Guiding consumers since 2009

Should you use your bank card while overseas?

By Staff Writer
When planning to travel overseas, it is important to know which bank cards you can use on your travels. But which card is perfect for taking on your travels, and which cards should you leave behind?
 
Stacey Barnett, sales and marketing manager at Dreams, a travel company, notes: “Debit, credit and travel money cards can generally be used in most destinations around the world as most South African banks are linked to Visa or MasterCard, which allow for global transactions.”
 
Daniel Buntman, from Absa Retail International Banking, points out that cards that are part of the Visa or MasterCard network, and that have been “configured for international use can be used overseas wherever those merchants or banks partner with the schemes.”
 
However, Barnett highlights that it is important to know as much as possible about the country you are going to visit, as some might not have the infrastructure required to accept card payments. In those instances, you will need to ensure that you have enough cash in the relevant currency to cover your expenses.
 
There are also some cards which are not accepted in certain countries. For example, Barnett points out that the Diners Club card cannot be used in some African countries.
 
Should you inform your bank?
 
When you are travelling and plan to use your debit or credit card, it is important to inform your bank that you will be doing this. As a precaution to prevent fraud, some banks will block overseas transactions.
 
“Notify your bank that you will be going abroard so that your credit card isn’t blocked while you are shopping because your bank suspects that there might be irregular transactions occurring on your account,” highlights Chris Labuschagne, CEO of credit card at First National Bank (FNB).
 
“You should inform your bank as this will help to prevent fraud. As a safety precaution some banks also block purchases or transactions should they take place in a foreign currency which can inconvenience you when attempting to make payments and purchases,” adds Barnett.
 
The transactions
 
“Wherever network partners are accepted for payment a card can be used for payment. It is worth noting that any transaction that is not a purchase or goods or services but rather is akin to a cash withdrawal attracts extra charges if a credit card is used, as these transactions are treated differently under the card terms and conditions,” says Buntman.
 
“Overseas card usage means that additional charges are levied (up to three percent depending on the card issuer) on top of the rand value of the transaction currency cost,” adds Buntman.
 
Barnett reveals that among the additional fees that banks can charge you when using your bank card overseas are: currency conversion, cash advance, cash advance interest, local ATM fee and international ATM fees.
 
Buntman highlights that travellers need to be aware that the price that they see on their bill will not be the same as “the wholesale rate seen online or in the newspaper, for example.” This is because the FX rate that is used to convert payments to your home currency is determined by the network providers.
 
Furthermore, Buntman states: “If a cardholder tracks spend via notification services (SMS) then the cardholder should be aware that the amount authorised may not be the same as the amount charged if there was a delay between when the cardholder swiped at the merchant and when the merchant banked the transaction. In short, the card holder bears all the risk of currency movements.”
 
Even if you are able to use your bank card overseas, there are certain transactions which will still require cash payments. These include taxi fares, tips/gratuities, as well as paying street vendors or payments at arts and crafts markets.
 
Alternatives to traditional bank cards
 
Rather than using your bank card overseas, which can incur many additional and possibly unforeseen charges, there is the option to make use of travel money card or cash passport.
 
Buntman points out: “A very cost effective option that has the same safety profile as credit card with the currency risk is the multi-currency cash passport which is issued in four currencies wallets on one physical plastic card.”
 
According to Buntman, the multi-currency cash passport is available in US Dollars, the Euro, the Pound and Australian Dollars. “If you want to remove the cost of exchange rate volatility and are travelling to any of those four currency zones, we see this as a very effective product [under the correct circumstances].”
 
“The beauty of this product is that a customer can manage four currency wallets on one card, check balances via a dedicated app or online, trust that transactions are safe and secure, while simultaneously reducing the risk of theft and all at a fixed cost managed upfront before your holiday or travel begins,” adds Buntman.
 
Several financial institutions offer these cards, which allow you to load money onto the card in the currency of the country you are going to, and you do not incur any of the additional charges, such as international ATM fees and currency conversion fees, that would result from using a bank card.
 
Travelex explains: “Cash Passport is a MasterCard or Visa prepaid currency card. You “load” your travel money onto it in advance (at a participating bank or retail outlet in South Africa) and then use it at millions of MasterCard or Visa ATMs and merchants across the world (depending on what type of Cash Passport you have), to access your money quickly and safely.”
 
It is important to note that a Cash Passport is for use outside of the country, and therefore should not be used in South Africa. The card can be reloaded with funds at any of the following banks or financial services providers:
  • ABSA Bank Limited
  • American Express Retail Foreign Exchange (Tourvest)
  • Bidvest
  • FNB
  • Global Foreign Exchange
  • South African Bank of Athens Limited
  • Tower Bureau de Change
  • Travelex Retail Foreign Exchange (FX Africa)
 
Barnett adds: “[A travel money card] has the advantage of not carrying the currency conversion fee as well as keeping you within your prepaid budget. Credit and debit cards offer convenience and have a number of built in safety features should they be lost or stolen. Credit cards, though, are more expensive due to the interest charges.”
 
The cost of bank cards overseas
 
The table below illustrates the cost of using a debit card and a credit card overseas for the big four banks, Absa, FNB, Nedbank and Standard Bank.
 
Bank Card Swipe fee ATM fee International currency conversion fee
Absa Transact Credit Card* R0.00 R50.00 (at Barclays and Global Alliance ATMs)
R50.00 (at other international ATMS)
2.75% (of the rand value of the transaction)
Flexi Account R9.75 + R0.75 per R100 (max. R45) R35.00(at Barclays and Global Alliance ATMs)
R50.00 (at other international ATMS)
2.75% (of the rand value of the transaction)
FNB Classic Credit Card 2.75% of transaction value R 30.00 + R1.65 per R100 2.75% of transaction value
Smart Account 2.75% of transaction value R30.00 + 2.75% Commission and Conversion fee 2.75% of transaction value
Standard Bank Access Credit Card Not listed R35.00 + 1.5% of transaction value 2.5% of
rand value of
transaction
Access Account Free R33.00 + 1.40% 2.5% of Rand value transaction
Nedbank Classic credit card Free R35.00 plus R1.28 per R100. 2% of transaction value
Nedbank Savvy Bundle Free R35.00 plus R1.28 per R100 or part thereof 2% of transaction value
Source: Bank websites, click the card name to go to the link
*Absa does not charge swipe fees on any of their credit cards, according to the bank.
 
The fees for the Multi-Currency Cash Card will differ depending which country you are visiting, the USA, Australia, the UK or a European country dealing in the Euro. However, according to the Cash Passport website, purchases at a MasterCard merchant are free, as the Cash Passport is a MasterCard affiliated product.
 
There is a four percent currency to currency transfer for transfers between all currencies. According to the website, the ATM withdrawal fees for a Cash Passport are as follows:
 
US Dollar Great Britain Pound Euro Australian Dollar
$3.00 £1.80 €2.00 $3.00
Source: Cash Passport
 
In addition to the above fees, Absa points out that the initial conversion fee for the Cash Passport is 1.65% plus VAT, which is much less than the conversion fee charged on debit and credit cards.
 
From the above, it would appear that the Cash Passport, even though some of the fees are charged in a foreign currency, is cheaper to travel with, as if you use the card at a MasterCard merchant (there will be a sign with the MasterCard logo or you can ask the sales clerk) it is free to swipe your card.
 
Banks, on the other hand, charge you for every transaction that you make overseas. And charge you an international currency conversion fee on your purchases and withdrawals.
 
Tips for travellers
 
Here are some tips for travellers wanting to use their bank cards overseas:
  • “Be careful not to overspend, as the last thing you want is to come home from a wonderful overseas holiday to a mountain of new debt,” says Barnett.
  • Use the same safety precautions you would at home such as not allowing someone to swipe card where you can’t see it and keeping your card safe at all times.
  • Make sure to have a back-up card in case of emergencies.
  • Research the country of intended visit to check acceptable methods of payments as some countries may still be cash reliant and some merchants have a preference to a particular brand, i.e. Visa vs MasterCard.
  • “Some countries may have card acceptance coverage limited to urban areas. To minimise the risk of your money being stolen, you should spread the risk across cash, a Cash Passport, and a credit card if you have one,” suggest Buntman.
 
“Travellers must ensure that they learn as much as possible about their destination when planning their trip whether domestic or abroad. Watch the currency fluctuations, and always check the ‘buy-rate’ for the currency you wish to have loaded on your travel money cards. The better prepared you are the more time you will have to enjoy your holiday,” adds Barnett.

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