Don't Lose $ on Foreign Currency!

My best money saving tips have to do with...well...money. People who are saavy about penny pinching in other ways don't always know the money traps dealing with foreign currency. Because I live on an international border, and spend both US$ and Canuck bucks daily, I've learned some tricks that also apply to cruising.

Don't pay in U.S. cash. It's convenient, but except in the Caribbean where local currency is pegged to the US$, most vendors will skin you alive on the exchange rate. Typically, you can lose 10%. Quick fix: Get the official exchange rate for the currency from a site like XE.com, and carry a calculator. Do the math before you hand over cash.

Don't exchange money in airports. It may be tempting to pick up some local currency on your way to the ship, but resist the temptation. The "official exchange rates" quoted will bear no relation to the real ones. Banks (and real exchange centers) charge about a 2% premium above the official exchange rates for their services in money exchange. Airport exchange is usually MUCH higher. Quick fix: Again, check the real rate with XE.com and do the math.

Don't get foreign money from your U.S. bank before you leave home. If foreigners will cheat you on exchange, you'd be better off relying on your own bank, right? Wrong. With a few exceptions, most U.S. banks don't have much experience dealing with foreign currencies, and won't have it on hand. Not much need for euros in Iowa. So, you'll usually be charged a hefty service fee to send away for that foreign cash. Quick fix: Ask first and (once again) do the math.

So, what should you do? Believe it or not, credit cards are often a good option. There have been a lot of articles written exposing which credit cards make money grabs on exchange. Here's a sample:

http://www.bankrate.com/brm/news/cc/20010416a.asp

By shopping ahead of time for a credit card that offers fair exchange rates, you can save big bucks. Don't be disappointed if your "usual" card doesn't qualify. You might be better off leaving all your usual cards at home, and applying for one particular card especially for foreign travel.

When you need cash, ATM's can be an option, but, once again, check into fees before you leave home. Also, the foreign bank that owns the ATM you use may have it's own fee. However, foreign banks will generally give you a fair exchange rate on the currency transaction itself.

A few things to add. Make sure your credit card company and bank know that you will be using the card in a foreign country. If you don't you may find out that your card has been stopped due to unusual activity.

Many cities have exchange houses where you can buy (trade) foreign currencies. I know where I go here in Las Vegas often has less than a 1% transaction fee.

This is a good site to find current exchange rates.

Do research on cc.s that charge and don't charge fees. We use Capital One and aren't charged the fees found on most cc. Also they offer a debit card that offers the same customer service. Have never had a charge on either out of the country and the exchange rate is spot on each day.

Check with your bank to see if they have any 'correspondent' banks where you are traveling. I use Bank of America, and there are no fees to use a BofA ATM card from either BofA or the non-USA bank

• Barclays (United Kingdom)
  
• BNP Paribas (France)
  
• China Construction Bank (China)
  
• Deutsche Bank (Germany)
  
• Santander Serfin (Mexico)
  
• Scotiabank (Canada)
  
• Westpac (Australia and New Zealand)
  

My advice is to do your research about foreign exchange based on your own situation. Contact your bank and your credit card company and ask them about fees and rates. Some credit card companies will say they don't charge fees, however the rate they offer is much higher.

In my situation, I am able to get the best exchange rate through my local bank. The rate I get from them is usually slightly higher than what the true exchange rate is - however it is still much lower than a foreign exchange kiosk at an airport. My bank does not charge me any fees when I have to order foreign currecny. My visa uses the same rate that my bank uses however they also add an extra 2.5% for commission.

I agree completely about paying with local currency. I have seen many Americans get ripped off on the exchange rate and not even realize it.

;) My wife and I have traveled to 9 Western European countries and always got our best exchange rates at ATMs and with credit cards. In Venice, the clockmaker didn't accept our American Express Card but accepted MasterCard (Maestro in Europe). I have never been charged a fee at a European ATM but lordy did my bank back home charge with each use!

I spent 25 years in banking, 5 buying and selling foreign exchange.

Glenn:cool:

Don't exchange money in airports. The "official exchange rates" quoted will bear no relation to the real ones. Banks (and real exchange centers) charge about a 2% premium above the official exchange rates for their services in money exchange. Airport exchange is usually MUCH higher. Quick fix: Again, check the real rate with XE.com and do the math.

Thank you for a very interesting article. I too was wondering about exchanging money at CIBC our bank or doing it at the airport. So 2 months ago on a visit to Vegas I put it to the test. I went to the bank and exchanged some money for US $ and right away head to the airport and once through security made my way to the exchange carts they do have there and I asked the lady behind the counter what would the excact amount of Cad $ that I hours earlier exchanged at CIBC, convert to here.

The difference was 3 % more at the airport than at my bank. The lesson I learned from that is that when I only want to exchange small amounts its not worth my while to make an extra trip to the bank and stand in line there only to be told : "I am sorry we dont have a lot of $1 for you, I can give you lots of $20 " etc.

I asked the lady at the airport booth if they carry lots of $1 bills and she said yes they do as most tourists needs loads of $1.

Like WarmWaters, I find the banks don't always have a lot of US one dollar bills on hand. No way would I pay an extra 3% on top of the rate a bank already charges. I start collecting American one dollar bills well ahead of time. I can always use them. I don't want to stuck with leftover unusual currency.

Now I'm just trying to determine how many $1 would be a reasonable amount to have on hand for tips and off shore small purchases. This is a Panama cruise - 16 days.

As suggested by the original poster, knowing what a reasonable conversion from the Yankee dollar to a different currency is the best approach.

Now I'm just trying to determine how many $1 would be a reasonable amount to have on hand for tips and off shore small purchases. This is a Panama cruise - 16 days.

In my case I usually take $20 in US $1 bills for a 7 day cruise. Most times I get room service for breakfast and will pay a $2 tip to the guy who brings up the tray of food from the kitchen. Other than that I don't use the $1 bills for anything else during the week. I guess it all depends on what you have to spend them on when on the ship.

I used to always use the ATM route. It was not very often a fee, and if it was the exchange rate was better and no other fees. Now, most if not all banks with an ATM/Debit card charge the same 3% fee as MC/Visa do. Capital one is great advice as they still do not. I had one Visa that had no fee, but, was just bought by another bank.... and now the ugly 3% on every transaction fee. If you watch, some of the little exchange windows around do not charge as much as banks or the fees. THe ship ususally charges a lot and any place close to the ships in port will be higher. Just like buying food at a convenience store.. they get you for the easy fix. I will try to use my Capital One Card. I guess 2 or 3 % is not that high if you just dont spend much anyway.

In my case I usually take $20 in US $1 bills for a 7 day cruise. Most times I get room service for breakfast and will pay a $2 tip to the guy who brings up the tray of food from the kitchen. Other than that I don't use the $1 bills for anything else during the week. I guess it all depends on what you have to spend them on when on the ship.

We use a lot of $1 bills when we travel. It does come in handy when you use public transport which is a dirt cheap way to travel and get a feel for the area and the locals, its valueble to use as tips for luggage porters, taxi drivers, eating at restuarants and for room service.

Strangely it seems no one ever has small change when you offer to pay with bigger bills !