Currency Exchange: What You Use Matters

currency exchange
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To International travelers, the name Travelex should sound familiar. They are the largest airport currency exchange operator in the world. But a recent currency exchange study comparing the cost of using Travelex, some of the largest U.S. banks and credit cards revealed what experts already knew.

CardHub’s 2013 Currency Exchange Study compared the cost of the currency exchange services offered by 15 of the largest banks in the U.S. as well as Visa, MasterCard and Travelex. The study proved that using a no foreign fee credit card is the way to go on spending internationally. Banks charge an average of exchange rate of 7.1% and Travelex charges 15.5%.

Worried about using a credit card outside of the U.S.? Don’t be. Credit cards also provide fraud protection for just that reason.

“Even if a consumer uses a credit card with foreign fees – the average foreign transaction fee is 2.24%, according to CardHub’s latest Credit Card Landscape Report – he’ll still save 4.86% on currency conversion relative to the services offered by banks and 13.26% compared to airport currency exchange providers,” said CardHub CEO Odysseas Papadimitriou in a HeraldOnline report.

The best banks for currency conversion? The CardHub study indicates Northern Trust and Harris Bank lead the pack as they did in the 2012 and 2011 editions of the study while U.S. Bank and SunTrust hold the bottom two spots. On average though, banks are better than Travelex, saving an average 8.4%.Still, many travelers do not feel like they are fully packed for an international trip without some local currency from the country they are visiting. They want to arrive with local cash for a cab, food or supplies they may not have been able to bring on the plane.

“It’s just one of those things that have been traditionally recommended,” says Papadimitriou. “But with the banking system becoming increasingly digital, it makes sense that the easiest way to buy things in a foreign currency is with plastic.”

Credit cards are good. No foreign fee cards are better. Still, some cash will probably be necessary along the way tipping or making purchases in places that do not take cards. With that in mind, Papadimitriou recommends a debit card with low international ATM withdrawal fees but warns travelers to avoid dynamic currency conversion, when a merchant offers to convert your purchase total from the native currency to U.S. dollars.

It might seem as though that merchant in Venice is trying to be help make sense of how much a purchase really costs, in our own currency, but “they could be looking for an excuse to apply a high exchange rate and squeeze a bit more money out of you. It’s best not to find out, especially when you can use your phone or a small pocket calculator to make quick conversions and better understand how much things cost,” says Papadimitriou.

As long as we’re talking about financial security when traveling, what about pickpockets? Well, the days of those villains are ending. In this video we see that all it takes now is a smartphone to steal your credit card information.

Electronic Pickpocketers 'Steal' Credit Cards Using NFC

Delta joins the ranks of “cashless cabins”

I can’t remember the last time I paid with cash for a drink on a domestic flight. Even on my last few international flights, I pulled out the plastic when it was time for a nerve-calming vodka-cran. So I was actually kind of surprised at the announcement that Delta Airlines would no longer be accepting cash on flights in North America, Central America, and the Caribbean. I didn’t even realize cash was still an option.

But if you haven’t yet joined the plastic revolution, or if you just prefer to pay with cash, be warned. As of December 1, you must use debit or credit cards only for all purchases made onboard Delta and Northwest flights, with the exception of trans-Atlantic, trans-Pacific, and South American flights (where both options will be available). You’ll also still be able to use cash (or your card) for onboard duty-free purchases.
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Problem with using credit card in Europe? Try these

This read by Ed Perkins of Tribune Media Services reminded me of a problem I had in Amsterdam this past December. When trying to buy a train ticket at one of the kiosks with my credit card, I was asked for a pin number. If I have one, I can’t know it. I ended up going to a booth with a person to buy the tickets with Euros since the ticket kiosk didn’t take cash (I don’t think, or why wouldn’t I have done that?). I had hoped to use the kiosk since that would have been faster.

According to Perkins, credit cards issued in the U.S. don’t have chip-enabled cards like European banks are using. This can create problems once in awhile for those of us trying to use an American bank issued card. However, unless you are at a place like a kiosk where a swipe is required, and there isn’t a person involved in the transaction, you shouldn’t have a problem because the credit card should be able to be used without a pin.

  • If the clerk or waiter asks for a pin, let them know that the card is good with a signature on the back and I.D.
  • If the person still doesn’t want to use the credit card, ask to see the manager and see if that works.

Perkins suggests having a debit card as well so that if needed, in a pinch, you can get money out of an ATM, however don’t use the debit card to get money at other times or you’ll be dinged more in fees than if you had used your credit card.

In my case, I did use my credit card two times without trouble. Once at the Pancake Bakery in Amsterdam and the other time paying for tickets for the canal boat ride in Copenhagen. The rest of the time I used cash. I would have used my credit card (and cash) more on my last day in Denmark but I was PICK-POCKETED! Robbed! So sad. On the upside of that experience, I spent less money. [Smarter Travel]