If you are planning on going overseas this holiday season, make sure you have your currency sorted before you leave.

Whenever I land overseas I withdraw some cash at the airport ATM using my credit card. However on my last overseas trip I discovered that my Mastercard was not accepted at the airport’s ATMs which were all on the Cirrus network. It was a good reminder of the importance of having a few payment options when travelling. Historically traveller’s cheques were the main payment option when taking spending money for your overseas trip. While traveller’s cheques still have their place, especially if you are travelling in the US or Africa, credit cards and travel wallets are fast replacing cheques as a more convenient way to pay for goods and services. With a traveller’s cheque you have to find an exchange bureau that won’t charge you to cash in the cheques and you may end up carrying more cash than you feel comfortable with.

Travel card

A travel card or travel wallet is a prepaid debit card that allows you to load your currency before you leave. You know the rate at which you purchased the currency and have the convenience of being able to pay at the merchant or draw cash from an ATM without the hassle of cashing in traveller’s cheques.The four major banks offer travel cards across a range of currencies. For example the Absa Cash Passport is available in the following currencies: US dollar, Euro, Pound sterling and Australian dollar. MasterCards are chip and PIN-protected. Visa Cards are PIN-protected and have a signature panel at the back and can be replaced after loss or theft, just like traveller’s cheques. A travel wallet allows you to budget for your holiday as it is pre-paid.

Credit card

Credit cards can be used virtually anywhere and you can draw cash from ATM’s. The downside is that you do not know exactly the exchange rate on the day of your purchase so you may have a nasty surprise if the rand suddenly collapses – as it did earlier this year – throwing your budget out of the window. You also need to monitor your spending carefully so that you don’t have a scary credit card bill when you arrive back home. Even if you do opt for a travel wallet, a credit card is still a good option to have as a back-up especially for emergencies. From experience I have also found that the travel card cannot always be used for low-value transaction points like the Metro underground or to get a trolley at JFK Airport and there were times when the merchant’s terminal could not read the card. Having my credit card was a money saver in those situations.Travel cards are also limited in the number of currencies available and Absa says if the country you are travelling in has a less popular currency, then a credit or debit card is probably the best way to go, as a travel card will be converting your money into the major currency and then into the foreign currency, so will be more expensive.

Cash

It is great to arrive in a foreign country and already have some cash available to pay for taxis or to grab that first cup of coffee. The best option is to buy a small amount of foreign currency from your bank before you leave South Africa. You don’t want the risk of walking around with a wad of cash so just get a small amount to see you through until you can draw cash at your destination.

Costs

As the banks each have their own cost structure it is worth finding out the most cost effective way to spend. You can use your Mastercard or Visa enabled credit, debit and cheque cards anywhere in the world. There is usually no merchant fee when using your credit card overseas however there is a 2% foreign currency conversion charge. Your debit card will carry costs each time you swipe it but the conversion fee may be lower – for example Absa charges a 1% conversion fee on their debit cards. Remember if you have a bundled fee option this does not usually include overseas transactions. There is also a fee to withdraw money at an ATM which can be pretty expensive and in some countries there may be an additional charge from the ATM provider, but this will generally be mentioned on screen. According to Absa, if you intend to spend over R15 000 on holiday then their Cash Passport is cheaper than taking cash or using a debit card.