With the Rugby World Cup around the corner and the rand being the rand, these tips will help you keep foreign exchange (forex) expenses at bay so you can focus on giving your undivided attention to the Boks.
FOREIGN exchange rates can ruin a traveller’s budget and mood if not carefully considered.
Watching the Springboks live in action at the Rugby World Cup in France this September and October is a once in a lifetime opportunity and it shouldn’t throw you off your financial plans and goals.
According to Bianca Botes, Director at foreign exchange and treasury experts Citadel Global, while the weak rand is certainly not counting in travellers’ favour right now, there are a few hidden expenses South Africans can make themselves aware of before travelling to Europe, which can help them stretch their rand further for a more memorable trip.
Here are some expert tips on forex and hidden foreign exchange expenses you need to be aware of, before embarking on your trip, according to Botes.
The South African Rand to the Euro: Exchange Rates vs Conversion Fees
According to Botes, exchange rates come into play when you convert your home currency into the currency of the country you’re visiting.
“If the rand is stronger, you can get more value for your money abroad. However, if the rand weakens while you are travelling, you might end up getting less foreign currency for the same amount of your own currency,” she said.
Botes said that many travellers forget to consider conversion fees when it comes to currency exchange.
“When exchanging money or using your credit or debit cards abroad, there might be fees associated with currency conversion.
“You need to investigate these expenses. These fees can eat into your budget, so it’s a good idea to understand the fee structure of your financial institutions and explore options that offer better rates,” said Botes.
Other fees associated with forex transactions
According to Citadel Global’s director, when you convert one currency into another, such as your rand to the euro in France, or use foreign currency for international purchases, various fees and costs may be associated with these transactions.
Botes revealed 7 lesser-known/hidden fees that South African travellers need to consider when travelling abroad:
1. Transaction fees
Botes highlighted that some banks or exchange services may charge a flat fee for processing your currency exchanges or international transfers. She advised to always investigate what a forex kiosk or a digital service provider’s fees are before you use their services.
2. Spread
According to the director, spread is the difference between the buying and selling prices of a currency.
“When you exchange money, you may typically get a slightly lower exchange rate than the true exchange rate. The difference or balance goes to the financial institution facilitating the exchange,” added Botes.
3. ATM fees
When using an ATM abroad to withdraw foreign currency, Botes noted that you might be charged fees by both the foreign bank and your home bank. “Do a quick Google search to investigate what different European banks charge at their ATMs,” she said.
4. Credit or debit card fees
Botes revealed that using credit or debit cards for international transactions might come with foreign transaction fees, which may be calculated as a percentage of the transaction amount.
She said to ask the vendor what the fees on your purchase will be and additionally, if the transaction involves currency conversion, there might be additional fees.
5. Dynamic Currency Conversion (DCC) fees
According to Botes, sometimes when you purchase an item or a service in a foreign country, you will be given the option to pay in your home currency instead of the local currency and there might be additional fees associated with this choice.
“It’s always wise when given a choice at the point-of-sale machine, to choose to pay in euros instead of rands, as there may be additional fees associated with allowing the merchant to convert your currency for you,” said Botes.
6. Wire transfer fees or SWIFT fees
Botes said that if you’re sending money internationally via wire transfer, there can be fees associated with the transfer process so be careful with these fees.
7. Hidden service fees
And finally, Citadel Global’s director said that some services may have hidden fees that are not immediately apparent to the user which is why it is important to review the terms and conditions of the service before making any payments.
“There are various available forex management strategies that can give you the ability to protect yourself from negative market and currency movements,” said Botes.
She said travelling abroad, more so after the travel bans of the pandemic era, can be tremendously exciting, especially when you attend a once-in-a-lifetime event such as the Rugby World Cup in France.
“The trick to enjoying it more and worrying less about your travel budget is to be savvy with your rands.
“As South Africans, as long as the rand is weak, we need to learn to be wise about forex when travelling – because when we are, we can enjoy our travels all the more,” said Botes.
