How to save money online by shopping overseas

Christmas is fast approaching and the Australian dollar recently broke through parity with the US dollar.

Not surprisingly many of us are looking to take advantage by buying Christmas gifts online at US websites.

Our dollar's well up against the pound and the euro too so we can spread the net further. That's all fine, but be aware of what you're getting and postage costs which are quite high from the USA.

Our rising $A value means the big bargains may be overseas - just be careful about the risks and shipping costs.

In the past we've been limited to shopping around for the best deals at local stores. Now, thanks to the internet, you can compare products from all over the world and find the best price, whether the seller is in Melbourne, New York, London or Johannesburg. This is particularly true for clothing, books and electronics.

A copy of Dan Brown's The Da Vinci Code is the same no matter where you buy it.

Popular ways of accessing overseas stores online include Topshop.com, which specialises in fashion and has both UK and US websites, Amazon.com particularly for books and electronics, and shopping directly from merchants on Ebay.com.

As mentioned, postage costs from overseas can really add up, with Amazon currently charging $4.99 for books and DVDs shipped from overseas, and American TopShop around $15 per item. The shipping charges at notable US outdoor clothing outfit llbean.com are staggered by item, adding up to $50, $150 and so on.

This is offset by the fact that all purchases below $1000 from overseas are GST exempt, meaning you effectively get a 10 percent discount on anything you buy on top of the savings you make.

Australians are certainly taking advantage of these deals. Jenny Thomas from eBay says that they have seen a "considerable increase" in the number of buyers purchasing items from international sellers. Thomas says: "Not only are those buyers able to get a great deal, they can access brands consumers can't necessarily get here in Australia." If the seller won't ship to an Australian address, you can use a package forwarding service such as myus.com.

Great online deals are not limited to clothes and electronics, you can find massive discounts on overseas tours and flights on the web. Travel agents in Australia often lock in their prices at the start of the holiday season so they can print brochures and advertise.

But because our dollar has firmed significantly against most major currencies, prices fixed in other countries can offer far better value. For example, I recently looked at booking a place on a popular European tour. The price quoted by an Australian travel agent was around 30 percent higher than booking on the English version of the website. Needless to say I booked online, saving close to $500 by typing .co.uk at the end of the address, rather than .com.au.

If you are planning on heading overseas, you can also save plenty thanks to new products that allow you to lock into today's high exchange rate and also to minimise transaction costs when it comes to changing money into local currency.

Only a couple of years ago a British pound cost about two and a half Australian dollars; now it's closer to one and a half. This is great news for travellers, but not such fantastic news for Australians working in London who were planning to come home for Christmas.

An easy trap to fall for is to save up for an overseas trip, book the flights in advance, and then see the exchange rates change drastically before you leave. This can make for a budgeting nightmare. But there are a couple of ways to lock in your exchange rate before you leave.

You could buy a stack of US dollars or UK pounds ahead of time, or travellers' cheques. Carrying loads of cash overseas has obvious security problems.

Traveller's cheques are a far safer way to carry money overseas while locking in your exchange rate, but I've seen first hand how expensive and clumsy these instruments can be. Fewer and fewer merchants overseas will accept travellers' cheques, and those who do often charge a premium to convert them to cash.

In recent years I've simply withdrawn money from overseas ATMs with my debit card and copped the large withdrawal fees.

The latest way to lock in a great exchange rate is with a pre-paid travel card. If you don't want to lock in your exchange rate in advance, there are new products which make withdrawing cash overseas far less painful. Most ordinary debit or credit cards charge $4 plus 2.5 percent to withdraw cash overseas, which can add up to hundreds of dollars over the course of a trip. The Wizard Clear Advantage MasterCard has no annual sign-up fee, and doesn't charge you anything to withdraw funds from overseas ATMs.

The NAB Gold credit card offers similar features, albeit with a $90 annual fee. With any such product, check out overseas fees and charges before you leave.

Once you're overseas, there's the cost of communicating.

Bill shock can be particularly painful. Phones can burn data even when you're not using them, for example they can automatically log onto applications such as weather forecasts or currency conversion, so turn the data roaming function off before you step onto a plane.

The cheapest way of communicating overseas is to buy a prepaid SIM card with internet access, or to use free WiFi available at many public places, cafe's and hotels. Smartphones now have VOIP applications such as Skype, which allow you to make free calls over the internet to any Skype user back home.

You can also make international calls to mobile phones from Skype for around 20 cents per minute, far cheaper than using international roaming.

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