One of the great advantages of debit cards is that they can be used for foreign currency transactions. This can also carry some dangers, in that it can attract some unexpected charges, and if there is a lot of spending on a debit card in a foreign currency then it may be a good idea to use a specialised pre paid debit card for that foreign currency.
The way in which debit cards work means that they are very much suited to foreign currency transactions. Debit cards, like credit cards, pay for a transaction in the currency of the merchant and will charge for the transaction in Australian dollars. This is one massive advantage of debit cards, in that there is no need to exchange money before buying a good and a person buying the good with the credit card gets charged the same price that a person who would buy the good with local currency would get charged, rather than getting charged a higher price if the shop “accepts Australian dollars”.
This can also apply to online purchases. Many foreign web sites do not accept Australian dollars for payment. However this is not a big problem as they will accept debit cards and credit cards. This means that the good can be bought online and paid for in US dollars, or whichever currency is used, and billed for in Australian dollars.
However the debit cards do often attract foreign transaction charges. This is a flat fee charge for the use of a card, often when using foreign currency although at times it can be for using the card outside Australia whether or not foreign currency was used. This can differ between the card issuers, with some charging a small fee, some charging no fee at all and a few charging a very large fee.
Exchange rates are also an issue with debit cards. Debit cards charge exchange rates usually at a daily basis. These exchange rates are not very competitive, although they may be favourable compared to airport exchange rates.
For a frequent traveller the alternative may be prepaid debit cards in a foreign currency. These cards act like debit cards, but the balance is paid up front. The prepaid debit cards tend to offer very competitive exchange rates, particularly the cards with larger balances, and they also do not charge foreign currency transaction fees.