Changing money abroad without big fees

parrot_phanJuly 27, 2006

OK, DH (of 3 months) and I are nearly to our savings goal for our honeymoon to Australia in November. (We agreed we'd only go when we'd saved the cash to cover the trip.)

How do we avoid paying money-changing fees when we go overseas?

I've taken a few business trips abroad. Formerly, the best method I found for avoiding fees for changing money and getting a good exchange rate was to use a credit card -- MC and VS are taken virtually everywhere. And one has to carry little cash.

When I came back from a business trip in February and got my CC statement, my eyes bugged out at the 3% foreign exchange fee tacked onto each purchase. Thankfully, my employer paid all expenses, including that 3%. Apparently the 3% fee is pretty standard for CCs these days.

I don't know that ATMs will work either. In 1998, I got Argentine cash out of an ATM in Buenos Aires -- and it cost only the $1 my bank was charging for using a "foreign" ATM, whether in the US or not -- not a bad price to pay. Those days, I fear, are gone too.

For the next trip, should I go back to good ole American Express Travelers Checks? My bank will provide them fee-free. On my February trip, I got my best exchange rates with AmEx TravChex and U.S. cash -- and there were no fees.

I don't relish carrying either big wads of cash or a bunch of AmeEx TravChex. Plus, I recently found out my local grocery store won't take TravChex anymore because of fraud, prompting me to wonder if other merchants elsewhere in the world are turning these down too.

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My experience abroad has been that no one want to accept travelers check at POS except the hotel where you are staying at. I believe the reason the hotel will accept them is that they have your CC to reserve your room, and if the checks don't pan out they can bill your CC.

When traveling abroad the best rates for exchanging money are at a bank. But that may depend on which country you are in and I don't have any experience with AU.

I would suggest exchanging at least some of your money before hand at a local bank and bringing it with you. Use some of it to 'get you started' right away when you arrive and always keep some of it with you for 'emergencies' - like a place that won't take a CC or TC.

Keep you cash and passport on your person at all times. Stores that cater to travelers sell things like money belts, and little purses that can be attached to bra straps, and straps with little zippered pouches that can be Velcro-ed around your calf, and things like that. Don't keep all your cash in your wallet. Just have what you will need for the day and keep the rest hidden on your person.

    Bookmark   July 27, 2006 at 4:29PM
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bud gives lots of good advice. Definitely bring some already-exchanged money with you just to make things go more smoothly. One good way to exchange money at your destination is with your ATM card. ATMs, particularly at airports and train stations, display in English if you don't speak a local language and -- at least last time I tried it about five years ago -- there were no conversion fees.

    Bookmark   July 28, 2006 at 9:10AM
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Whenever I've travelled to Europe I've always taken traveller's cheques in the currency of the place I'm visiting. When I went to Britain I took pounds sterling and when I was in France (a decade ago) I took French francs - lot easier now with Euros. That way I could buy them here and pay the exchange here when I could get a good rate. I think they were VISA traveller's cheques the last time I went to Europe and I've never had any problem cashing them at a bank in the country I was visiting and there was never any question about how much I was going to get - cheque was for 100 francs and that's what I got. There was probably a minor service charge but it would have been negligible. I find bringing TC's in the foreign currency really helps with budgetting too. The last trip we took was to New Zaland and unfortunately nobody sold TC's in their currency so we ended up taking Canadian dollar TC's and getting them exchanged at banks. Never had any problems with that but I would have preferred to have them in NZ dollars. Since Australia is a more popular travel destination check with AMEX to see if you can get Australian dollar TC's. We used our credit cards to pay for major things - car rental, motels, some pricey excursions - and then just paid that off when we got home with the money we'd left in the bank strictly for that purpose. I'm a mega-budgetter when I travel, I hate to see surprises on my credit card statement!


    Bookmark   July 28, 2006 at 12:50PM
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My best advice is, if you need spending cash, don't change money at the airport or train station. Look for a locaL bank in a residential neighborhood. I travel fairly frequently to Canada. Money changing places charge more when they're located near travel destinations.

    Bookmark   July 31, 2006 at 11:20AM
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I asked this same question about 3 years ago before I went to Austrialia. It was at another forum.

I called around to get some information beforehand and conversion fees were high. Someplaces were going to charge 10% - I think that was American Express.

The consensus was to use the ATM machines. I don't believe there was a conversion fee, just the small fee for using a ATM that was out of network. And there are several ATM in the Sydney airport. Worked out great.

    Bookmark   July 31, 2006 at 11:59AM
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I think you can get some foreign currancy at some of the AAA offices. When my daughter went to France last summer, I got her about 100 euros so she could have some spending money before she got settled for school. Our credit union credit card charges us a 1% fee for getting money out of a foreign ATM. My credit card also tacks on a 1% fee. It costs them money to do all of this money exchange, so I dont mind paying the 1%.

Oh, AAA does not have the best exchange rate, but it wasn't bad because I could get exactly what I wanted. I also sent my daughter with Euro travelers checks. She used those to start her bank account when she was living there for 6 months. She had access to her money right away.

    Bookmark   July 31, 2006 at 8:45PM
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I think traveller's checks are obsolete. With the proliferation of ATMS, there is no need for them. At least in Europe, where I travel frequently, ATMs are everywhere and actually charge less than my now-$2.00 withdrawal fee here at home. Check with your bank before you leave to make sure your ATM card will work in the country you are going to. Also, you can find an ATM locator on a web site (your bank should direct you to it) that will tell you the location of the ATMs in the cities you are travelling to. Print it out and bring it with you. Piece of cake!

    Bookmark   August 2, 2006 at 2:53PM
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We have always used ATM machines and gotten the best rates, The machines are every where in Europe and the fee for using them is very small. It is really convenient and easy. Have a wonderful trip.

    Bookmark   August 3, 2006 at 2:42PM
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Wanted to share what I've found out as well as to thank all these wonderful responses!

So many of you indicate that ATMs seem to be the way to go for cash, so that's what we'll do for pocket money.

We have discovered that we need to put down a deposit for lodging and an outing we've planned. That means that before we travel, we have to pay using a CC.

I have discovered this.

Credit cards issued through credit unions don't sock users with a 3% foreign exchange fee. They pass on the 1% that they are charged by VS & MC, but don't tack on the extra 2% that most banks add, for the total of 3%.

Hooray for credit unions! DH is a member of one that issues CCs. (The two I belong to only have savings accounts and simple loans -- they don't even offer checking!) So we will apply for the CU CC -- to be used for overseas transactions!

We are cautious/intentional about using CCs and pay our entire balances every month.

    Bookmark   August 3, 2006 at 4:23PM
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Hooray for credit unions! DH is a member of one that issues CCs. (The two I belong to only have savings accounts and simple loans -- they don't even offer checking!)

Except for an LOC I hold with a national commercial bank, all my banking (including my mortgage) is done at my credit union. They offer better returns and lower fees. If a person lives near a CU they can use, (s)he really has to think about why they'd let a regular bank literally nickel-and-dime them with foreign exchange fees and minimum balances and the like.

And the best thing is that almost everyone can join a credit union -- they extend membership to many different interests or areas and to family members of those folks, too. They are A Great Thing (tm). :-)

    Bookmark   August 4, 2006 at 9:46AM
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We have 2 Visa cards because our bank offers one for free and another bank gives us a free one with cash back bonuses. Before we travelled to Europe the last time we went, we paid $2K onto the Visa card we never use. This gave us free withdrawl of money in Europe, without starting up the interest charged on cash advances. We used the other card for credit purchases. It was very handy to have both credit card and bank card for ATM's.

    Bookmark   August 4, 2006 at 4:51PM
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I went to Holland with my mother in May. She brought Canadian $$ to exchange for Euro's at a bank. Well....... the only reason the bank allowed her to exchange it is because my cousin works for the bank in it's head office and *she* was given permission by her boss. I, on the other hand, opened an ING Direct account. I had no problems at all getting money from any bank machine in Holland. I found that they don't like credit cards there. Most stores want you to spend a minimum $50 Euro's if you use plastic. A few stores lost sales... And also be very careful because not all stores to refunds on credit card purchases. I found that out the VERY hard way. Not sure how it is in Australia, but this is how my experience was in Holland.

    Bookmark   August 15, 2006 at 11:07PM
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Capital One cards don't charge that 3% foreign transaction fee. Also, most smaller bank type debit cards don't either. I just got back from Paris and didn't incur any fees using my ATM card twice (my bank gives me two free out of their network withdrawls per month) and my debit card at other places.

One tip my bank gave me was to only use swipe type ATMS, not insert your card type, so your card can't get eaten....well, i couldn't find a single swipe type in Paris, so I put card in and didn't have any problem.

    Bookmark   August 16, 2006 at 3:48PM
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