Don't Forget the Exchange Rate

On the Untours European travel listserv that I follow, there has been much discussion lately about currency exchange and the fees associated with using credit cards and ATMs overseas. The fact that many of these fees are onerous bank ripoffs causes many to overlook the most important element in purchasing foreign currency: the exchange rate. One woman told how she avoided all fees during a three-month vacation by going to her bank prior to her trip and exchanging several thousand dollars for euros. Presumably she carried some or all of them on her person during the trip.Aside from the security issue, that's a bad idea because, compared to using an ATM in Europe to obtain euros (or any other European currency), most bank rates of exchange for such transactions are simply awful. One experienced traveler on the list told how his bank wanted to charge him $1.68 for each euro when the bank-to-bank exchange rate (which he would have gotten with his ATM card) was $1.58. On a $3000 currency swap he would have gotten 123 fewer euros or about $194. Check any offered exchange rate against rates quoted at www.xe.com.

My suggestions for currency exchange are: 1. Use a debit or ATM card in Europe to obtain cash from ATM machines; 2. Don't use your credit card for cash advances; 3. Get a Capitol One credit card which charges no foreign transaction fees; 4. Forget travelers' checks, they are hard to cash in Europe, even if you get them in a foreign denomination the exchange rate is likely to be unfavorable; and, 5. Do not purchase foreign currency from your bank without comparing the exchange rate to that posted at www.xe.com.