As the holiday season approaches and more countries continue to lift travel restrictions to reopen the global economy, many South Africans may be planning their next international holiday. However, given the logistics involved in an international trip, extensive planning and preparation is required to avoid a failed trip and excessive spending.
Chantal Robertson, Head of Cross-Border Advice at FNB says, “There are a number of financial considerations that travelers need to keep in mind from an offshore spend perspective, including individual allowances that SA residents need to comply with from an exchange control perspective.”
Expanding on this further, Robertson provides a helpful checklist you need to tick to ensure that your trip abroad is hassle free and within budget:
- 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 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but using a Global Account Debit card is a more secure means of making purchases therefore it is advised that cash be withdrawn using this card at an international ATM only when necessary (in the case where bank cards aren’t accepted etc.) In addition, Global Accounts will be launching its very own virtual card come this November. Offering additional security, customers will be able to add a USD, EUR and GBP Global Virtual card to their physical Global Debit card at no additional cost. Like the Global Debit card, these virtual cards can be added to third-party digital wallets such as Google Wallet, Samsung Pay and Apple Pay, etc.
- Use your Global Account card for international card transactions – Swiping with a local credit or debit card sees an additional 2% currency conversion rate. However, when using a Global Debit 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 significantly less than your local credit card fee. In addition to this benefit, our customers can earn up to 4% back in eBucks when they use their Global Debit or Global Virtual card.
- Leverage your banking benefits – 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:
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- Free travel insurance when you pay with your credit 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 SLOW Lounge locally and to over 1000 lounges internationally
- 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 are travelling 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
A simple way to manage these limits when travelling with your partner, is to ensure that you utilise both allowances. Should your SDA be fully utilised, or close to the limit, the following options need to be considered:
- Using previously externalised funds. For example, you can use funds held in a Global Account or FNB Channel Islands Account. The cards linked to these accounts may also be used without affecting your SDA;
- Utilise the R10m FIA by applying for tax clearance under the SARS FIA001 process, but bear in mind that this process may take some time (approx. 21 working days). A further consideration is that the amount being applied for must be liquid.
“A large number of our private banking clients are frequent international travelers and can be considered as global citizens. Our role as an integrated financial services provider is not only to solve for our clients’ transactional needs but to help them manage their money by providing integrated advice and contextual solutions such as our Global Account, which is structured to help with their international banking needs, as well as advice to meet their various financial goals,” says Pravesh Sunker, CEO of FNB Private Wealth and RMB Private Bank.
“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-mentioned guidelines, one will be able to focus their travelling and have peace of mind from an offshore spend and regulatory perspective,” concludes Robertson.
