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Cash | Travelers'
Checks | Exchange Rates Complete
Listing of Ed and Julie's by Ed Gehrlein and Harlan Hague Continued from Page 1
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It seems
to have become fashionable of late to pooh-pooh travelers' checks. |
t surprises
some travelers that many credit cards and ATMs (using a cash card) fetch the best exchange
rates.
Most credit card transactions are converted between currencies on the day of processing at roughly the inter-bank rate plus a small commission or service charge (typically 1%).
owever, many issuers have
recently taken to padding the exchange transaction by adding 1-4% on top of the normal
charge.
Amex has largely increased its fee from 1 to 2%;
Citibank is adding 2% instead of 1%;
BankAmerica is adding 2% on top of the exchange commission;
Providian may add as much as 4%.
Even at that, Citibank, Amex and BA card transactions would still be equivalent to converting currency at most banks. If you make only the occasional trip to Europe this is no big deal. The typical added cost would be only $20-$40.
You should check with your issuing bank to learn what charges they, and their processing center, add to foreign purchases and ATM use. (Few European banks assess ATM fees ... any fees you might pay would be those added by your home bank, if any.)
If you or your company make more frequent trips or charge large sums you may wish to find a card issuer with no add-on. We don't follow credit card industry news, so you'll have to do your own checking.
ote that if the dollar's value is
declining the purchase amount in dollars appearing on your credit card statement may be a
bit more than you calculated when you made your purchase. The reverse is also true. This
is because the exchange rate is calculated on the date the charge is processed, not when
the purchase occurs.
In most cases in Western Europe, processing occurs within a few days of the charge. On occasion, charges made in a small town may take weeks to reach the processing center, although this is rare these days. Usually the time lag is small, and exchange rates usually inch up or down gradually.
We're a
pro-business couple, normally. Frankly, though, added bank fees on overseas transactions
represent one thing: greed. |
here's a
catch to getting a better rate by using a credit card. Do you normally pay off your
account balance every month? If not, if you have an unpaid balance on your card, you may
pay interest charges on your travel purchases. In most cases these exceed any savings you
hope to gain.
arying somewhat by country,
MasterCard (called EuroCard in Europe) is most-widely accepted, Visa almost as widely.
American Express is less-accepted in shops and restaurants than in the US and should be
relied on mainly for major hotels, restaurants and shops in major cities. Diners Club lags
AMEX in acceptance. JCB is often widely accepted in certain areas, for example the
Jungfrau region.
US oil company cards are not generally accepted. As a rule, credit card acceptance off the beaten track in smaller hotels and smaller towns is less-common than you may expect, often rare.
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ATMs
And by the way, the term 'ATM' is not universal in Europe. Ask locally for the correct term. In Britain, for example, you'll find 'cashpoint' in use, "bankomat" in Italy.
There will likely be interest charges if you're using your credit card with the ATM to get what most credit card companies call a "cash advance." Interest charges can wipe out your rate savings. Some credit cards will let you build up a credit balance before your trip to avoid interest charges. Check with your issuer on this. These interest concerns don't apply to cash cards, of course.
How Much to Take
Calculating Cost" If you're traveling in the eurozone (Germany, Italy, France, Finland, The Netherlands, Portugal, Spain, Ireland, Austria, Belgium, Greece and Luxembourg) the answer is getting easier. Most establishments now post prices in both euros and local currency. With the euro worth close to a dollar, the euro price comes pretty close to the dollar cost.
You can bypass making up your own conversion chart by going to our Cheat Sheet for Travelers. Print out the conversions you want in both directions (US to foreign and vice versa) and paste them back to back.
Should the lira appreciate to, say, 1500/$, multiply by two, divide by three and drop the last three digits: ITL30,000 X 2 (60,000) / 3 (20,000) / 1,000 = $20. With the Swiss franc at about sixty cents, you can multiply the price in francs by six and drop the last digit. The German mark at around fifty cents is easy; divide the price in marks by two to get dollar equivalent. If the British pound is near $1.60, add 60 percent to prices in pounds to get the equivalent in dollars. (e.g. GBP15 ~ USD24.)
After the trip may be another question!
TippingFifteen and twenty percent tips are an American habit, and "guilt trip", arising from the fact that US waitstaff are poorly paid and depend on tips for a major portion of their income. This is not the case in Europe. Bear in mind the words/phrases for "tips" in such languages as German and French equate to "drinking money" ... something that would pay for an afterwork beer. You'll find country-specific notes on tipping in Italy and Switzerland. They're useful as general guidelines elsewhere in Europe as well. What WIll You Do With Your Leftover Foreign Coins? Back to Page 1 of
Money and Exchange Other
Resources
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rawing cash from a machine usually
has the same rate advantage as charge purchases. The cash that comes out will be local
currency, of course. Although in Switzerland and elsewhere near borders we have seen
machines that offered a choice of, for example, Swiss francs, French francs or marks.
TMs are widely available in Western
Europe, particularly in large cities. (Rome has over 1,000 Cirrus-connected machines, for
example.) As in the US, you'll find fewer machines in smaller towns. Note there are
multiple 'chains' of machines world-wide (e.g Cirrus, Plus) and you'll need to find a
machine with symbols matching those usually found on the back of your card. 
onsider taking a duplicate ATM card.
ATMs have been known to swallow cards. Threats, obscenities (whether in English or the
local language) and kicks rarely induce the machines to disgorge swallowed cards. If there
is no attached and open bank to which to appeal, and it's 10:00 p.m. on Saturday and you
have no cash ... you're in trouble. A second card and directions to another ATM can save
the day.
e spend most of our time in Europe in
smaller towns. We find fewer machines overall, and less yet that accept our cards -- when
they are working. Thus our habit of relying on TCs rather than plastic. We use machines as
a convenience when we find them but do not rely on finding them.
d thinks all that's unnecessary. He
doesn't really care if the meal costs $19.95, $21.73 or $17.50; they're all around $20,
close enough. If the US dollar buys 2,050 lire you can get from lire to dollars by
dropping the last three digits in the lira price (divide by 1000) and dividing by 2. If
the lira rises to 1,900 per dollar, add, say, 10% and you're close enough to know whether
you'll have grocery money when you get back home.
ou can find a shortcut to converting
prices that works best for you. 