Get Good Currency Exchange Rates
A few weeks ago I attended a wedding in California. I flew into the Bay Area a few days early and met up with some old co-workers and friends. I had a great time seeing everyone, and catching up on the latest gossip. But those stories are for another time.
The wedding was for a good friend of mine. The gathering was small, and I felt honored to be part of the celebration. The ceremony was beautiful, and for an outdoor wedding you couldn’t have asked for better weather. The reception was great. And If I do say so myself, my moves on the dance floor were second to none.
Later on I found out the happy couple would be traveling to Europe for their honeymoon. As a matter of fact they’re there right now!
A few days ago though they called me from the currency exchange window at the airport. They were concerned that the posted exchange rates looked off. And the fees . . . let’s just say the mob has nothing on these guys.
For those of you who don’t know, I edit a newsletter on currency trading called Currency Options Insider. After traveling the world and exchanging more currency than I care to count I’ve learned a few things about the currency markets. Armed with this experience, I focus on finding ways to profit from fundamental and technical movements in the global currency markets.
Now, I don’t usually give advice to tourists about exchanging money for vacations or honeymoons . . . but this was my good friend. I had to help him out. After passing along my sage advice, it occurred to me that my readers would benefit from this knowledge as well. Keep these tips in mind when you travel and you’ll be able to save yourself some money.
This is what I told him.
Foreign Exchange Tip #1 – Notify Your Bank and Credit Card Companies Before You Leave
Let them know that you’ll be traveling abroad. I learned this lesson the hard way. My credit card company didn’t know I was in Europe. When international charges started appearing they tried to contact me. When they couldn’t reach me my card was canceled. They assumed the charges were fraudulent.
It was nice of them to protect me like that. But you can imagine the look on my face when I tried to pick up a dinner tab and my card was rejected.
Foreign Exchange Tip #2 – Most Banks and Credit Card Companies Provide Good Exchange Rates
Since you’re calling anyway, take an extra minute to find out what fees they charge for foreign exchange. Usually the fees are between 2% and 3% per transaction. Surprisingly, I’ve found that I get better exchange rates using my credit card – even with the additional fees.
Now, when I travel internationally I use the credit card that offers me the lowest fee. Because the credit card companies handle huge numbers of transactions they’re able to get very competitive exchange rates. Many of them will pass these rates on to their cardholders.
Foreign Exchange Tip #3 – Don’t Tip Your Bellboy With A Credit Card
Sometimes you have to pay with cash. It’s a fact of life. Cabs, bars, museums, and public transportation usually don’t take credit cards. This is where a little advance planning can really pay off. Call your bank a few weeks before you leave. Most major banks can convert hundreds or thousands of dollars at a decent exchange rate.
The fees are nominal and depending on your bank you might be able to do this with only a day or two’s notice. I’ve found that exchanging currency through my bank is easy. . . . as long as I plan ahead.
Foreign Exchange Tip #4 – ATM’s Are Good In A Pinch
As an investment banker when a client called we jumped. Sometimes that meant dropping everything and going straight to the airport. On several instances I barely caught my flight with bag in hand. Getting to the bank beforehand just wasn’t possible. Short of keeping a stash of various currencies locked up at home I discovered a secret.
ATMs work overseas. If I’m traveling internationally and find myself short of cash I head right for an ATM machine. Flip your ATM card over. On the back are logos of various ATM networks. Some of the larger ones are Plus, Star, and Interlink. If you use an ATM displaying those logos the withdrawal process is very easy.
Just remember you are traveling internationally so use caution when flashing your cash. One other thing. Local ATM are used primarily by natives. Don’t be surprised if the ATM uses the native language of the country you’re visiting. Even so, they’re still very easy to use . . . the process is just like it is in the US.
The nice thing about ATMs other than convenience is that they also offer competitive exchange rates. There is a nominal fee of $3 to $5 but that’s a small price to pay for the ease of getting foreign currency.
Foreign Exchange Tip #5 – Your Hotel Will Usually Exchange Small Amounts Of Cash
If you need a quick $20 or $50 you can try your hotel’s concierge desk. The rates won’t be great, but they’ll be better than the currency exchange huts. This is convenient, but sometimes you’ll have to pay a small fee. Remember, since this isn’t the main business of the hotel they’ll limit the amount you can exchange. Also they sometimes run out of money so don’t wait til the last minute.
When you get back.
I hope these tips help you to get the best exchange rates and lowest fees on your next trip overseas. Remember, when you come back to the US the left-over currency in your pocket has a lot of value.
Call your bank and have them exchange your paper foreign currency back to US dollars. Your leftover coins can be a great gift to the children in your life. I give mine to my nieces and nephews . . . always with a great story filled with international adventure.
Category: Currency Trading
