Headed overseas this season? It’s easy to get hit with extra fees
and expensive exchange rates when switching currencies when you travel.
Some currency exchange tables in airports and tourist areas offer
bad rates, taking more of your money. And some credit cards and banks can add
fees when you buy something with your card.
Your best bet is to bring a credit card that doesn’t charge
currency exchange fees and some cash for backup. Most purchases should be done
on the credit card, said James Gambaccini, a certified financial planner at
Acorn Financial Services. That’s because credit cards offer fraud protection.
If you lose cash, or it gets stolen, you won’t get it back. Lost credit cards,
or fraudulent charges, are easily replaced or fixed, said Gambaccini.
“Walking around with a money belt and a large amount of cash is
not relevant anymore,” he said.
Here are five tips to maximize your dollars:
1. Get an App — Before boarding the plane, download a
currency-converting app on a smartphone you plan to use on vacation. You can
open up the app to see if you’re getting a good deal when exchanging money.
With the app, you type in the amount you want to exchange and it will calculate
a figure in the new currency. There are several free ones to choose from,
including XE Currency and GlobeConvert.
2. Ask before you exchange — Be wary of currency exchange places
that say they don’t charge fees or advertise really good exchange rates. “Don’t
trust it,” said Stan McGahey, an international tourism professor at Saint Leo
University in Florida. Often, they will offer you a worse exchange rate to make
up for the low fees or have caveats that they don’t advertise. Instead of just
handing them your money, ask how much you would get for the amount you want to
exchange first, McGahey said. That way you will know exactly what you’re
getting.
And always do currency exchanges in the country you’re visiting.
You’re likely to get a better rate than if you do the exchange at home, McGahey
said.
3. Find the right card — Get a credit card that doesn’t charge a
foreign exchange fee. Some will charge a 2 percent to 3 percent fee for every
purchase made with a foreign currency, said Matt Schulz, a senior analyst at
credit card comparison site CreditCards.com. There are many that don’t. You can
find a list of them on websites such as CreditCardInsider.com, CreditCards.com
or Bankrate.com.
Not sure if your card charges a fee? Call and ask.
If you don’t have a fee-free card, it may be worth applying for
one, said John Ganotis, founder of credit card comparison site
CreditCardInsider.com. As long as you’re not charging more than you can afford
to pay, it could be a better deal than exchanging cash. Most credit cards
designed for travelers let you earn benefits, such as miles or points to use
for a future trip, Ganotis said.
Another benefit: credit cards often will offer exchange rates that
are an average over the past month. That could be helpful if you are traveling to place
where the currency is volatile, including some South American countries,
Gambaccini said.
(Incidentally, you should call your credit card company before
traveling to let it know where you are going. If the credit card company
doesn’t know you’re traveling, it could think it is being used fraudulently and
temporarily block your card from making charges.)
4. Say no to hotel exchanges — If a hotel or another business asks
if you want them to convert the bill into American dollars for you, decline.
The exchange rate can be bad, Gambaccini said. Instead, let the hotel bill you
in the country’s currency and let your credit card do the exchange.
5. Check out checking accounts — As with credit cards, make sure
your bank doesn’t charge foreign exchange fees if you plan to use a debit card.
Some may charge a flat fee for using a foreign ATM on top of a percentage for
currency exchanges. Checking accounts at online banks, such as Capital One 360
and Charles Schwab Bank, don’t charge foreign transaction fees. Call your bank
and ask if you’re not sure if they charge fees. Personal finance website
NerdWallet.com publishes a list of banks that don’t charge fees. — AP
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