Whether it's pounds or pesos, dollars or dinars, working with foreign currency while travelling overseas can be a confusing task. "Handling foreign money can be daunting for many people, because it’s something they do only occasionally,” says Old Mutual Bank product manager Ben Stander. “Spending some time with your bank sorting out exactly what products suit your particular requirements can make all the difference to your trip, whether it’s for business or a holiday.”

Here are a few frequently asked questions about forex:

Cash, traveller's cheques or cards?
Probably all three. As a general rule, some cash is needed for food, drink and local travel as soon as you arrive. If you intend to buy expensive items, or are staying for more than just a couple of days, traveller's cheques are a safe way of taking money with you.

Cheques can be cashed at banks, hotels and bureaux de change. If they are lost or stolen, you can claim from the issuer. Credit cards and increasingly debit cards are accepted abroad, but check with your bank before you go. Where they're accepted varies from country to country and from region to region. Make sure your card has a Maestro or Cirrus logo on it.

What currency should my traveller's cheques be in?
It depends on your destination and whether you are visiting large towns and cities, or rural areas away from the main tourist routes. Ask your bank for advice.

What are the advantages of traveller's cheques?

  • They are refundable if lost or stolen.
  • They're valid until they are used — they never expire.
  • You can get forex in various currencies.
  • No commission is levied if they're cashed at the representative's office
  • They can be exchanged at most hotels/restaurants/shops.

    What is the cheapest way to pay overseas?
    Again, it depends on your spending patterns. There will be a cost in converting local currency to a foreign currency whether you do so in SA or overseas, and further commission may be charged on any unused foreign money when you want to convert it back to rands. There will also be a potential loss (or gain) due to the fluctuation in exchange rates.

    Local currency can often be drawn from cash machines abroad using your debit card or credit card, but if you use your credit card this will probably be counted as a cash withdrawal and attract a charge accordingly. There may also be a handling charge.

    How much money do I take?
    This will depend entirely on how much you want to buy — and how much you can afford! Don't forget to allow for souvenirs, presents, meals out, snacks, drinks and excursions.

    Where can I buy traveller's cheques and foreign currency?
    A bank, a bureau de change or sometimes your building society or a travel agent. Shop around for the best deal. Note that you can now book and pay for an airline ticket online, and get a reference number, so you no longer have to produce an airline ticket to manage your foreign exchange.

    Why can't I just cash my usual cheques overseas?
    Many banks overseas, particularly in the more popular tourist areas, will cash your own cheque if it is supported by a valid cheque guarantee card. You may however be charged a higher commission by the bank cashing it. Check with your bank before you go, but it's recommended that you take local currency, travellers cheques and a credit or debit card as well.

    The exchange rate I'm offered when I buy (or sell) foreign currency isn't the same as the one published in the daily press. Why?
    Exchange rates are continually fluctuating according to wholesale market movements. There is no ‘official' rate of exchange for any particular currency and different organisations will offer different rates for handling traveller's cheques and currency.

    Make sure you check on the total cost of the transaction though — you may find that an attractive exchange rate is offset by higher commission charges.

    If I use my credit card abroad the transaction often takes quite a long time to reach my account. Is there a danger of getting a worse exchange rate than the day I used my card?
    Your credit card company will use the rate applicable on the day they receive the transaction from overseas. This will often be different to the exchange rate on the day you used your card. The rate could be better or worse depending on market movements.

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