Still confused about converting currencies
Jun 13th, 2006, 10:01 AM
#1
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Still confused about converting currencies
1st off - pardon my ignorance on this topic - I am traveling abroad for the 1st time, and I really don't understand this currency exchange business. I searched on here and read the posts concerning the best way to deal with currency conversion in order to get the best rates and avoid extra fees. I chose the recommended pre-loaded AAA debit card. I just returned from a AAA office and they said that there is a 7% currency conversion fee deducted everytime you withdraw cash (in addition to ATM fees). If I understood my credit card company, they only charge a 3% fee, so the 7% appears steep to me. She told me that some places charge 10+% conversion fees and if I wanted the absolute best rate, I should go to the TELEX kiosk at the airport when we arrive & show them my AAA card & exchange currency there. I'm confused . . I don't really understand what everyone means by "the best rate" - do businesses not used the standard rate given on that particular day, (the one shown on www.xe.com)? Is what is meant by the "best rate" actually referring to the service charge to convert the currency? If so, it seems that my bank (who charges only $10 flat rate for up to $2000) is offering as good a deal as any. Since I'm only wanting to convert about $1200 to pounds sterling, and we'll be ridding ourselves of $560 of that as soon as we get to the B&B the 1st day, would it be just as cheap (and simple) to order the money through the bank before we go & just keep it in safety belt purses? If not, what is the cheapest way to convert currency? Between the flat rate conversion fees and the % fees and the term "best rate", I am confused.
Thanks for your help. I'm just feeling a little frustrated with myself for not understanding this better.
Thanks for your help. I'm just feeling a little frustrated with myself for not understanding this better.
Jun 13th, 2006, 10:32 AM
#2
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Whomever would recommend those prepaid debit cards is nuts and never read the fine print, and sorry if you were taken in by them.
The 'best rate' means that which banks use to settle between themselves. The closest we mortals can get to it is to use the ATM machines. Your goal is to have an ATM/Debit card with a bank/credit union that does not also charge for using a 'foreign' ATM (meaning, not their own machine).
It's ok to get a bit of walking money in advance with a bank or at the exchange window at the airport (maybe 100€ or something like that, for taxi or whatever). Then use ATMs for the remainder of your trip. Be sure to notify the bank that you will be using the card overseas.
Some banks will pass on a 1% fee from Visa International, and others will pass on that 1% and then tack on a couple more% for their own pockets. Avoid those if possible.
The 'best rate' means that which banks use to settle between themselves. The closest we mortals can get to it is to use the ATM machines. Your goal is to have an ATM/Debit card with a bank/credit union that does not also charge for using a 'foreign' ATM (meaning, not their own machine).
It's ok to get a bit of walking money in advance with a bank or at the exchange window at the airport (maybe 100€ or something like that, for taxi or whatever). Then use ATMs for the remainder of your trip. Be sure to notify the bank that you will be using the card overseas.
Some banks will pass on a 1% fee from Visa International, and others will pass on that 1% and then tack on a couple more% for their own pockets. Avoid those if possible.
Jun 13th, 2006, 10:39 AM
#3
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The other thing you need to know about change/currency conversion kiosks is this:
some will lure you with the possibility of not charging a commission for the transaction, but they'll "get" you by giving a poor exchange rate. Travelex may very well charge a standard commission and who knows how good the exchange rate is. Others will offer a seeminlgy better exchange rate and then hit you with a higher commission fee.
I still believe withdrawing your cash from an ATM affords the "best" exchange rate.
And as to the cards, such as Capital One which appraently don't charge you a "foreign currency conversion fee." I have been told I am crazy but some of us actually believe that Capital One is making that so-called "perk" to you up by giving a less favorable exchange rate.
See how UNcomplicated this is?
Use an ATM and save the worry for even more important issues.
some will lure you with the possibility of not charging a commission for the transaction, but they'll "get" you by giving a poor exchange rate. Travelex may very well charge a standard commission and who knows how good the exchange rate is. Others will offer a seeminlgy better exchange rate and then hit you with a higher commission fee.
I still believe withdrawing your cash from an ATM affords the "best" exchange rate.
And as to the cards, such as Capital One which appraently don't charge you a "foreign currency conversion fee." I have been told I am crazy but some of us actually believe that Capital One is making that so-called "perk" to you up by giving a less favorable exchange rate.
See how UNcomplicated this is?
Use an ATM and save the worry for even more important issues.
Jun 13th, 2006, 10:41 AM
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Yes, as Travelnut states, the XE (or newspaper) rate that you see is the "wholesale" rate. You will get less. Do get an ATM card (not credit card) to use for your withdrawals. Note that no fee does not necessarily translate into the cheapest cost to you. As you may see in your travels, currency exhange booths will advertise "no fee" currency conversions so you may think "great, better than the bank down the road" NO! Banks (and these booths) set their own exchange rates...just because they have no fee does not mean that they give you a good exchange rate. It just means they can bury their costs inside of the exchange rate they use instead of telling you up front that it is 1%/3%...Complicated, but to simplify ATM card linked to bank account, not VISA card, not travellers cheques, buy a few euros before going, and don't assume no charge for trransactions makes one card better than another.
Jun 13th, 2006, 10:44 AM
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Hi B,
>I chose the recommended pre-loaded AAA debit card.<
I fear that you have been misinformed.
All of the "pay in advance" cards are too expensive.
The least expensive way to purchase goods and services in foreign countries is with your credit card, whenever you can charge, and an ATM card when you have to have cash.
ATM machines are ubiquitous.
Check with your bank as to your daily withdrawl limit and fees for "out of network transactions".
Some people like to change $50-100 at the departure airport in order to have cash on arrival. This will cost about $3-5 more than getting the money upon arrival.
How much will you lose if you turn the card in and ask for your money back?
>I chose the recommended pre-loaded AAA debit card.<
I fear that you have been misinformed.
All of the "pay in advance" cards are too expensive.
The least expensive way to purchase goods and services in foreign countries is with your credit card, whenever you can charge, and an ATM card when you have to have cash.
ATM machines are ubiquitous.
Check with your bank as to your daily withdrawl limit and fees for "out of network transactions".
Some people like to change $50-100 at the departure airport in order to have cash on arrival. This will cost about $3-5 more than getting the money upon arrival.
How much will you lose if you turn the card in and ask for your money back?
Jun 13th, 2006, 10:47 AM
#6
I am totally confused! You say you read posts here, and somehow still ended up thinking a pre-paid debit card is the way to go.
A very few posters have suggested these type cards - however every time it happens, immediately 15 or 20 others explain (as patiently as possible after the thousandth identical question) that these cards are a <b>terrible</b> idea.
What you want to do is you and your wife each have an ATM card for your checking acct. Then you can each withdraw up to your max each day. If you daily limit is too low you can ask your bank to temproarily raise it.
<b> Do Not get an AAA (or Amex) pre-loaded debit/travel card</b>
A very few posters have suggested these type cards - however every time it happens, immediately 15 or 20 others explain (as patiently as possible after the thousandth identical question) that these cards are a <b>terrible</b> idea.
What you want to do is you and your wife each have an ATM card for your checking acct. Then you can each withdraw up to your max each day. If you daily limit is too low you can ask your bank to temproarily raise it.
<b> Do Not get an AAA (or Amex) pre-loaded debit/travel card</b>
Jun 13th, 2006, 10:48 AM
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Use the ATM. Depending on what kind of standing you have w/your home bank, you may be able to convert some funds for free. (I work for a bank & can exchange whatever I want at no charge & the exchange rate is very favorable). Purchase travelers cheques (usually 1%) in the foreign currency you seek.
Jun 13th, 2006, 10:55 AM
#8
It doesn't have to be confusing. Here's your methods, in my own personal order of preference:
1) ATM card and withdraw funds in the local currency from bank machine.
2) Convert US cash into local currency after arrival
3) Buy foreign currency before you leave
4) Use a credit card
5) Purchase travelers checks, if you must
Preloaded "travel cards" and the very worst deal of any of the above. I'm not sure who or where you saw it "recommended"... because it certainly was not here on Fodors!
The only reason to use that type of card would be possibly for a teenager who didn't have a bank account and the parents were funding a trip or like that.
1) ATM card and withdraw funds in the local currency from bank machine.
2) Convert US cash into local currency after arrival
3) Buy foreign currency before you leave
4) Use a credit card
5) Purchase travelers checks, if you must
Preloaded "travel cards" and the very worst deal of any of the above. I'm not sure who or where you saw it "recommended"... because it certainly was not here on Fodors!
The only reason to use that type of card would be possibly for a teenager who didn't have a bank account and the parents were funding a trip or like that.
Jun 13th, 2006, 11:06 AM
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Purchase Travel Cheques? I don't think, will all due respect, that is good advice.
Oh well, we all have different ideas as to what is best.
I do like to take about $100.00US in the currency for the place I am going to.
I use ATM's for cash. I use credit cards whereever possible.
This subject gets rehashed week in and week out. Sorry, but it is true!
Oh well, we all have different ideas as to what is best.
I do like to take about $100.00US in the currency for the place I am going to.
I use ATM's for cash. I use credit cards whereever possible.
This subject gets rehashed week in and week out. Sorry, but it is true!
Jun 13th, 2006, 11:07 AM
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I don't use AAA debit card for the reasons cited.
Confusingly, the AAA MBNA Visa Credit Card, however, gave me good transaction rate.
For those folks with AAA MBNA Visa credit card, here is a good news. During my recent Italy trip, I reviewed my cc bills using the:
http://www.xe.com/ccc/
to compute exactly how much each credit campany is charging me over the official conversion rate. Here are the results of the several transactions:
My bank's Visa
0.69%, 2.17%, 1.38%, 1.38%, 2.20%
AAA MBNA Visa
0.00%, 0.02%, 0.00%, 1.16%, -0.02%, -1.17%, 0.05%
Credit Union Visa
-0.02%
I knew that my bank was passing the Visa's 1% charge and it shows.
The AAA MBNA Visa seems inclusive; either the currency fluctuation timing favored me or AAA is actual not passing the Visa's 1% charge -- which is very hard to believe.
Confusingly, the AAA MBNA Visa Credit Card, however, gave me good transaction rate.
For those folks with AAA MBNA Visa credit card, here is a good news. During my recent Italy trip, I reviewed my cc bills using the:
http://www.xe.com/ccc/
to compute exactly how much each credit campany is charging me over the official conversion rate. Here are the results of the several transactions:
My bank's Visa
0.69%, 2.17%, 1.38%, 1.38%, 2.20%
AAA MBNA Visa
0.00%, 0.02%, 0.00%, 1.16%, -0.02%, -1.17%, 0.05%
Credit Union Visa
-0.02%
I knew that my bank was passing the Visa's 1% charge and it shows.
The AAA MBNA Visa seems inclusive; either the currency fluctuation timing favored me or AAA is actual not passing the Visa's 1% charge -- which is very hard to believe.
Jun 13th, 2006, 11:27 AM
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I don't often use travelers cheques but they do serve their purpose. I was recently in the Caribbean on an island w/only 1 ATM & everyone took only cash. Rather than carry a ton of cash, I took cheques for my villa & car rental.
Jun 13th, 2006, 11:47 AM
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greg - I don't know why those xe.com/ccc computations are all over the map - mine are consistently within a few hundredths of zero.
Maybe you're using the date of the transaction from the charge slip? You should use the settlement date from your statement instead.
Maybe you're using the date of the transaction from the charge slip? You should use the settlement date from your statement instead.
Jun 13th, 2006, 11:51 AM
#14
TC's are not my method of choice, it is the last option on my list for a reason.
That said, if you get them without a fee from your own bank they are better (cost less in the long run) than the preloaded travel card this person is using.
That said, if you get them without a fee from your own bank they are better (cost less in the long run) than the preloaded travel card this person is using.
Jun 13th, 2006, 01:48 PM
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It shouldn't be surprising that AAA Visa cards are a good deal. AAA doesn't basically make anything -- they use other companies for their financial products. The preloaded debit card is a VISA product, I think, and pretty much just like the preloaded VISA travel money or whatever they call it. AAA doesn't set the rates, and that debit cards doesn't have antying to do with the rate on their credit card (which is adminstered by MBNA).
Preloaded debit cards are always a bad idea by any company or mark. They have a large markup on them and all kinds of use fees. I don't think anyone recommended a AAA debit card as a good deal, so wonder why Bendemeer read they were recommended. By whom?
I have no idea what the remark is about showing a AAA card at an airport exchange bureau and exchanging cash. You can bet that's probably bad advice, also -- first, airports are always a bad place to exchange as their rates are higher than in the city.
Businesses are in business to make money, not just exchange for people at cost. Why would they do that? Think about it, they make a profit, and can charge what they want, I imagine (within some limits of law, perhaps).
This is like that funny fake ad on SNL many years ago about a money exchange place that said they gave better rates than cost and then said -- you're probably asking how do we stay in business? Volume.
Preloaded debit cards are always a bad idea by any company or mark. They have a large markup on them and all kinds of use fees. I don't think anyone recommended a AAA debit card as a good deal, so wonder why Bendemeer read they were recommended. By whom?
I have no idea what the remark is about showing a AAA card at an airport exchange bureau and exchanging cash. You can bet that's probably bad advice, also -- first, airports are always a bad place to exchange as their rates are higher than in the city.
Businesses are in business to make money, not just exchange for people at cost. Why would they do that? Think about it, they make a profit, and can charge what they want, I imagine (within some limits of law, perhaps).
This is like that funny fake ad on SNL many years ago about a money exchange place that said they gave better rates than cost and then said -- you're probably asking how do we stay in business? Volume.
Jun 13th, 2006, 10:37 PM
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If you feel happier changing it all at your own bank and bring the £ with you then do that, it's not exactly a fortune. Once you've paid the B&B you'll be left with around £350. That's not an unreasonable amount of cash; just don't lose it!
It's not uncommon for us Brits to get the full £300 whack from the ATM machine so you would not be doing anything I wouldn't do.
How many days are you here for though? That isn't a lot of spending money for two people if it is more than a few days.
It's not uncommon for us Brits to get the full £300 whack from the ATM machine so you would not be doing anything I wouldn't do.
How many days are you here for though? That isn't a lot of spending money for two people if it is more than a few days.
Jun 13th, 2006, 11:24 PM
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A pre-loaded debit card may be a 'right choice' for any number of reasons. Its cost can be justified if one will consider safety. If the card is lost or stolen, the amount at risk is limited to the balance on/in that card. Some travellers may not be eligible for debit/check cards. Find out the difference in cost between traveller's checks and the pre-loaded debit card.
Jun 13th, 2006, 11:47 PM
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Best rate! Each country's financial powers determine exchange rates. This is a 'continual' process. Currency traders accept a daily rate for use in their businesses. They buy foreign currency at less than the daily rate, they sell local currency for more than the daily rate. Today the Euro is posted at 1.25 per dollar. You may be able to buy them for $1.30, you can sell them for say $1.20. The mark-up varies from agency to agency. An airport dealer may ask $1.35 and a street vendor $1.28.
Jun 14th, 2006, 12:12 AM
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Hi
I don't know if this helps but I use a Visa credit card with 55 days free credit and an ATM card (savings). Both display the Cirrus and Maestro symbol and the ATM you withdraw from should do too. I found no problems with merchants accepting VISA (in Spain I was asked to produce my passport though). I don't think the fees are greedy (yet) and the exchange rate is excellent. It's certainly better than mucking around with traveller's cheques or money changers and it's a small price we have to pay for this convenience. Of course all banks have their own fee structure so the old adage applies - shop around. Just make sure you let your bank know you will be using them overseas. I also take some of the local currency with me, maybe around €60. Grudgingly I get it from Thomas Cook at ridiculous rates and fees. However I don't like rocking into some place without money - I make sure I have at least enough for a taxi fare to my hotel.
Good luck
I don't know if this helps but I use a Visa credit card with 55 days free credit and an ATM card (savings). Both display the Cirrus and Maestro symbol and the ATM you withdraw from should do too. I found no problems with merchants accepting VISA (in Spain I was asked to produce my passport though). I don't think the fees are greedy (yet) and the exchange rate is excellent. It's certainly better than mucking around with traveller's cheques or money changers and it's a small price we have to pay for this convenience. Of course all banks have their own fee structure so the old adage applies - shop around. Just make sure you let your bank know you will be using them overseas. I also take some of the local currency with me, maybe around €60. Grudgingly I get it from Thomas Cook at ridiculous rates and fees. However I don't like rocking into some place without money - I make sure I have at least enough for a taxi fare to my hotel.
Good luck
Jun 14th, 2006, 03:10 AM
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Thanks so much for all the replies and advice. The fog in my brain is clearing a bit on this subject. I think I must have misinterpreted the original posts that I read - I think they were referring to the fee for reloading the AAA debit card - not transaction costs.
One problem that I have is that my husband and I do not have a debit card associated w/ our bank account. We use a small hometown bank that was among the last to offer bank cards and we just never used ours, so after one year they notified us that the card was no longer valid from non-use. At home we just use cash, checks and credit cards. I did talk online with Bank of America last night & am thinking about opening up an account with them. They said they would receive our debit card within 5 days. I really would prefer this as opposed to a card attached to our "working" account anyway. My other option is that I found out that we have a debit card, (Mastercard/Cirrus) associated with an investment money mkt acct. I may check into that today, (again, we've never used it so I don't know if it is still valid).
I am also thinking of just converting to cash in advance (what would be the most you would feel comfortable carrying in a security belt wallet?) and after paying the hotel, just use the remainder and credit cards to get by. We are only there for 6 days so maybe that would do. Thanks again for your patience and good advice.
One problem that I have is that my husband and I do not have a debit card associated w/ our bank account. We use a small hometown bank that was among the last to offer bank cards and we just never used ours, so after one year they notified us that the card was no longer valid from non-use. At home we just use cash, checks and credit cards. I did talk online with Bank of America last night & am thinking about opening up an account with them. They said they would receive our debit card within 5 days. I really would prefer this as opposed to a card attached to our "working" account anyway. My other option is that I found out that we have a debit card, (Mastercard/Cirrus) associated with an investment money mkt acct. I may check into that today, (again, we've never used it so I don't know if it is still valid).
I am also thinking of just converting to cash in advance (what would be the most you would feel comfortable carrying in a security belt wallet?) and after paying the hotel, just use the remainder and credit cards to get by. We are only there for 6 days so maybe that would do. Thanks again for your patience and good advice.
