Once your flights and accommodation have been booked, the
biggest concern thereafter is spending money. Well for some of us that is. For
the purpose of this article, do try to soberly forget the planning of that
adrenalin-infused itinerary or the list leading you to all the best
sightseeing spots at your preferred destination. After all you’re going to have
to pay for these things somehow, no?
Despite all of its problems of late, the Euro certainly makes
it simpler to travel across multiple European destinations – saving most of us
the hassle of having to swap forex at every border crossing. Would it be selfish
to hope that austerity measures prevail within its 17-member alliance, ensuring
its survival, for this very reason alone?
Whatever the required currency, it goes without saying that the benefits of credit cards or
prepaid plastic eliminates many of the risks associated with travel forex, what
with chip and pin safety measures, but it is impractical to think you will be
able to escape carrying cash around with you during your globetrotting
adventure.
So the question to ask is: What are the risks associated
with plastic, paper or cold, hard sterling?
Plain and simply put, it can be summed up in three phrases…
- High bank
charge
- Foreign
transaction fees
- Unpredictable
exchange rates
While the money in your bank account is yours, banks stake their
claim to a certain portion of it through services rendered – and when those
services include making your money available far, far away from home it can
become quite an expensive business.
Money in the Wall
When using your debit card in a foreign ATM, money is taken
directly from your bank account and instantly gives you the currency of the
country you’re in. It’s important to remember that while you'll pay fees for
the convenience, more often than not you’re getting a better rate than
exchanging traveller's cheques.
Pitfalls in this instance for using a foreign bank’s ATM
facilities could see you being charged a fee by that bank, besides your
own. Charges your bank may levy against your account, besides the normal service
fee, is an additional percentage for the currency exchange. It is best to familiarise
yourself with all of these charges before you go. The best way to get around it would be to
plan better with your cash and reduce the number of ATM visits you
make while abroad.
It’s also important to remember that certain overseas banks
set an independent withdrawal limit - safeguarding you but an inconvenience if
you’re not aware of it and have the need to spend more than you are able to
access.
Bank rolling your
holiday
Plastic fans gloat that you get a better exchange rate by
using a card instead of buying the forex before you go. This may be true
only if
you have a card with particularly low fees. Irrespective, choosing to
make
purchases or withdrawals with your credit card always means you’re
absorbing costs
somewhere along the line for using the banks money instead of your own -
you're simply not aware of it because it's been seamlessly worked into
the credit system.
Some establishments also employ what is known as the
forward exchange rate. This is a specific rate agreed upon to exchange
one
currency for another at a specified future date. The forward exchange
rate acts
as a buffer for settlements made by card, safeguarding institutions for
delayed
transfer of funds and any exchange rate fluctuations that may occur
during this
time. Thus it is always higher than the current exchange rate. So the
key piece of advice here is be aware of this rate when making
payments while on holiday – sometimes the ‘secured rates’ can work in
your
favour, especially is there is a big fluctuation, but our advise is,
"Don’t bank on it."
It’s also important to consider dynamic currency conversion fees.
Some opportunistic European merchants can charge you for converting their
prices and while this may seem like a convenient service it only translates
into more middle-man fees being added to your transaction. If the conversion is
detailed on your receipt, reflecting a dollar rate and the original currency
rate, you have right to refuse the converted rate. But then again the bank may
end up charging you for the conversion anyway. What to do? Be aware of whose having a slice of
your ‘holiday savings pie’ and factor these cost in so that you don't come up short or in shock.
Before you leave, ask about all these unknown fees. Banks
are required to detail international transaction fees as line items on your
statement, helping you to see exactly what you've paid for – but this doesn’t
help much as you will only see the charges after your return.
It’s also wise to confirm with your bank that you'll be
making withdrawals while traveling or else you could find your card frozen due
to unusual spending patterns. Another important thing to check if you are going to
solely rely on swiping your plastic when abroad is that the validity period of your card matches
the time frame of your trip.
In touch with your Internet
Don’t rule out the benefits of online or mobile banking
while away. Admittedly, you may not be making many EFT payments, but it will be useful to
log on to check balances and monitor those unforeseen charges mentioned above.
It’s also useful when there are payment delays for the conversion and exchange rates.
Still unsure? Here are the benefits of a few forex options provided by local banks and credit card merchants.
American Express®
GlobalTravel Card
- Locked
in exchange rate with cash loaded prior to travelling
- The
American Express GlobalTravel Card can be used to purchase products and
services at overseas merchants, and make ATM cash withdrawals at millions of
locations that accept American Express worldwide
- Access
to 24 hour global assistance programme
- As a measure of precaution American
Express issues two cards (one being a backup card) at the time of purchase.
Both cards are magstriped and require the card member’s signature or personal
PIN to transact, keeping security tight.
- If the primary card goes missing, it can immediately be
blocked and the backup card activated at no cost via a call to the 24-hour
Customer Service Centre.
- Is
subject to local exchange controls
- Introductory
Offer – No Card Purchase Fee until 31 December 2012, thereafter regular
purchase fee of R100 is applicable
Visit the Amex site for their rates and fees
FNB: Visa Cash
Passport
- Withdraw
cash from any ATM displaying the VISA logo
- Swipe at
any point of sales displaying the VISA logo
- Accepted
around the globe
- 24/7
global emergency assistance
- Visa Cash
Passport is pre-loaded with your travel money before your trip, making it easy
to stay within your budget
Visit the FNB website for their rates and fees
Standard Bank:
TravelWallet
- Manage
Exchange rate fluctuations: You spend at the rate that you bought your foreign
currency; hence there is no exchange rate fluctuation if used in the same
currency as that loaded on your card
- Your TravelWallet is both a payment and ATM card. Your money is available to
you 24/7
- Draw
money in the currency of the country you are visiting at any MasterCard ATM
- There is
no transaction fee for using your card at a MasterCard merchant but there may
be a currency conversion fee if the currency you are paying is different from
the currency loaded on your card as a foreign exchange transaction will take
place
- The exchange rate will be the same as that offered by MasterCard on that
date
Visit the Standard Bank Website for their rates and fees
Have any money tips of your own to share, why not post a
comment below?
Follow @GoTravel24 on twitter or like our Facebook page for the latest travel updates or come check out our images on Pinterest
