Avoiding Currency Conversion Fees
I am planning to go visit some friends later this year in Europe so I will need to change some Dollars into Pounds and Euros.
Use you Credit Card instead you might say but 1. Not all places take Credit Cards and 2. Even Credit Cards charge a fee for Currency Conversion… and some of them throw on a Rip-Off Foreign Transaction Fee of up to 5%… (means you should always check with you card issuer to see if they’ve implemented something like it and to also let them know that you will be out of the country so they can put a notice on your account to keep the security bots from freezing your card while you’re trying to buy Aunt Petunia a new purse in East Latvia)… and changing money at the your bank before leaving the US or especially at Airport Moneychangers is asking for… well, you might as well just give them your wallet and hope they give it back to you after they’ve emptied it.
In my case I have access to people who are from Britain and Europe as well as fellow employees who take Europeans to the airport and sometimes get Pounds and Euros as tips… I’m going to trade them Dollars for them at whatever the current conversion rate is. Usually the drivers change them at the airport but still get stung for a couple of percentage points by the moneychangers. We both win then.
Baggage porters are also prime candidates to ask… you might not get much but you might get all you need for the cab ride to the hotel when you reach your destination.
If you live near a University they almost always have foreign students and you can swing deals with them as well… Mom sends 500 pounds in currency and you change it for starving student into dollars.
It’s also good advice for students like those in the college program I transport everyday… I suggested it to one student from Brazil who is going home in 2 weeks. Asked him if he knew anyone coming in for the next program and he said a friend was coming in in a week for a six monther… the one currently here has saved about $1000 in Dollars. He’s going to contact his friend to bring the current equivalent in Reals and they will trade when he gets here. The current exchange fee in Rio is 10% so they will both save… 10% on Reals to Dollars and 10% on Dollars to Reals.
Anyone ever tried anything similar?
Photo credit: stock.xchng.
Good advice, Roland. We’re headed to Amsterdam in March for our honeymoon, so this is timely advice. The last time I was there I found that my bank charged less of a conversion fee for withdrawing money at a Dutch ATM than I would pay exchanging paper dollars at an exchange counter. I got a much better rate (at the time the dollar was trading at 60%), and the conversion fee was no more than what I would pay for using a nonbranch ATM.
Enjoy your trip Serena.
Once on short notice I went to a moneychanger here in the US and cut a deal to buy Pounds. I got a much better deal than the usual since I was buying here and not over there. As I recall it was a flat $5 plus 1%. Much better than my banks 6% and a weeks wait to get the currency.
“Britain and Europe?” Since when Britain is not in Europe? 🙂
As far as money savings, some people have reported Fidelity not charging foreign transaction fees on their credit card even though the terms clearly spell out a fee. I tested it in Mexico and was not one of the lucky ones. There is also a Capital ONE card that does not charge any foreign transaction fees (except maybe Visa/MC fee?).
Dima: Britain is part of Europe but I was segregating based on Currency…Britain uses the Pound and the rest of Europe has converted heavily to the Euro.
Not all credit cards charge the foreign transaction fee but they all charge a fee for currency conversion. You don’t necessarily see it as they slip it in to the exchange rate itself…ie: say on the day your charge from overseas in Euros appears the Euro is trading for 1.50 Dollars and the card issuer charges a 2% conversion fee. What you see on your statement is the Euros converted to dollars at 1.53 not the actual trade rate of 1.50 it takes 2% more Dollars to buy the Euros.