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 ATM’s which were all on the Cirrus network. It was a good reminder of the importance of having a few payment options when travelling.

If you are planning on going abroad this holiday, make sure you have your currency sorted before you leave. 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 wallet 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 travellers 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 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 taxi’s or 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.

 

10 Travel tips

Work with a budget

Calculate how much money you will need each day on holiday in the foreign currency. Once you arrive stop thinking in rands unless you want to drive yourself crazy. Just stick to your daily spending budget, and if you overspend one day, just eat bread and water the following day!

Apply in Advance

If you’re planning on using a travel card, apply several days in advance. Technically, it should be issued the same day, but demand for the product is resulting in delays.

Comply with FICA

When applying for currency, you have to prove your identity. Take your ID, passport, proof of residency and ticket with you when you go to the bank.

Use your credit card for bookings

All banks offer free travel insurance when you book your airline ticket using your credit card. Basic travel insurance covers emergency expenses, legal assistance and even theft or delayed luggage.

Inform the Bank

Notify your bank when you are travelling so they don’t block your card if they become concerned about transactions from unusual locations.

Chip It

Although most credit cards are now chip enabled, if yours is not request your bank to issue a new card with chip technology when travelling to France or the UK. These countries are fully chip integrated and you may have a problem using a mag stripe-based card.

Traveller’s cheques for the US and Africa

When travelling in the US, traveller’s cheques are cost-effective as they are accepted like cash at most stores – even taxi drivers accept them. Technically you can use a credit card when travelling into Africa beyond South Africa’s borders, but it can present problems, so taking US dollars and traveller’s cheques is advised.

Separate Cards

If you’re travelling with a partner, carry your cards separately or split your currency. If one of you is robbed, you still have access to immediate cash.

Leave a Paper Trail

Leave the details of your card or traveller’s cheques with a partner or close friend back home. If you need to report them stolen, you’ll have access to the relevant information.

Watch your cash flow

Use a separate card for preauthorisation. Hotels and car rental companies block funds on your card as part of a pre-authorisation process to ensure that the funds are available when you come to pay. The problem is that they usually only unblock these funds several days after you’ve paid, limiting the amount you have to spend on the rest of your trip. If you are using a travel card, give the hotel or car rental company your credit card for pre-authorisation.

Draw Big Bucks

Draw cash in larger denominations to cut your transaction costs. There is a cost to drawing cash, which includes the currency conversion fee, your bank’s transaction fee and the foreign bank’s fee. The foreign bank charges an additional fee for using their ATM network of around two dollars or two euros. Travel cards usually have a set fee of around two dollars per withdrawal.