Foreign Exchange
 

I am taking a trip to England and Australia in Novemeber. I would like to know which of the following method will give me the most favorable exchange rate in British ponds and Australia dollars? Thanks!

1. Withdraw money from local cash machines (require service fee).
2. Put all the charges on credit cards.
3. Exchange money in airports or local currency exchange stores, such as Thomas Cook.
4. Exchange money with the bank that you have an account with (my bank requires $10 service fee for less than $1000 transaction).
5. Traveler checks.

David

No matter which way you are going to change your money, it is going to cost something. :td:

1. I have found that this system is the cheapest, provided that you shop around to find out which bank charges the least. You would be surprised at the difference in fees. So, a few calls to the various banks around you will make the difference.

2. A mix of one and two is the best, but there again, shop around among the cc companies. Fees vary again wildly.

3. Avoid Travelex and Thomas Cook like the plague. Their fees vary widely and are, most of the time, outrageous. In certain cities like Paris or Geneva for example, there are some independent small exchange shops that have amazing rates with very low fees. They are however hard to locate.

4. If you know what your needs are going to be in advance, it would not hurt to change a little bit, so as to be ready as soon as you arrive in the country. Would not work for large amounts, too risky.

5. I am a little bit old fashioned in that regard and I found TC's still the best, provided you buy them in advance in the denomination of the country you'll visit. i.e. buy TC's in Pounds and in Australian Dollars. When you need cash, just buy something at a store, they'll give you back the change. No additional fees. I have made substantial gains by buying TC's. I bought Amex TC's when the Euro was under $ 0.90, exchanged them again as the Euro was more than $ 1.20
On my last trip in Australia, I have lost my TC's (more than $12'000.-), had no trouble in having them refunded. Avoid banks to cash them, it will save you cashing fees.

Good luck and have a nice trip.

I'll agree with magexpert that 3 and 4 aren't very economical, and that a mixture of 1 and 2 would make the most sense. Just remember to withdraw fairly substantial amounts of cash out of ATMs, since many banks have minima and maxima when it comes to fees- e.g. my Greek bank charges 1% of the transaction with a minimum charge of €1.50 and a maximum of €2.97, consequently I have to pay a whopping €1.50 when withdrawing 10 GBP and just €2.97 when withdrawing 600.
As for 5: To be honest, I think travellers' cheques (or however they're spelt) are a waste of space. Why mess around with paperwork when you can do everything electronically?

For convenience, we usually use ATMs. This has been a lot more economical since we switched banks- my old one charged $5 for international transactions on top of any other ATM fees- even if it was Canada.

Unfortunately, sometimes you find things out in retrospect- many credit card companies have started to extract their pound of flesh by using a less-than-favorable exchange rate on purchases. We're headed to Budapest and Prague (no Euros in either place) and will probably get hit again. But, it sure beats the "Bureau de Change" shops.

If you must use travelers' checks, getting them in the country's currency is a good idea, but if you ask about the buy/sell spread you'll find out that you're still paying for the convenience, even at AAA.

My impression is that the order in which the OP has listed the options is the preferred order of use if exchange rate is the main issue. Another variable for using credit cards is to know what exchange fee is charged by your bank. MBNA and CapitalOne are two large CC issuers that only pass on the 1% Visa/Mastercard fee with no additional charge of their own. Most other banks add 1 to 3% to the exchange. Amex's fee is 2% (but the exchange rate that Amex uses isn't necessarily an "official" interbank rate).

I agree with all the above.

Keep in mind that you are not buying enough to make much difference.

However, if you are the type person that pays his credit card off each month, the big surprise and expense is that if you hit the ATM machine, you get hit with the 14% or 18% monthly interest on the whole card balance. I frequently run up $10-20,000 on a card in a month. The 18% charge runs 1.5% of average balance, which can be $150-200.

Get and use a debit card from your bank. Find out how much they charge for the whole transaction, but do not forget, even if you run through $5000 or so(which is a lot of cash), at 2-3%, you're only talking about $100 or so.

slawecki- I should have been more specific- all our ATM transactions are tied to our checking account. You're right about cash advances, which is why I've done that only once (missed Sabena flight from BRU-EWR, Turkish Airlines was flying from BRU-EWR and wanted cash).

Two reasons: you have probably never been in Paris at Xmas when no ATM's were working for over 12 hours and CC's could not be processed.
Try many places in Australia where only cash or TC's are accepted.... Never depend intirely on electronic, no matter where you are.
By the way, there were quite a lot of problems in Alabama last week.
In case of trouble, cash and TC's are still the best.

I don't want to start an argument over this, but in general I've found that ATM's overseas are much less reliable then they are in the United States, expecially on weekends. I can almost always find a place here to get money, but I've been in places like London, Amsterdam, etc where ATM after ATM was not working, many times just out of cash.

I wouldn't depend on them as your only source of funds, we always exchange some at the booths when we first land if the airport ATM isn't working.

I see you are here in Southern California.

My advice is to consider opening an account at Bank of America. BofA is part of a global ATM Alliance, including Westpac (Australia) and Barclays (United Kingdom). In short, you may use the ATMs of these banks to withdraw funds from your BofA account with no foreign (in this case, meaning not part of BofA's ATM network) transaction fees, and you get the straight interbank foreign exchange rate.

That way, you have reasonable access to currency if you need it, although cordelli's warning about ATM availability is a very good one, IMHO.

I try to visit the websites of the banks before I travel and find the ATM locations that may be convenient to where I am going to be staying/visting. (I also enter them as waypoints in my handheld GPS, but that's the geek in me).

Hope this helps!

The fault in this comparison is that you compare a country with a city. It's obvious that ATMs in central london or amsterdam will need to handle lots of cash, consequently it is possible for them to be caught out cashless. OTOH, this won't be the case near where you live in Connecticut (or near Nottingham for that matter). I've been spending the last four years in England and never happened to conseqtively stumble upon two ATMs that were out of order/out of cash. Cards are so omnipresent here, I never have to withdraw more than 20 GBP out of a cash machine, and 20 GBP in cash can last me a week (coffee and urban public transport/taxi are the only things I pay for with cash). That said, no matter where I travel to, I do not frequent areas where there are more tourists than locals. :D

EDITED TO ADD: As far as I can remember, every UK airport I've been to had at least two ATMs of different banks (that certainly is the case at BHX and STN that I've visited recently)

Travelers Checks Are Obsolete
 

The basic rule is that the electronic modes typically offer the best exchange rates.

Anything involving paper or an exchange booth comes with higher transactions costs.

Minimizing the number of ATM transactions cuts associated costs, and minimizes exposure from malfunctions/nonoperations.

One can always carry $300 in US cash or so to cover any contingencies.

My view is that travelers checks are completely obsolete. The last place I used them, in Tanzania (no ATMs at the time), there was a 3% charge from the merchant for accepting them.

PNC debit v MBNA credit?
 

I bring mabye $200 US dollars, get local currency cash from an ATM when I arrive at the airport, enough for a week, and charge everything I can.

I generally use the PNC Visa debit card attached to my brokerage account for international charges and cash - 5 ATM withdrawals a month without charge. I'm not sure about their international exchange charges now - they used to not charge the extra 2-3%. No points or miles.

I also have an MBNA Amtrak Mastercard. I'm wondering whether to use the debit card for the cash advances only and the MBNA credit card for the rest of the charges. Points.

Your thoughts?

Sylvia

I have had trouble finding ATM money in Florence, Venice, Bologna, Paris, London, Moscow, PetersburgNice, Cannes. Probably a few more. Trouble is at least 2 non working machines in a row.

I must burn a lot more cash than average, because I convert at least $100 a day, and frequently get to $2-300 a day. Driving a car in Italy between tolls and self service gas (feed money to the machine)can be very expensive, as can my wife's shopping habits.

Most machines will not allow withdrawal of more than about $200us, and I do not recall any machine that would allow €300.

Take two cards, so when you find a working machine, you can get some real money.

You can pay Italian tolls with a credit card, but I know what you mean about feeding the gas pumps. I once thought I'd buy €5 of gas - what a waste of a stop... I think later in the day I found a gas station where I could use a CC.

On another trip I had trouble finding a working ATM on a Saturday in Antwerp. This was before the Euro switchover, and we had just arrived from Amsterdam. But the biggest problem in Antwerp was finding a pay phone.

Not sure but I think the daily ATM withdrawal limit is set by your bank. Usually it can be raised temporarily or permanently if you ask.

But that's why I prefer using credit cards as much as practical, even though even after my bank's out-of-network fee I generally get a better rate with ATMs.

I think $100 per day is about right. For a week in England I withdrew 100 pounds on arrival, then 60 pounds two days later, and then another 60 or so at the end of the week. But the only way the cash lasted that long was to use a credit card whenever possible, including Underground fares.