Foreign Currency - DOING THE TOTAL MATH!

In preparation for some foreignport intensive cruises coming up across multiple countries and many differentcurrencies, I have been doing the math. The total math, and reviewing articles,reading comments to articles and shouting at the screen to people who can'thear me - as my wife just reminded me.

Ok. First of all, let's get the basics out of the way.

1) Use an ATM card to withdraw local cash. That is the singlebest option, depending on your ATM card and fees. But how many of you have timeto do that when the ship docks, as you are herded from the excursion meetingplace to the bus and there is a line at the sole ATM temporarily installed justpast the gangway. Or it has an out of order sign. Taking local currency hasallowed us to just walk on by and smile.

2) Cash advance on credit card. This is the worst way to getlocal cash. You get hit with cash advance fees, an exchange rate fee andprobably a higher exchange rate. Nuff said.

3) Why local cash? I hate passing up that cute little souveniror snack or bottle of water to settle the hiccups or small tip. Giving out US$in foreign ports are ok in ports like Mexico, some South American and theCaribbean, but get further afield, like Seychelles, or Sri Lanka, what is ataxi driver or ice cream vendor going to do with a $5 bill besides having topay exchange fees themselves. And some countries are still cash-centric likeJapan. On our 2012 Asian cruise we carried 12 different currencies and passedup many machines that were out of order or had a heck of a que while we wererushing to catch that bus! Not only that but every time that ATM sucked my cardinto its bowels, I got a shiver running up and down my spine wondering if Iwould ever see that card again!

I do not want to be dependenton a machine when we arrive at the dock. We want to hit the ground running, notwaiting in line or dashing to a nearby bank/ATM that may or may-not take ourcard – been there done that all over Bruges one day trying 4 different ATMsuntil we found one that would take our card – as we had run out of Euros andwanted CHOCOLATE!

So what are the options andcosts – the total costs? We have foursources of foreign currency here in our home town. Wells Fargo, Bank OfAmerica, a local Travelex office and a dedicated currency exchange office about75 miles away. (I’m not even going to discuss exchanging currency in an airportexchange center – that is typically worse than a credit card advance.)

Wells Fargo charges $7.50 percurrency, unless you exchange > $1000 USD, with an exchange rate about 6-7%above the inter-bank exchange rate. This is the rate you see if you Google thecurrency exchange rate. This is the best rate that large banks give each otherfor large (million $) transactions. So yes, Wells Fargo is getting 6-7% rightoff the top. They will waive the $7.50 per transaction if you have an account.But there is a cost of having an account at Wells Fargo. Minimum amounts for nofee savings or checking that are basically getting no interest and noinvestment potential. This ranges from $1500 to $3500 minimum balances. So youare getting basically nothing for that money being tied up.

Bank of America charges $7.50per currency, but only sells to existing customers, with the aforementionedminimum investments and tying up your money – and you still get charged $7.50per currency transaction. They also charge 6-7% above the interbank rate. So ona $100 exchange, you are paying almost 12-13%.

Our local Travelex will allowus to order currency with an ATM card and have it delivered to the local officewith no fees, but an exchange rate with a 10-12% markup depending on the currency.No accounts or minimum balances are required.

The dedicated currencyexchange office that is 75 miles away, in Denver actually, charges about a 3-5%markup in the exchange rate, but also $5-$10 per currency in fees and it wouldtake 6 gallons of gas to go there and back for another $15 to $20 in gas plus 5hours out of your life. No accounts are required, but the larger the amount ofcurrency exchanged, the less per currency fee.

So what is the cost of bankaccounts? For round numbers sake, let’s put $2000 in a BoA or Wells Fargoaccount as opposed to an FDIC CD. Today you can get a CD for 1 year at 1.5%. Soyour $2000 account is costing you $30 per year. Plus the hassle of havinganother account to keep track of.

As you can see, the totalmath shows BoA to be the worst possible choice. Not only a 12-13% markup withthe $7.50 fee, but $30 to maintain the no-fee account, which on small cashreserve transactions could be an additional 10-30% - like getting some pesosfor Mexico!

The currency exchange inDenver looks pretty good with the smaller markup, but then add in the fees, thegas, your time and it’s not worth it either.

The 6-7% markup by WellsFargo looks initially attractive, but then the $30 yearly loss in investmentincome potential, plus the hassle of another account to track is questionable.

Travelex is simpler andstraight forward, but charges an arm and a leg in markup, AND if you come backand do another exchange you get hit with the markup in the opposite direction!

So what is a traveler to do?

That is the real question forus out here in the ‘sticks’. I’m sure travelers in the big cities like New Yorkor LA or Miami might have better options in banks, but right now I’m tornbetween the Wells Fargo account and simply holding my nose and ordering fromTravelex…

BUT, and there is always aBUT, if you do multiple trips per year and multiple currencies per year, the WellsFargo account looks far more attractive than even Travelex. Fees per currencytransactions will eat your lunch, but the lack of fees for Wells Fargo mightjust turn the tables. The ONLY problem is trying to understand their fees forvarious types of accounts. Like wire transfer fees – which do not appear to bewaived when you maintain the minimum balance, which now means you have to personallywrite a check from another account and deposit the check (not sure if mobilebanking has a fee or not) with the time and gas involved. Geez, now I have tobe a CPA and a lawyer to read and understand all the footnotes!

Is everyone confused now?Good, so am I….

Anybody got any other suggestions?

I take a small amount of the local currency so I do not have to search for an ATM

Like you say when you want CHOCOLATE your want it now

I know many people just use their CC for purchases but some places like cash & I prefer to have some local cash for little things ..like Ice Cream :D

Fortunately we have Currency Exchange places in the mall that do not charge much more than the bank rate & no delivery fees

No matter what you do you cannot get away from some sort of fee

Just go with the flow do not sweat it :halo:

First suggestion.

I don't lose sleep on it.

Let's say I need $500.00 and I overpay by 3%. Well I've lost $15.00. In the scheme of things I'll survive.

So here is what I do.

If I don't have time to get to ATM machines when I first arrive I get local currency at home before I leave. I use my bank.

I try to charge as much as I can and take at least two credit cards with me that do not charge foreign translation fees. Capital one does not and doesn't charge an annual fee either.

In some countries where you have the option of using our own currency or their currency I won't convert money. I am talking about places such as Vietnam.

Keith

1) Use an ATM card to withdraw local cash. That is the single best option, depending on your ATM card and fees. But how many of you have time to do that when the ship docks, as you are herded from the excursion meeting place to the bus...

You don't need to use an ATM before being herded on an excursion bus, you don't need money on the bus. Use an ATM after you leave the bus. ATM's are all over the place, I used one during a walking tour, dashed up to one, dashed back, the group did not even notice I was away.

You don't need to use an ATM before being herded on an excursion bus, you don't need money on the bus. Use an ATM after you leave the bus. ATM's are all over the place, I used one during a walking tour, dashed up to one, dashed back, the group did not even notice I was away.

On some tours we wish to buy handmade souvenirs at a stop or two and need local currency. That is why we always get some at our Wells Fargo ahead of time.

On one tour there were some locals selling a few items at a scenic stop. Most of the tour members could not purchase items since they had no local currency. I was able to purchase a lovely set of embroidered tea towels since I had brought local currency.

You don't need to use an ATM before being herded on an excursion bus, you don't need money on the bus. Use an ATM after you leave the bus. ATM's are all over the place, I used one during a walking tour, dashed up to one, dashed back, the group did not even notice I was away.

Great idea, but 9 times out of 10, several other people have the same idea. Sort of like the ubiquitous bathroom stop!

I thought the same thing in Bruges last year. While the hunt for the ATM was interesting, and we were lucky that the tourist map had ATMs marked, the first four did not accept my card and I had to use Google Maps to find the fifth. Google maps would not have have worked as well in the narrow alley tall buildings of southern Europe - like Naples or Dubrovnik.

Anybody got any other suggestions?

No offence, but as Keith1010 suggested, the actual cost of doing it the expensive way is peanuts compared with the rest of the holiday costs. I get mine from my travel agent, who usually have good rates; and if somebody else has better rates, I'm not looking around so I won't find out.

For foreign trips, I always have some local currency. My bank provides this service and I am able to get whatever currency that I need quickly (usually within 24 hours) and at minimum extra cost. I have yet had the need to search for an ATM in any foreign country. And, like others, I will depend upon a credit card that has no foreign transactions fee.

My recent cruises have mostly been to euro-zone countries. I generally have a bit of leftover cash on me but I use ATMs on the ground there to get the majority of cash needed.

Can't say I've ever had to look far for an ATM. I tend to not take ship tours so I am on my own time but have spent far less time getting cash than most spend buying a postcard or going to the bathroom!

Maybe some people are living in the wrong country.

In Tokyo, there are several independent exchange companies that charge just 1% above the interbank rate, with no transaction charge. I take the subway to visit them, so there is an additional cost of about US$3.50 for transportation.

Worrying about a few dollars lost in exchange rates and transactions seems a bit foolish when I see so many cruise passengers who are paying top dollar at the souvenir shop on the pier because:

1. they are too lazy to go to the shops not designed for cruise passengers.

2. the way they dress screams "I'm a cruise passenger. Please charge me double".

3. they insist on using US dollars in other countries, guaranteeing that they will be grossly overcharged and then ripped off a second time on any local currency change they receive.

I save any left over foreign money. So I usually have enough of the major currencies (pound, euro, yen and yuan) to get thru a day or two. Nearly all our tours are private ones. When I say I need to visit an AMT to get money to pay them, the happily find one during the day.

No offence, but as Keith1010 suggested, the actual cost of doing it the expensive way is peanuts compared with the rest of the holiday costs. I get mine from my travel agent, who usually have good rates; and if somebody else has better rates, I'm not looking around so I won't find out.

I agree that 3% is not a big deal, whereas 25% is to me. Just rubs me the wrong way I guess. I had no idea Travelex charged so much of a markup until I did a detailed review yesterday. For example:

French Polynesian Francs - 19.5%

Vietnam Dong - 24.9%

South Korean Wong - 14.2%

South African Rand - 13.6%

Euro and Pounds are probably the best rate, but even those are just under 10%.

So what does this mean in terms of real life? Well, on some of our upcoming cruises its around $300 to $400 in cash lost in transaction fees if we go with Travelex. About $100 less in Wells Fargo.

A lot in the scheme of things? No, not as a percentage of the overall cost of the trip, but $100 here, a $100 there and pretty soon you've covered the bar bill.

Maybe some people are living in the wrong country.

In Tokyo, there are several independent exchange companies that charge just 1% above the interbank rate, with no transaction charge. I take the subway to visit them, so there is an additional cost of about US$3.50 for transportation.

 

Worrying about a few dollars lost in exchange rates and transactions seems a bit foolish when I see so many cruise passengers who are paying top dollar at the souvenir shop on the pier because:

 

1. they are too lazy to go to the shops not designed for cruise passengers.

 

2. the way they dress screams "I'm a cruise passenger. Please charge me double".

 

3. they insist on using US dollars in other countries, guaranteeing that they will be grossly overcharged and then ripped off a second time on any local currency change they receive.

Too bad we don't have that kind of exchange rate here out in the sticks. I'd hop on it in a second - even drive some ways to get a 1-2% above the interbank rate.

Its really interesting to walk through the 'markets' set up by the ship in which everything is marked in the majority currency of the ship passengers, or in the case of the Baltic, in two or three different currencies, and then wander just a bit off the beaten path and find a completely different pricing structure - but almost always in local currency. The price inflation is as you say, but the currency exchange rate is even worse as it is invariably rounded up in favor of the merchant - and then the coinage you get back in change is absolutely useless except for tossing in that big globe back on the ship or giving to a coin collecting relative.

So I notice that some of you are SE Asia based and have mentioned Vietnam. Upcoming cruises are stopping in Nha Trang, Phu My, Halong Bay and Chan May. Only Travelex sells VND, Wells Fargo does not. So what is the ATM situation in those ports? I do not remember seeing one ATM while running around Vung Tau in 2012.

A lot of good basic info here, but there is no ONE answer that fits every country, every one's situation, and home location. For example, we probably only use ship's excursions 25% of the time, and rarely spend money in that situation. But we travel extensively (writing this from Canada right now), and almost always use ATMs.

This is our second visit to Canada this year, so got money last time (ATM ) and are using it up. We having Euros at home (ATM ), for our next trip to Europe next summer. We generally agree with Keith1010, but have done the research, and plan our trips such that ATMs work most logically for our trips.

Good foundational research, from which others should attempt to build their decisions on.

A lot of good basic info here, but there is no ONE answer that fits every country, every one's situation, and home location. For example, we probably only use ship's excursions 25% of the time, and rarely spend money in that situation. But we travel extensively (writing this from Canada right now), and almost always use ATMs.

 

This is our second visit to Canada this year, so got money last time (ATM ) and are using it up. We having Euros at home (ATM ), for our next trip to Europe next summer. We generally agree with Keith1010, but have done the research, and plan our trips such that ATMs work most logically for our trips.

 

Good foundational research, from which others should attempt to build their decisions on.

Our previous cruise experiences in Asia, the South Pacific, the Med, the Baltic and Norway proved to me at least that having local currency in hand when you arrived was really, really handy. Even though some of those cruises had several different currencies, I was not ready for planning the upcoming world cruise with over 22 different currencies - some of them closed. An eye opener once I started researching currency exchange rates, currency exchanges and actual ATM locations - not to mention chip and pin vs chip and sign vs swipe and sign vs swipe and pin!

And with technology advances the way they are, everything I research now will be OBE by the time we sail!

But I do appreciate the inputs...

There are too many variables to have set rules for all situations. How much currency do yo need, what fx rate your bank charges on ATM withdrawals, bank and in country ATM fees, credit card Fx fees. On board exchange rates are often userous but when compared to the cost of obtaining a small amount of FX from an ATM it this avenue may bet the less expensive route.

We usually travel 4 months per year-cruises and land trips. We use a credit card that does not add 2.5 percent admin to foreign purchases. Their FX rate has been consistent right to the fourth decimal point.

When we need cash we do a cash advance on the above credit card. Why? Because our bank's exchange rate on ATM withdrawals is consistently 2-3 percent higher than the FX rate on our credit card cash advance. We avoid cash advance fees/interest by maintaining our credit card in a positive balance while travelling....we treat it like a current bank account. No interest or fees are charged when the card is in a positive balance.

We often by travel outside our home country. Between ATM and credit card fees/exchange rates we have saved as much as $500-600 in one year. Or should I say avoided that much in onerous bank fees.

When we travel we often ask if there is a discount for cash. In some countries there is-often five-ten percent. You simply have to ask just before handing over your credit card!

We don't sweat the small stuff. We won't go miles out of our way to avoid a small fee. But we do pay attention to currency. When we are travelling on land our typical ATM/cash advance is $500.

We get a small amount from our local bank before leaving home...years ago, we were in the port of LaHavre France could not find a place to exchange dollars... not fun. We were surprised, expected to be easier, it wasn't...

Because we travel fairly often, and always come back with something, we always seem to have between $50 and $100 worth of GBP, Euro, Canada $ and Peso to start with until we find a bank ATM ( never that difficult). Traveling elsewhere, we always do port research - which includes locating ATM's- and, on a couple of occasions, have purchased local through ChaseBank.

I had no idea Travelex charged so much of a markup until I did a detailed review yesterday. For example:

 

French Polynesian Francs - 19.5%

Vietnam Dong - 24.9%

South Korean Wong - 14.2%

South African Rand - 13.6%

Euro and Pounds are probably the best rate, but even those are just under 10%.

Note that currency exchange businesses will mark up the exchange rate that much while advertising "No Fee". Those US residents who say they got a great rate from their bank, Travelex, or AAA have probably never checked against the interbank rate.

You haven't done the total math until you return home and find out what your left over francs, rands, wongs, and dongs are worth.

Note that currency exchange businesses will mark up the exchange rate that much while advertising "No Fee". Those US residents who say they got a great rate from their bank, Travelex, or AAA have probably never checked against the interbank rate.

 

 

You haven't done the total math until you return home and find out what your left over francs, rands, wongs, and dongs are worth.

Exactly - ATM is clearly the way to go if at all possible.

We usually use a private guide who will always make time for an ATM stop when asked - and I usually ask by email while booking the guide so they know beforehand. If we take a ship tour, there is usually at least one ATM near the shopping stop - the guide can tell you where.

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In some countries there is a charge on both ends when using an ATM.

In others, such as Vietnam, there is a fairly low limit on how much you can get from an ATM per transaction. Most are about $150, a few banks are slightly higher.

When we buy currency at home we always buy from an FX store. The rates are much better than our bank and the choice of denominations is much better. It is not unusual for us to buy trave in a foreign currency. If we buy a $4k cruise in Australia, the US, or Europe we save $100-120 simply by using a card with no FX fees.

The one exception is when we buy airfare from a major US carrier. They will typically convert to our CAD at rate even lower than the prevailing FX rate. Same with the cruise lines although typically the advantage still rests with our on line TA who provides generous OBCs.

We keep currency in mind when selecting travel destinations. Postponing a three week trip to South Africa by year when the rand was dropping saved us 10-12 percent on in country spend and 20 percent on airfare from Europe.

When we buy currency at home we always buy from an FX store. The rates are much better than our bank and the choice of denominations is much better.

I don't know why Canadian bureaux de change can charge so much less than those in the USA. Or should I ask how US bureaux de change can get away with charging so much more?

We never use the FX at any airport.

I sometimes see one of the employees of the bank that I deal with at the FX store. They get an employee discount at the bank. The FX store also gives them a discount.

They go to the FX store because the rates are better and there is more choice of both denominations and currency.

Our experience is that Canadian banks are bandits when it comes to fees and service charges. For both retail and commercial banking. Probably one reason why their stock performs so well.

Exactly - ATM is clearly the way to go if at all possible.

Agree.

I was in for a surprise today. I went to an ATM to withdraw some money to have a bit of USD for our trip expenses (taxi to/from home airport and airport purchases) - we're leaving tomorrow. The ATM spit my card back, saying it was de-activated. After 50 minutes on hold with the bank, I found out it had been de-activated for lack of usage. I charge everything to get points and since I work for a merchant I will even get some pin money from time to time, using a CC....I hadn't used the ATM in 5 months. I'm glad I found out before we got to Poland.:mad:

So, for this trip it looks like we'll have to buy currency at the xchange desks and put some meals on CC, instead of paying cash. There is not enough time to order FX from a bank, since we're leaving tomorrow. DH has a different bank ATM, but we try to avoid using that one because it's tied to some bigger accounts. LOL...however, we did use his last February, when coming off a flight sleep deprived, I left mine in an ATM at the Hong Kong airport. Thankfully, that time I wasn't on hold 50 minutes, calling from HK, to cancel the card.