Should you use your bank card while overseas? | JustMoney (2024)

When travelling overseas, cards present a safe and convenient option for accessing your funds. But which card is perfect for taking on your travels, and which cards should you leave behind? We find out.

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Stacey Barnett, former 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”.

An Absa spokesperson 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’s important to know as much as possible about the country you are planning 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.

Acceptance of specific cards is also limited in certain countries. For example, Barnett points out that Diners Club cards can’t be used in some African countries.

Should you inform your bank?

When you are travelling internationally and plan to use your debit or credit card, it’s important to inform your bank in advance, says Chris Labuschagne, CEO of credit card at First National Bank (FNB). As a precaution to prevent fraud, some banks automatically block overseas transactions.

“Notify your bank that you will be going abroad so that your credit card isn’t blocked while you are shopping owing to irregular transactions occurring on your account,” says Labuschagne.

Transaction fees

Absa says, “Wherever network partners are accepted for payment, a card can be used. It’s worth noting that any transaction that is not a purchase of goods or services, but is a cash withdrawal, attracts extra charges if a credit card is used. These transactions are treated differently under the card terms and conditions.”

“Overseas card usage means that additional charges are levied (up to 3% depending on the card issuer) on top of the rand value of the transaction currency cost,” adds Absa.

Barnett notes that the additional fees that banks may charge you when using your bank card overseas include currency conversion, cash advance, and cash advance interest fees, and local and international ATM fees.

Absa notes 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 foreign exchange (FX) rate that is used to convert payments to your home currency is determined by the network providers.

Furthermore, Absa says, “If a cardholder tracks spend via notification services (SMS), they should be aware that the amount authorised may not be the same as the amount charged. This can owe to a delay between the cardholder swiping at the merchant and the merchant banking the transaction. In short, the cardholder bears all the risk of currency movements.”

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 a travel money card or a cash passport.

Absa points out, “A very cost-effective option that has the same safety profile as a credit card, but without the currency risk, is the multi-currency cash passport, which is issued in seven currency wallets on one physical plastic card.

“If you want to remove the cost of exchange rate volatility and you are travelling to any of these currency zones, this is a very effective product under the correct circ*mstances.

“The beauty of this product is that a customer can manage up to seven currency wallets on one card, check balances via a dedicated app or online, trust that transactions are safe and secure, and simultaneously reduce the risk of theft - and all at a fixed cost managed upfront before your holiday or travel begins,” adds Absa.

Several financial institutions offer these cards, which allow you to load money onto the card in the currency of the country you are visiting; and without the additional charges, such as international ATM and currency conversion fees, that would result from using a bank card.

Travelexexplains, “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
• FNB
• Global Foreign Exchange
• Inter Africa 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 Absa, FNB, Nedbank, and Standard Bank.

Thefeesfor the Multi-Currency Cash Card will differ depending on which country you are visiting. However, according to the Cash Passportwebsite, purchases at a MasterCard merchant are free, as the Cash Passport is a MasterCard-affiliated product - but some merchants may still charge their own fee.

There is a 4% currency-to-currency transfer fee for transfers between all currencies. According to the website, the ATM withdrawal fees for the Cash Passport are as follows:

Source:Cash Passport

From the above, it would appear that the Cash Passport is cheaper, even though some of the fees are charged in a foreign currency. 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.

Some banks, on the other hand, charge for every transaction that you make overseas, along with an international currency conversion fee on your purchases and withdrawals.

Money tips for travellers

The following are tips for travellers wanting to use their bank cards overseas.

• Avoid overspending, as the last thing you want is to come home from a wonderful trip to a mountain of new debt, cautions Barnett.
• Use the same safety precautions you would at home, such as not allowing someone to swipe your card where you can’t see it, and keeping your card safe at all times.
• Make sure you have a backup card in case of emergencies.
• Research the country you intend to visit to check for acceptable methods of payment. Some countries may still be cash reliant, and some merchants have a preference for a particular brand, such as Visa vs MasterCard.
• In some countries, card acceptance is limited to urban areas. You can minimise the risk of your money being stolen by spreading your funds across cash, a cash passport, and a credit card if you have one, suggests Absa.

“Travellers must ensure that they learn as much as possible about their destination when planning a 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,” says Barnett.