Americans still don’t like dollar coins

dollar coinsAccording to an NPR story this week, the Federal Reserve is sitting on a billion dollars worth of the $1 Sacagawean and Presidential coins, and the program to replace dollar bills with the metal coins has largely been deemed a failure. The government spends millions annually to mint new coins in order to introduce all the US presidents, resulting in millions languishing in vaults a la “Scrooge McDuck” said Planet Money’s David Kestenbaum. Despite the fact that they are legal tender and the government’s many efforts to promote their use, Americans still distrust the dollar coin.

Why the reason for the distrust? Americans claim they are difficult to spend, not recognized by many merchants, or just weigh down pockets too much. Perhaps we should ask our foreign neighbors how they have integrated them into daily life. America is one of the few countries in the developed world to use a $1 banknote and the only one of the top five traded currencies (including the Euro, British Pound, Japanese Yen, and Australian dollars) to use a bill in such a small denomination. Canada replaced the dollar bill with the “loonie” coin in 1987 and the British pound note has been out of circulation since 1983. Is taking away the $1 bill the only way to get Americans to use the coin? We reported earlier this year on a possible way to earn frequent flyer miles by purchasing dollar coins, a legal (but not encouraged by the US Mint) practice that may actually contribute to this back log of currency. Maybe go out and spend the coins instead and hope the trend catches on.

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Photo courtesy Flickr user cometstarmoon. Hat tip to Honza Kerver for the NPR story link.

Bank of China offers expanded yuan service

yuan, China, chinaThe Bank of China has begun offering its customers in New York City and Los Angeles services in yuan, Bloomberg reports. Services include deposit, exchange, remittance, and trade finance. Business customers may access these services in New York City and Los Angeles, while at the moment individual customers can only access these services at the New York City branch.

What does this mean for travelers? Not much, yet. If you’re one of the many English teachers in China you can send money home more easily, but that’s about it.

It’s the long-term view that’s interesting. China is obviously trying to expand the range of the yuan (also called the renminbi) beyond its borders. In fact, Chinese Premier Wen Jiabao said as much last year when he expressed worry over how much China’s international assets are dominated by the dollar. This move allows international trading in yuan, which is sure to attract more investment and, if it’s successful, bolster the currency’s strength. It’s already at an all-time high against the dollar. The New York branch’s general manager says the move will eventually lead to the yuan being fully exchangeable with the dollar.

This will encourage further investment in China and could lead to more foreign businesses opening up shop there. It would also make it easier for international travel businesses to have offices in China. A yuan that’s strong against the dollar, however, will make trips to China more expensive for Americans.

Tourism is one of the fastest growing sectors in the Chinese economy. More and more Chinese are traveling abroad, and with greater access and use of their currency, those numbers will only increase. The World Trade Organization says if current trends continue, China will have the largest share of the world’s tourism industry by 2020, with 8.6 percent of global revenue.

Could yuan become another international currency like the dollar and the euro? Could we see money changers accepting them in more destinations? Only time will tell.

[Photo courtesy user Polylepsis via Wikimedia Commons]

Don’t pay in dollars – International travel tip

Like it or not, the gold standard for international currency payment is now the Euro.

The United States Dollar is still being used, but it doesn’t hold the prestige it once did. There was a time when you could purchase goods at a great discount if you paid with hundred dollar bills. However, nowadays, merchants will increase their base price and round up figures to give you can even dollar amount. Merchants do not want $5 dollar or $10 bills. Whatever you pay will be rounded to the next $20.

So pay with local currency — or pay with Euros.

Counterpoint: Bring American dollar bills – International travel tip

Will the Toyota recall affect your next car rental?

Toyota‘s massive recall due to faulty accelerator pedals is trickling down into car-rental companies. How does the recall affect your next rental?

I checked in with some of the major players to see how they’re handling the recall, now estimated at more than 9 million worldwide.

Avis Budget: About 20,000 cars have been grounded due to the recall. “Our fleet is 7 percent smaller today, but we are receiving weekly deliveries of new vehicles from the purchase agreements we made months ago with our suppliers,” Avis Budget spokesperson John Barrows told me via e-mail. “So we expect to be able to fulfill all demand for any rental occasion while we await guidance from Toyota regarding the handling of the recalled vehicles.”

Dollar Thrifty: The recall represents less than 1.5 percent of the overall Dollar Thrifty fleet. “We have currently grounded the vehicles and are working with Toyota on inspection of the vehicles and a proper resolution of the issue. We do not have any significant Toyotas on order,” Scott Thompson, president and CEO of Dollar Thrifty Automotive Group, said in a written statement.

Zipcar: Toyota’s recall affects about 5 percent of the Zipcar fleet. The car-sharing company isn’t taking new reservations on any recalled vehicles, which include the 2009 and 2010 Toyota Matrix. If you already have a reservation on a Toyota Matrix, Zipcar will move you to a different car and compensate you for any rate difference. If you’d rather bail, any cancellation fees will be waived. For questions about upcoming reservations, call Member Services at 866/494-7227.

The silver lining: Many car-rental companies, such as Avis, Budget, Dollar, and Thrifty, only let you reserve a certain vehicle class (compact/economy, mid-size, full-size). Since you weren’t able to specify a make/model to begin with, at least you won’t have to deal with re-booking because the car you wanted is suddenly unavailable.

In general, car-rental companies had already been shrinking its fleets, which was resulting in higher prices. We’ll keep an eye on how this will affect pricing now that the supply is even smaller. I’ll also update once I hear back from Hertz, Enterprise, Alamo, and National.

Weekly Euro watch: we’re still making ground


I just can’t help but feel giddy about all of the progress that the Dollar has been making against the Euro over the past month. Sure, this is the direct effect of a near worldwide financial meltdown, banks are failing left and right and Iceland was briefly for sale on Ebay. But the slim silver lining to the whole debacle is that we, as Americans, now have more buying power overseas.

As of this morning, you can now officially buy a Euro for a $1.25, down from nearly $1.50 in September. That means that if you’ve got some late fall (say, Thanksgiving) travel to the EU lined up, it just got 17% less expensive.

In case you’re wondering, Iceland’s Krona started trading again a couple of weeks back after the government effectively froze trading for a little while to let the market stabilize. One now earns 126 Krona / Dollar instead of the 76 from earlier this summer.