I will be travelling in Australia soon. What's the best, and cheapest, way to pay for my expenses there. Should I use a credit card (I know there is an extra charge beyond the exchange rate), or exchange my money into Australian currency before I leave, exchange money at the airport, take travellers' checks,etc.
Any suggestions?

I suggest using your credit card for things such as car rentals and accommodation, and using an ATM to get cash for other purchases. I live in Australia, but use my US credit card and US ATM card whenever possible due to the favorable exchange rate with the US dollar. The 'extra charge beyond the exchange rate' charged by my US bank on credit card purchases is nominal and I pay nothing for using my ATM card.

Suggest you check with your bank to find out exactly what they charge for transaction fees so you know up front.

I absolutely would not exchange money before you leave, because there's usually a hefty fee for this exchange, and you'd have to carry a load of cash with you, which isn't a good idea. I also absolutely would not buy travellers checks, as they too, carry a fee and they're almost obsolete these days.

Yes, you can use your credit card for just about anything these days since we moved on from trading in kangarodd and rabbit pelts.!

But if you are interested in fine tuning to save a few dollars here and there, do as Mel says and find out from your bank what charges are for both overseas credit card transactions and withdrawing cash [certainly with a savings account debit card and not a credit card].

I've discovered in the past that whereas you couldpay 1% - 2% for the credit transaction, a cash withdrawal with debit card is also a minimum of 2% because it can be something like $5 + 1% of ammount withdrawn and so withdrawing the maximum of $500 you pay $5 + $5 = 2%
If however you withdrawin $100 lots you pay $5 + $1 for each $100 and that would = 6%.

Far better to withdraw in maximum ammounts in that situation.

Banks here in Australia are also introducing additional ATM withdrawal fees of about $2, so that just adds to the cost situation.

Even though travellers checks are "old hat" , still worth checking out as some organisations like AMX if you have an account can do them for free and so then you may just pay the exchange rate "plus the buy/sell span" - and that can be more of a killer.

Mel - if you're going to be around in Oz for a while, you're shooting yourself in the foot expense wise by buying with a US credit card [connected to your US bank I imagine] instead of getting an Aussie one if you can and the US exchange rate has nothing to do with it.

I signed up for a Capital One VISA card for international travel because they don't charge a fee. It's even a rewards card. I got cash back and a very good exchange rate.

Also, withdrawals on my debit card I was only charged $1.50 by my U.S. credit union.

Bushranger -

We're paid in US dollars, so the exchange rate has everything to do with it for us. We have an OZ account, but it makes no sense for us to get an OZ credit card as we'd have to transfer the funds into the OZ account to pay the OZ credit card. As it is, we have to transfer funds from the US account into the OZ account for rent, etc.

If you pay an international use fee on each purchase with the credit card Mel and it was possible for the paying organisation to pay salary into your Australian account, and the ammount would be whatever the equivalent would be for exchange rate at any time, then no effewctive loss of salary.

But where you're losing now would be in transfers to for rent etc. and in the international use fees if applying on the credit card.

Whatever the purchase is going to be in Australian dollars, all the exchange rate does is convert that to US $
For example if you buy something for $100 with exchange rate .65/$1 then it will be US$65 but would show on your US account as 65+fee, lets say 66

If the monthly salary was US$10,000 you'll lose US$66 for every A$100 purchase and then say $30/month in transfer fees.

Lets say that you make 40 purchases a month = US$2640 + 30

If you had your salary paid into an Oz account or a split if you also have payments in the US to be made.
Lets say you do a US$65000/35000 split and so you have A$10,000/m in Oz account for purchases and rent [hopefully transfer fee not applying if absorbed in organisation administration]

Your 40 purchases would be just A$4000, ie no international per purchase fee and you save at least US$40/m.
The exchange rate not coming into it.

Of course there could be some weirder payment arrangement that helps with taxation or whatever.

I appreciate your concern Bushranger, but we've looked at this from just about every angle and we're doing what makes the most financial sense for us.

US company, US payroll, US banks. No way to pay directly into OZ account, and we'd prefer not to anyway for various reasons. No fee on our US ATM. Nominal fee on our US credit card.

We chalk it up to the cost of living overseas. We've had similar banking issues in every country we've lived in.