Originally Posted by mikeyyz
I noticed this too on a recent RCI cruise - except that as far as I can tell, there isn't a fee (but it could only be for 100$+?)
the problem is that my onboard account was in US$, and billed to a Canadian$ card (Aerogold), which I believe charges a 3-4% currency spread, so you lose out on the exchange rate...
Otherwise it'd be nice to take out a few $,000 and grab a bunch of points... and NOT spend it at the casino, right...
The cost of 3% is not necessarily a real cost to you if you can convert the USD back to CAD at a rate equal or better than the one charged to you by the cruise.
Suppose the cruise billed you $100 X 1.15 = $115 CAD on your Canadian CC. You now have $100 USD cash on your hand that if you can sell it for equal or more than $115 CAD, after adding the interest earned during the wait time compared to what you would have earned had it always been $CAD, then there will be no real cost to you. Plus, the grace period on your CC will act as an interest freebie for you - essentially, the bank was lending you money for free. To make this really simple, let's use our $100 example as follows:
You now have $100 USD in cash given to you by the cruise, charged to your CC. Once you get off the ship, you deposited into a $USD saving account (which earns about 5% currently). You are waiting for FX fluctuations when and if you can sell your $USD at equal or greater than $115 CAD. Meanwhile, there is no effect on your $CAD deposit since you haven't paid anything yet to the bank. Hence, your liability of $115 is still earning interest for you in a Canadian savings account (assumend a current rate of 4%). Suppose your CC grace period is 30 days and for simplicity, assume you have 30 days between depositing the $100 USD into a bank and the day you have to pay your CC in $CAD for $115 CAD. If you can sell your $USD within 30 days, there is no doubt you will be at least even. On Day 30, your USD balance will grow to $100.42 USD and you need $115 CAD so the effective FX rate that will make sure you'll break even is 1.1452. You will therefore exercise this "option" if the FX rate is equal or greater than 1.1452 Beyond Day 30, you will need to start consider the interest rate differential between $USD and $CAD and look for opportunity to get out of the USD position in consideration of your interest earnings in USD vs. that of CAD.
Long story short, the cost may not be real, in fact, you can even make money with it if your bet turns out to be right given some time and market volatility.