Financial considerations that international travelers need to keep in mind
With the holiday season upon us once again, most people are looking forward to their upcoming holidays, with international travel being on the top of the list for many. Given the logistics involved in an international trip, extensive planning and preparation is key to avoid any disappointments and excessive spending.
Before you pack anything, it’s important to make a list of all the things you will need for the duration of your trip, most importantly take the time to note all the financial considerations you would need to have in place for the country you will be visiting. The last thing you want is to get to your destination and not be able to transact freely or to come back to exorbitant unnecessary penalty fees on your transactional account.
Chantal Robertson, Head of Cross-Border Advice at FNB says, “Before travelling abroad, it’s important to review your finances and existing bank account and credit card options from an offshore spend perspective. To ensure that you’ve covered all your bases, it is worthwhile having a conversation with your Private Advisor or Wealth Manager regarding the impact of the individual allowances, how to manage the currency conversions and to get a better understanding of the international transaction fees, depending on the payment mechanism used.”
Below are 5 key items to tick off your prep list to ensure that you have a hassle-free holiday:
- Take note of your Single Discretionary Allowance boundaries – The Single Discretionary Allowance (SDA) covers all personal foreign payments and transfers, including travel, gifting and foreign investment. It is important to remember that any purchase using your local debit or credit card while you outside the country is also allocated to the SDA. These limits are reported and controlled at an individual level, based on identity number. In terms of the current rules, SA resident individuals (18 years and older) are entitled to the following:
- R1 million annual Single Discretionary Allowance (SDA)
- R10 million annual Foreign Investment Allowance (FIA), subject to Tax Clearance
There are many benefits to pre-funding a Global Account using the above allowances. Debit and Virtual cards are available on US Dollar, Pound and Euro accounts.
- Ensure that you take up some travel insurance cover – Travel insurance covers medical emergencies during your travel, including the cost of medical treatment up to a certain limit, whether for a medical condition or for an accident. It also covers trip disruptions, such as cancellation or curtailment of a trip due to any reason and covers booking cancellations by you or the tour company.
- Beware of withdrawal fees when drawing cash – There is a withdrawal fee (for example €4 for withdrawals in Europe), but using a Global Account Debit card is a more secure means of making purchases so it is advised that cash be withdrawn using this card at an international ATM only when necessary (in the case where bank cards aren’t accepted etc.) Get cash in the currency you need by simply ordering it via the FNB App.
Make sure you have some cash on hand for tips, taxis or to buy something special at the airport.
- Use your Global Account card for international card transactions – Swiping with a local credit or debit card attracts an additional 2% currency conversion rate. However, when using a Global Debit or Virtual card there’s no conversion rate at all if you’re using it in the currency of the country. For example, if you’re travelling to Europe and have a Euro Global card, there will be no additional fees or commissions levied – it’s the same as spending here in SA. And even if you are spending in another currency, such as the Australian Dollar, there is only a 1% conversion rate – which is still less than your local credit card fee. In addition to this benefit, our customers can earn eBucks through Smart spend when they use their FNB Global Virtual card for 80% of their transactions.
- Leverage your banking benefits or value-adds – Take the time to tap into some of the benefits that come with a Global account. The FNB Global account provides customers with the following benefits:
- Free travel insurance when you purchase your flight ticket with your Global Debit or Virtual Card
- Up to 40% discounts on flights and car rental when booking with eBucks travel
- eBucks Travel desk to help you book your holiday
- Access to over 1200 international airport lounges
“The Global Account is really the most cost-effective and easiest way for travelers to enjoy their time abroad without any hidden currency conversion surprises and with a lot of additional banking benefits. By following the above travel tips, you will be able to focus on exploring your destination and have peace of mind from an offshore spend and regulatory perspective,” concluded Robertson.
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