The simple rule in foreign exchange is this: The more often you
exchange currency, the more money you lose. Every time you get
money from a bank, the hotel, the ATM, or off your credit card, you
will be subject to a retail rate of exchange and a fee. The more
often you do this, the more money you lose. So, limiting the number
of exchanges you do is the best way to save money.
Steps
- Notify your domestic bank about your travel plans. There have
been many cases where travelers have their card accounts frozen
because of "suspicious foreign activity". Your bank means well, but
if you don't tell them you might be stranded with no access for
cash for several days.
- Take as much cash, in the foreign currency, as you feel
comfortable carrying and get it before you leave for the airport.
Check with your bank to see if they can sell you some currency
before you go. Or order cash online.
- For any amount you need over the amount you feel comfortable
carrying, try to take traveler's cheques in that currency
-- not US dollars. If they are not available, plan on
using your ATM card.
- Be aware that ATM's can be expensive! While it's true that
you'll get very competitive rates from ATM's, the fees will come
over the top and eat away the savings. It's generally about $5 US
from your own bank to use a foreign ATM with about another $3 US
equivalent from the foreign bank - although there is no limit to
what the foreign bank may charge. And this is on every transaction
- no matter the amount!
- Understand that credit cards usually get wholesale rates (which
is very good) but have fees of 2 - 3% of the US dollar amount of
every purchase.
Tips
- If you use your ATM Card, make sure your PIN is only 4 digits
long. Many foreign ATM's won't accept 3, 5, or 6 digit PIN's. Make
sure your PIN does not begin with a zero.
- Memorize your PIN by the number. Not by any word it
may spell out. Foreign ATM's probably won't have an English
alphabet on the key pad.
- Try to max out your daily limit. You get the fee regardless of
whether or not you withdraw 20 euros or 1,000 euros. So, try to
withdraw your daily max so you only have to pay the fee once - then
use that cash for as long as you can before returning to the
ATM.
- Call your bank and see if they will increase your daily
withdrawal amount. That way you can get more with each withdrawal
for the same fee.
- Don't use credit cards at ATM machines. Withdrawals will be
treated like a cash advance, plus it will be subject to all the
usual fees.
Warnings
- Plan for the worst. Hope for the best.
- Take at least one form of back up access to your funds. The
people that get in the most trouble are the ones that just take one
card or something and then lose it. With no other access to money,
it will be hard to get local currency. Your family will most likely
have to wire cash to you, which is very, very expensive.
