Currency Exchange Tips
Nov 11 2013
One of the most common questions for any traveller is if local currency is needed. Though US dollars and Euros are accepted in many parts of the world, there are many advantages in having local currency.
Using non-local currency may subject you to a higher exchange rate. Foreign coins are generally not accepted anywhere since banks don’t take them. Leftover coins should be spent, kept as souvenirs or donated to charity through airports and airlines such as Cathay’s Change for Good program for UNICEF. If you want to shop at markets and take public transit, you will definitely need local currency.
With international ATM networks, credit cards and the Euro, cash for travellers has become much easier. Cash is still a necessity for small purchases. Traveller’s checks are becoming obsolete.
For countries with low costs of living such as Cambodia, Vietnam, and India, it is better to use local currency otherwise purchases get rounded up to the nearest US dollar.
The worst rates are typically at exchange counters at airports and they often charge a fee on top of the bad rates. A high spread between buy and sell rates is usually an indication of poor rates. Banks don’t necessarily offer good rates and many have service charges as well. Credit cards usually offer good rates. Also, consider converting your currency in your destination country where you may get much better rates. You may be able to compare rates online. Convert just enough cash in your home country so you have enough to take a taxi or public transit to your hotel.
Depending on the bank, international ATM’s may offer a surcharge for using foreign cards on top of any fee your local bank may charge. Thailand banks are one example that charge a high fee. Japanese bank ATM’s typically don’t accept foreign cards with the exception of the ones at the post office and 7-11.
Beware of counterfeit currency when changing money since tourists that aren’t familiar with the local currency are easy targets. Withdrawing money from an ATM is the best bet for avoiding fake notes.
Beware of a new offering called Dynamic Currency Conversion. This feature allows credit card transactions or ATM withdrawals to be converted to your home currency at the time of payment or withdrawal. Typically, you don’t see the conversion amount until you view your statement. You will probably pay a couple of percentage points more on your transaction for this convenience. Always decline it if you want to save money.
Chip and pin credit cards utilize a smart card along with a numerical password to minimize fraud from magnetic swipe credit cards that can be easily cloned. Europe standardized to this system many years ago and Canada recently. Hotels and some restaurants may still take swipe cards but the majority of automated kiosk payments such as in train stations require chip and pin. For US travellers, check with your bank to see if they will issue you a chip credit card. http://thepointsguy.com/2013/05/us-credit-cards-with-smart-chips/ or http://www.creditcardinsider.com/resources/chip-and-signature-chip-and-pin-emv-cards/
British pounds are a unique currency with notes issued by the local country’s banks such as Scotland, Gibraltar, Guernsey, and Northern Ireland. With English Sterling notes the most common, try to not leave a country with the more obscure notes. Most exchange places (including at the airport) and banks will change to Sterling with no commission.
Check out this link verifying that credit card rates are indeed better. http://www.cardhub.com/edu/currency-exchange-study/