Credit card or foreign bank account for overseas purchases?

[emiaby]

Hi folks! I'll be doing some traveling later this year from May onwards, and am trying to establish the most cost effective way to spend my rands overseas. Two options have presented themselves:

1) Open overseas foreign currency account

Convert my rands to foreign currency (e.g. using Currencyfair or Shyft), and then send that foreign currency overseas to a bank account I open.

or

2) Use SA credit card

Use a South African credit card to make all my purchases overseas and let that cc provider handle the currency conversion e.g Visa or Mastercard.

Does anyone have any experience travelling and using either or both of these methods and can provide advice on which is the more cost-effective? I'll be travelling throughout the Nordic countries/South Korea/the US/the UK/Ireland. First time travelling and wanting to find out as much as I can about how to spend rands wisely overseas!

 

[augjdog]

@emiaby Use your credit card, you need a form of identification for opening bank accounts in most countries, check whichever country you are going to visit what the requirements are. You’ll pay a premium in anyway for sending and changing rands to foreign currency, why not let your bank handle it? Also credit cards come with travel insurance

 

[resjudicata]

@augjdog Yip. You will struggle to open a bank account. Just use a credit card and make peace that you’re paying 5 to 10% more.

Or convert before you go. Using a company like fxrand.co.za or one of the many others. And then just take the converted currency with you.

Dont use a bank to convert. It will cost you about 1.5% whereas other forex companies can get it below 0.5%

 

[mick7777]

@emiaby Use capitec. Cheapest

 

[susan001]

@emiaby Use Capitec Credit card, it has 0% conversion fee. Also comes with basic travel insurance. I have it linked to Apple pay and just tapped everywhere in Mauritius and Turkey. The machine will ask for local or foreign currency. Just pick local

 

[susan001]

My FNB premier card was charging 0.55% fee per transaction

 

[plainjane3]

@susan001 So just remember the bank uses a spot rate..... What does this mean.
They have a value of the current rate it is, but they convert at a rate a few pips better for them giving them a spread.

Essentially you would do the same when moving currency, which means this compared to shelving in shift would be about equal

 

[zandry42]

@plainjane3 Only difference is converting all to currency beforehand locks in a spot rate, where using the credit card would use the spot rate at the date the payment gets processed.

 

[stinna]

@emiaby keep it simple. just use a credit card, that's what its for. heck, even normal maestro/visa debit card will work in foreign atms, should you need to withdraw cash.

these days you even have the option of using your cellphone via samsung/apple/google pay - and you're travelling in mainly first world countries - so you should be even be able to go cashless most of the time.

to open a foreign bank account you will need to be a resident/have a permanent address in that country.

i don't even bother with traveller's cheques - always wondered why people still use them - i guess its the boomer way.

 

[rudye]

@emiaby Use a credit card. The only reason to do otherwise is if you know precisely what the forex rates are going to do and you can lock in. But let's face it, if you know that, you don't need our help.

 

[mariposa7]

@emiaby Which country are you planning to travel to? To open an acc overseas, most banks would require you to present yourself in person and have documentation re: working visa, reasons for opening an account, tax status etc

 

[silentjohn]

@mariposa7 Can open a standard bank platinum optimum account domiciled in the UK holding pounds from SA.
Can even use it for UK debit orders.

 

[gusbus48]

@silentjohn Those are not easy to open. I think there is a min deposit if I remember correctly and the paperwork was a pain to get everything.

 

[silentjohn]

@emiaby I would use Shyft.

 

[syoza]

@silentjohn I agree. I used my shyft physical card while I travelled and it was brilliant. If you need cash then research the ATMs in the country you're at to see which you can withdraw from cheaply. In Turkey HSBC was a good ATM to use.

I also found you can buy prepaid cards at some grocery shops. So you could EFT to the prepaid card or top up the prepaid card with cash at an ATM. Then you avoid swiping and conversion fees because you essentially have a local card

 

[evita111]

@emiaby Nedbank had an option that gives you two travel cards (in case you lose one) that you can load and buy more euros whenever you want using the banking app. I found it very simple and easy to use.

 

[gusbus48]

@emiaby 1 - You won't be able to open an account overseas, or rather it will be extremely difficult.

2 - Use Shift, you can order physical cards in specific currencies. You control everything through your mobile, including how much money is available on the card.

 

[syoza]

@gusbus48 You can't open a foreign account but you can use prepaid cards. There will be a low limit for foreigners but it's still useful.

FYI this can also be done in SA and the limit is 25k