the account balance goes into the red. If this occurs and no overdraft facility is in place, substantial overdrawn fees can be charged, often around $30 to $50. To avoid overdrawn fees, either negotiate an overdraft facility with your bank or make sure your account never has a negative balance.  

Fees for using your standard debit card overseas 

The fees charged by banks when a standard debit card is used overseas fall into one of several categories. These are:  

• Foreign transaction fees: this is a fee charged whenever a transaction is undertaken overseas and reimburses the bank or financial for the administrative cost of converting Australian dollars into a foreign currency. This fee is usually charged as a percentage of the transaction amount and is often around 3% to 4%. All foreign transactions may attract this charge, be it taking money out at an ATM, paying for drinks or a meal or spending money on a trip or excursion. This may not seem like a large percentage, but it can really add up if you’re making several transactions per day over many days or weeks whilst you’re abroad. 
• Currency conversion fee: this is another fee which can be charged either by a bank or a card provider in addition to a foreign transaction fee. It is similarly related to the cost of converting dollars. The rate is also based on the dollar sum to be converted and is either a percentage fee (often around 1%) or occasionally a set fee. If your card provider charges a currency conversion fee, you can be assured your bank will pass it on to the customer in full.  
• International ATM fees: if you use an overseas ATM which isn’t affiliated with your bank, you can also be stung by overseas ATM fees, which can be as high as $5 per withdrawal. Many of the larger banks and financial institutions belong to the Global Network Alliance, which is a network of over 50,000 ATMs worldwide which can be used free of charge by customers of any of the Alliance partners. However, if your bank isn’t part of the Alliance and doesn’t have an arrangement with banks overseas, you could find yourself paying hefty fees to withdraw cash.