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We often get asked how we deal with cash and payments when travelling internationally or even when purchasing items from an international online store.


Note: Although most of the following should be applicable to any traveller, this post uses examples based on options for South Africans.

When we travel abroad, we usually carry some foreign currency in cash but the necessity to do so depends on where you find yourself in the world. In developed countries, debit and credit cards are accepted almost everywhere nowadays and this is usually the cheapest way to deal with day to day spending. We carry both a credit and debit card and it would depend on the particular cost of a specific transaction to determine which one we would use to withdraw cash at a foreign ATM or make a Point of Sale purchase at a foreign merchant (swipe or online).

The reality is some bank charges are far from ideal for international travel and you need to avail yourself of the associated costs when using your debit or credit card to avoid unpleasant surprises. Let’s look at the two ways you might use your debit or credit cards when travelling:

ATM Foreign Currency Cash Withdrawal

The problem with most debit and credit cards is that when you withdraw cash at a foreign ATM there usually is a hefty transaction fee (charged by your bank) PLUS a currency conversion fee (commission charged by your bank - which could easily be 2-3%). To make it worse a lot of foreign ATMs might have add their own charges on top!

For some cards, the fee for ATM withdrawals might also be tiered. For example, there might be a flat fee of (for example) ZAR 40 for the transaction plus ZAR 1.40 per ZAR 100 withdrawn. You may also find some foreign ATMs limit how much currency you can withdraw in a single transaction, which makes it more expensive per currency unit than you might have thought. Also, keep in mind what your own account’s daily withdrawal limit is and adjust this in advance if needed.

As an example, if you withdraw Euro to the value of ZAR 5,000 at ZAR 16.00/EUR with an ZAR 40.00 transaction fee plus 2.5% currency conversion fee it will end up costing you ZAR 16.55 per Euro. However, if you only withdraw Euro to the value of ZAR 1,000 it will cost you ZAR 17.09 per Euro.

Importantly, keep in mind that when you use a credit card to make withdrawals at any ATM your bank may consider it to be a “cash advance” and will charge you interest from the date of transaction on the TOTAL OUTSTANDING BALANCE of your credit card account and any interest-free period would not be applicable. You should thus ensure that your credit card account has a positive balance at all times to avoid being charged interest if you plan to use it to withdraw cash.

Purchase at Point of Sale or Online in a Foreign Currency

This is the most likely way of making payments in any foreign currency when abroad - particularly in developed countries. You may also find that a lot of online bookings, for example, accommodation, will fall under this category. If you swipe your credit card at a Point of Sale you generally don't pay a fixed transaction fee, but may still pay a currency conversion fee. A debit card, on the other hand, may very well incur a fixed transaction fee in addition to a currency conversion fee at a Point of Sale. Avail yourself of the particular restrictions and costs of your bank and product.

If the currency conversion cost is the same when swiping a credit card at a Point of Sale than it would be to withdraw cash from an ATM then you have the opportunity to save the fixed transaction fee with the added bonus of not sitting on the cash you might not use.

It is important to make sure that the Point of Sale is charged in the LOCAL currency and not in your home currency! This is usually the case by default, but just be aware should someone offer to charge the transaction in your home currency – this is usually more expensive as the merchant then determines the exchange rate.

Alternatives to credit and debit cards

Prepaid cards / Travel Wallets are prepaid Visa or MasterCard debit cards that you load with foreign currency at a fixed exchange rate BEFORE your trip. These cards may attract a range of fees - from admin, ATM withdrawal, POS purchase and currency conversion fees so ensure that you avail yourself of the particular restrictions and costs of your bank and product.

Travellers Checks are also an option if you are going to a destination that has many exchange bureaus available for you to conveniently change your currency - but we’ve never used travellers’ checks and don’t see the benefit of them any longer.

What We Do

The strategy we use is to find the cheapest bank account with the lowest foreign currency conversion fee as well as the lowest foreign ATM withdrawal fee and take our chances on the currency fluctuation.

Thus far the best option by far that we have found in South Africa is a Capitec Global One account. Capitec offers this account in both credit card and debit card guise and they share the same benefits and pricing structure for transacting.

The monthly fee on the Credit Card is R40.00 and the Debit Card is only R5.00 and they offer the following:

Fee-free Purchases at international Mastercard machines;

Fee-free Online purchases;

Cash withdrawals at an International Mastercard® ATM are R70 per transaction

All the above with zero currency conversion fees

(Correct at time of writing - January 2021)

If we use the same example of above and withdraw Euro to the value of ZAR 5,000 at ZAR 16.00/EUR with an R70.00 transaction fee plus 0% currency conversion fee it will end up costing you ZAR 16.27 per Euro. Should the transaction value increase, the cost per currency unit will improve even further.

For good measure, we usually travel with both a MasterCard and a Visa card, just in case, a specific merchant does not accept one or the other. We have only run into this challenge once, and although it is very unlikely to happen, it doesn’t hurt to cover all your bases.

In Conclusion

Debit and credit cards do offer convenience in allowing you to draw cash when you need it, particularly if it is a Visa or MasterCard branded card which is accepted in most countries.

However, you are charged using the exchange rate of the particular day you perform the transaction on. Exchange rates fluctuate and you may not be knowing the exact amount you are paying at the time.

Whenever you have the option to do so make sure to select payment in the LOCAL currency and do not let a merchant offer to charge your HOME currency as this would in all likelihood result in an unfavourable conversion rate.

Prepaid travel cards are only worth it if you want your conversion rate fixed and if you’re planning to spend above a specific amount where the lower currency conversion fees cover the card administration fees.

Draw the maximum allowed from an ATM as the transaction fees are the same for smaller amounts. It's handy to carry some US Dollars as a backup in a separate hideaway space for emergency use. Never carry big amounts of cash around when walking in cities.

Unless you have told your bank/card provider that you are travelling abroad, they may put a block on the card due to “suspicious activity” if they see the card being used for an international transaction. Make sure to notify your bank before you leave that you will be using the card abroad.

Depending on where you are going and how much you plan to spend you should determine which solution(s) best meet your needs. You need to double-check the pricing guides yourself and consult with your financial institution for their advice.

If you plan on spending a lot of time in either the USA or Europe you should consider opening a local bank account in the US or an EU country. Sadly, there are not many options available to South Africans unless you are a resident but some banks may offer digital, no-cost debit card accounts as long as you can provide your passport and a residential address. These accounts generally offer zero interest rates on a positive balance but you should be able to withdraw cash and pay merchants at no cost in the same currency. Transferring funds to your own foreign currency account also have a cost factor to consider but generally, it ranges between 0.5% to 3% of the transaction value.

Note that South African residents over the age of 18 have a discretionary allowance of R1 million per calendar year and you should refer to the Exchange Control Regulations and the Currency and Exchanges Manual on the South African Reserve Bank (SARB) website before using your debit or credit card abroad.


I am not a financial adviser nor am I recommending any specific product(s). The information shared is for general use only and fees quoted are correct at the time of writing. Ensure to comply with your country Exchange Control Regulations when dealing with foreign currency and offshore bank accounts.


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