When Does it Ever Make Sense to Exchange Cash at a Bank or Currency Exchange?

[whogo]

This is the problem: exchange bureaus advertise that they charge no fee or commission; what they do not mention is the exchange RATE they apply.

 

As a real-time example, the interbank exchange rate (what is applied when you use an ATM) now is 1$ = .8995 euro, or 1 euro = $1.1117. Travelex is offering $1 = ,7997 euro --that means for $100 they would give you 79.97 euro, rather than the interbank rate of 89.95 euro for $100. That difference of 10 euro costs you $11.17. So even if you pay a non-refundable fee of $3, you are down $8. Not bad if all you spend overseas is the equivalent of $100 - figure how much you would be exchanging.

Travelex's fee was $9.95 the last time I checked. In your example your would receive €0.7997/$ for the remaining $90.05 from your original $100. You would get €72 instead of €89.95. Ouch! That makes a 25% markup.

[pris993]

We have been traveling for 30 years + -- use credit cards to pay for hotels only.... pay everything else in cash... we get a small amount of foreign currency before leaving home... then exchange what we need along the way, in some areas we have found folks happy to take US$s. We don't use ATMs at home or anywhere else, don't like electronic banking. We like to bank the old fashion way. Even if we pay more, we have peace of mind.

[Ashland]

I'll just answer the basic question by the OP.

 

It's made sense to me to walk into the Bank of China and exchange my US$'s into Yuan when in Shanghai....My passport and good condition $$'s has made it an easy transaction when I have been there.

[marco]

We usually get $50 or so worth of the money of the country we're going to at the international departure airport (usually JFK). Otherwise, we always use credit cards and ATM's where we're at. Some credit cards do not charge an international conversion fee and some bank's ATM's do not charge (or they reimburse) for withdrawals made not at their bank. But when we're paying upwards of $5K pp for the trip to begin with, we're really not all that concerned about $3-$4 in cc/bank fees.

[BlueRiband]

I agree with your general point. The other side of the coin is some people just don't feel comfortable landing in a foreign country with no local cash. I am sure you saw that in your reading of the many threads on the topic.

 

Exactly.

 

I don't leave home without enough of the local cash for at least a taxi ride and a meal. Should there be a delay and I arrive when everything has closed for the day I already have enough currency for my immediate basic needs. The peace of mind is well worth the trip to a currency exchange.

[edgar211]

I was in China in 2007 had just credit cards to us to get money. I told my credit card company's that I would be in China for 2 weeks. When I would get some money out of ATM"s credit card company's would shut down my cards and say it was fraud alert. So I had to buy a phone call credit card company's and let them know I was in China please remove fraud alert. Happened all 2 weeks I was in China. Now I always have some money with me and credit cards as backup.

[Cruise Junky]

Why do I get cash beforehand? Simple math. I have a local exchange place that is cheaper than the 2.5% my credit or debit cards add on, I don't have to pay a fee when I can't find a partner ATM and it allows for dollar cost averaging of my buying. I realize I could get a card without the 2.5% but they're rare in Canada and I like the rewards from my daily card. So simple answer, I do it because it's cheaper.

Edited June 30, 2015 by Cruise Junky

[CPT Trips]

Why do I get cash beforehand? Simple math. I have a local exchange place that is cheaper than the 2.5% my credit or debit cards add on, I don't have to pay a fee when I can't find a partner ATM and it allows for dollar cost averaging of my buying. I realize I could get a card without the 2.5% but they're rare in Canada and I like the rewards from my daily card. So simple answer, I do it because it's cheaper.

 

You are quite fortunate. I just shopped for Euros and the best rate I could get locally was just about a 6% premium over the interbank rate that I would get on an ATM transaction, 5% net of my foreign transaction fee.

[Cruise Junky]

You are quite fortunate. I just shopped for Euros and the best rate I could get locally was just about a 6% premium over the interbank rate that I would get on an ATM transaction, 5% net of my foreign transaction fee.

 

 

Yes definitely. I'm not sure if it's a Vancouver thing or a Canadian thing. I can walk across the street and buy euros for 1.4122 and the XE rate is 1.392 which is pretty darn close. I do still use an ATM when I run out but I do like buying a small amount each paycheck

 

 

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[CoffeHound]

Exactly.

 

I don't leave home without enough of the local cash for at least a taxi ride and a meal. Should there be a delay and I arrive when everything has closed for the day I already have enough currency for my immediate basic needs. The peace of mind is well worth the trip to a currency exchange.

 

Another vote for this philosophy. I know I am costing myself a few dollars, but if I don't have at least enough local currency to cover getting to my hotel and something to eat, I am in panic mode the whole journey worrying that I won't be able to find an ATM or won't be able to get it to work. I am a much happier traveler with a small amount of overpriced euros or UK pounds or whatever in my pocket.