Changing
Money Smart
Years
ago, it was just traveller's cheques. Remember....... "Don't leave
home without them." The world is changing and there are now more
options than you can shake a stick at. ATM cards, credit cards, and
debit cards now compete with traveller's cheques as the best way to
change your dollars into foreign currency. Smart budget travellers function
around the world with hard local cash. The big question is how to most
conveniently and economically change your dollars into the various currencies.
Banks make money off of you two ways: with fees and rates. Fees charged
for almost any money-changing transaction, vary enough to wipe out any
gains you might have made by getting the right rate. Relying solely
on credit cards and ATMs can get you the best rates and in a few years
there will be no traveler's cheques. But it's a little early to entirely
dump traveller's cheques. Rely on a mix. Here's a review of your banking
options.
Traveller's
Cheques
Traveler's cheques function almost like cash but are replaceable if
lost or stolen. You just need to choose the company, the currency, and
a mix of denominations. The company usually doesn't matter. Choose whichever
big, well-known company (American Express, Cooks, Barclays, Visa) you
can get for no fee. Ask around. There are plenty of ways to avoid that
extra 1.5 percent charge.
Understand the refund policy. Lost or stolen traveler's cheques are
replaceable only if you keep track of the serial numbers and know exactly
which cheques you've cashed and lost. Leave a photocopy of all your
check numbers (along with photocopies of your passport, plane ticket,
credit cards, and any other vital statistics) with someone at home,
in your luggage, and in your wallet. Your original traveler's cheques
receipt is an important document. Keep it handy but separate from your
cheques (you may need to show it to cash a cheques). Use cheques in
numerical order and update your list regularly as you cash them. Do
a complete inventory each week. Thieves may steal cheques from the middle
of your wad hoping the cheques they swipe will go unnoticed. Get a police
report after any theft. Report the loss immediately (within 24 hours)
to your issuing bank. (Travel with their emergency phone numbers).
For most trips, buy cheques in Canadian dollars. . The only way to win
in the currency market is to limit the changes you have to make. If
you bring home extra traveller's cheques in dollars and have to change
back, you lose nothing. Get a mix of denominations. For $2,000 in cheques,
I would choose 13 $100, ten $50, and ten $20 cheques. Large cheques
($100, $500) save on signing and bulk. Since more and more banks are
charging their $2-$4 fee per cheques rather than per transaction, large
denominations can save money. Small cheques ($20, $50) are more exact
and, sometimes, easier to cash. If you're out of cash and the banks
are closed, it's easy to find a merchant or another traveller who will
change a $20 cheque. Changing a large cheque in such a situation would
be tough.
Cash
Machines (ATMs)
Common in most parts of the world, cash machines are quickly becoming
the standard way for travellers to change money. ATMs work the same
way around the world and most have English language instructions. An
ATM withdrawal takes dollars directly from your bank account at home
and gives you that country's cash. Your account is billed in dollars
at the "wholesale" rate, which is always better than the travellers'
cheques rate. Many travelers are doing entire trips on ATMs and give
this method rave reviews--and never stand in a bank line. Know your
personal identification number (PIN) and confirm with your home bank
that it will work overseas. Ask exactly where, with which systems, what
fees, and on what machines. Since foreign keypads have only numbers,
you'll want a PIN with numbers and no letters.There are two dominant
ATM systems: Plus and Cirrus. Those traveling with a credit card for
each of these systems (you'll see the Plus or Cirrus logos on your Visa
and MasterCard) double their cash advance options and avoid a little
running around. Ask your banker how much you can withdraw per 24 hours
and what the charge is for using a foreign ATM. . The glory days of
the ATM may be numbered, as bankers are learning they can add a 2 percent
or so fee. Be sure to understand the latest fees.
Cash
Advances
Many fund their travels by relying solely on cash advances. They use
their credit (or debit) card in banks all over the world to change money
quickly, easily, and at a good rate. Visa is the most commonly accepted
card for cash advances. The problem with using a credit card is that
you are immediately into the 18 percent interest category with your
new credit-card debt. (There's no one-month grace period on cash advances.)
Avoid this by overpaying on your credit card before leaving home and
drawing down on that amount. A debit card lets you avoid all interest
concerns by drawing money from your existing bank account as if you
were simply writing a personal cheque.
Buying
on Plastic
Charge cards work fine throughout Europe and the developed world (at
hotels, gas stations, shops, restaurants, travel agencies, and so on),
although more and more merchants are establishing a $30 minimum. Visa
and MasterCard are most widely accepted. American Express is much less
widely accepted but popular for its extra services. Once again you tend
to get a better exchange rate using plastic.
Credit-card scams are commonplace, and many travelers are ripped off
big-time. Know what you're signing, understand the numbers, and keep
the receipts. Keep all bank cards safely in your money belt.
I use my charge card for cash advances, making hotel reservations by
phone, major purchases (such as car rentals and plane tickets), car-rental
security (usually required), and to avoid a trip to the bank when I'm
low on cash at the end of my stay in a country. But remember a dependence
on plastic reshapes the world you experience. Pedro's Pension, the guide
at the cathedral, and the merchants in the market take only cash. Going
"native" requires hard local cash.
Cash
Be sure to carry cash reserves. Cash in your money belt comes in handy
for emergencies, such as when banks go on strike. I've been in Greece
and Ireland when every bank went on strike, shutting down without warning.
Some places (such as Russia) make life with traveler's chequess very
difficult. But hard cash is cash. People always know roughly what a
dollar, mark, or pound is worth, and you can always sell it. To save
time and money, bring one day's budget in each country's currency with
you from home. With six bills--for six countries--hidden safely in your
money belt, you'll have enough money to get settled in each new country
without worrying about banking. Arriving at night or when the banks
are closed with $2,000 in your money belt but not enough local cash
to catch a subway or make a phone call is maddening. After-hours exchange
places come with long lines and terrible rates.
Figure out the money, foreign currency is not "funny money."
Some traveller’s never figure it out, get no respect from the locals,
and are constantly ripped off. Local currencies are all logical. To
avoid being short changed become familiar with your new currency. In
banks, restaurants, and at ticket booths, its vital to be aware of the
required amount and try to get as closed to the exact amount as possible.
Thus avoiding or lessening the opportunities for "errors"
Coins are generally worthless outside their country. Since $3 coins
are common in Europe, exporting a pocketful of change can be an expensive
mistake. Spend them (postcards, newspaper, a quick phone call home,
food or drink for the train ride), change them into paper before you
cross the border, or give them away. Otherwise, you've just bought a
bunch of souvenirs. The rare exceptions are border towns, which sometimes
accept both currencies.
If
you have any specific questions regarding money matters for travellers
please don’t hesitate to contact The Traveller’s Tale.
To
figure out exchange rates please use this link:
http://www.xe.com/pca/
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