November 12, 2017

How to make your travel rand go further

By Rebekah Funk

We live in a time when an overnight change of finance minsters can reduce a dream overseas holiday to a no-frills alternative. While there’s little you can do to control the rand’s slide against the dollar (yes, it’s sliding…again – R14.40/US$1 at last count), foreign exchange experts say there are a few ways to ensure you get the best bang for your buck when abroad.

Avoid using credit cards

The first, according to Andrew McDonic, Chief Executive Officer of Financial Services at Tourism Investment Corporation Limited, is not to use your credit card unless you really have to. “The exchange rate [fluctuation] and commission charged on credit cards can amount to between 6-10% of the value charged,” he explains.

Also, foreign exchange rates can make significant gains or losses in a single day and travellers have no control over what rates they’re buying at when using a credit card. “Most travellers don’t know this,” explains McDonic, “and even when they receive their credit card statement it is virtually impossible to know what the exchange rate was on the transaction day in question.”

Go for prepaid and cash mix

Using a mix of cash and a prepaid currency card is a far better option, McDonic suggests. “Both cash and prepaid cards are sold by the foreign exchange bureaus and banks at a total margin of around 2.5% — way less than the rates on credit cards. And the pricing and commission charges are far more transparent at the time of the transaction.

Prepaid currency cards can be used much like a debit card to draw money at ATMs (with a minimal transaction fee), or used like a credit card to pay for restaurant meals and goods in shops. Since currency rates are locked in on the day of purchase and there are no point-of-sale transaction fees, you can avoid hefty exchange fees.

Travelex regional manager Jacqueline Nosworthy agrees that prepaid currency cards are the best bet for extending your travel budget as the value of the rand drops. It’s also the most convenient and safest option, she believes. MasterCard’s Cash Passport, for instance, allows travellers to load more than one currency and is not linked to a bank account. Protected by chip and pin, the currency card is valid for up to five years and can be reloaded more than once, Nosworthy explains.

As an added bonus, Nosworthy says prepaid cards help travellers stick to budgets as amounts loaded are fixed, and you can’t dip into your credit card or overdraft facilities via the prepaid card.

Do your research

Look into how much foreign currency you’ll need for accommodation, activities, meals, transport and souvenirs, advises Nosworthy. “Then calculate the amount of foreign exchange you are going to require and purchase it all at once to avoid being charged for more than one transaction.”

Research can also save you buying too much currency, which can be costly because there’s a transaction fee to convert foreign buck back to rands. And you might lose on the conversion if the rand’s got stronger. Here’s hoping...

3 reasons why prepaid beats traditional debit cards

1. Savings of up to 10% in exchange rate fluctuations and transaction fees when you use a prepaid currency card versus a debit card.

2. You aren’t able to go into overdraft on a prepaid card.

3. If your prepaid card is lost or stolen, thieves won’t be able to gain access to your bank account as the two are not linked.

Need more expert travel advice? Contact your nearest Sure Travel consultant today, or call 0861 47 48 49.


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