A weekend city break in a big city? Maybe a longer holiday on another continent? Regardless of the destination you choose, a trip abroad always involves preparations. Between packing the essentials and planning your stay, it is worth thinking about financial matters. How to pay abroad without overpaying? What traps related to money can wait for the unaware tourist from South Africa?
Matters that are better to avoid...
Plane tickets bought, hotel booked, suitcase packed. However, South African tourists travelling abroad often forget one thing during their preparations - their finances. The result? They buy currency at a currency exchange office at the airport or just decide to pay with their debit or credit card in their account currency.
"These are the least cost-effective ways to pay abroad. Land-based exchange offices very often offer unfavourable exchange rates. The more popular the location, the higher the spread, i.e. the difference between the purchase and sale price of the currency. Anyone who has tried to exchange money at least once for example in the center of Paris or New York has learned this," says Robert Blaszczyk, head of strategic clients department at Conotoxia.
Also, the idea of paying abroad with a debit or credit card settled in South African rands is rather dubious. This is, of course, possible, but exposes you to skyrocketing commissions, which can be as much as several ZAR. The exchange rate offered by the bank may be much higher in such cases.
Exchange your currency in advance
So what can you do to pay less abroad? One way to seek additional savings is to exchange rands using an online service. This saves not only money but also time. Online transactions can be made at any time, and thanks to mobile apps, currency can even be exchanged while waiting to check in at the airport.
"If you still have a long time to travel, it is a good idea to keep track of the exchange rates and consider buying the currency in several instalments. Such practice will allow you to average the purchase rate and limit the impact of sudden quotation changes, " says a fintech Conotoxia expert.
Bet on a multi-currency card
Exchanging currency through an online service may involve having a bank account in the currency in question and a card assigned to it. However, once again, you can take a shortcut and use a multi-currency card, easily topped up with ZAR on an ongoing basis via a mobile app.
This is currently one of the most advantageous ways to pay abroad. Using such a card, users avoid currency conversion fees and gain free access to dozens of currency accounts (e.g. in euros, dollars, pounds, or yens) between which they can exchange money and pay with funds worldwide at any time.
How do I pay abroad - by card or in cash?
Cashless payments are extremely popular, and fewer and fewer people are using cash. However, the habits of foreign payers may be quite different. Although card transactions are common almost everywhere, you may come across places, where it is not possible to pay in such a way.
"What should a multi-currency cardholder from South Africa do in this case? Take advantage of ATM withdrawals, in the currency of the visited country. Cash may prove useful, for example, in some bars, bakeries, or markets, which don’t accept card payments," explains Conotoxia’s expert.
Keep an eye out for extra fees at ATMs
Multi-currency users withdraw cash abroad without additional fees. However, ATM operators may charge their own commissions or even offer to process transactions at their rate.
"What does this look like in reality? When a tourist from South Africa withdraws euros in a country with a common currency, the ATM may offer to settle the transaction in ZAR instead of EUR, using its own exchange rate. Such a rate is almost always significantly less favourable. It is always better to pay in the currency of the visited place, " adds Robert Blaszczyk from Conotoxia.
Therefore, when withdrawing funds abroad, pay close attention to the messages displayed on the screen and do not agree to the DCC service, i.e. dynamic currency conversion.
PERSONAL FINANCE