Posted on: Thursday, June 30, 2005

Make plan for foreign currency before trip

By Gary Stoller
USA Today

As the U.S. dollar tries to recover from an all-time low against other currencies, a smart money-exchange strategy is more important than ever for travelers abroad.

Getting the most out of a weak dollar requires a simple game plan, travel and currency experts say.

"Put it on plastic," advises Ed Perkins, author of "Business Travel When It's Your Money." "Use an ATM or debit card for what local currency you need and put major expenses on a credit card."

Here are some tips:

• Money before you go. Banks that exchange currency might be difficult to find outside the biggest cities, and fewer big-city banks are doing it. Those that do so might not carry currency of a particular country, says Lars Hansson of International Currency Express.

"You get better deals through banks and online agencies than you do at airport exchange counters," said Perkins. "Some of the worst rates I've ever seen were at U.S. airport exchange offices."

On June 16, International Currency Express said its Internet customers could obtain 397 euros for $500, plus a $10 shipping and insurance fee. That was a better deal than Travelex at New Jersey's Newark airport, which was offering 370 euros for the same dollar amount, plus a $5.50 transaction fee.

• Using an ATM. A better exchange rate can usually be gotten abroad at an ATM tied to a personal bank account than by exchanging cash at a U.S. or foreign bank or exchange outlet, Perkins says. A 1 percent currency-conversion fee and a transaction fee of up to $5 is charged, but on ATM debit-card withdrawals of $200 or more, you'll often wind up with more money in your pocket than by exchanging cash elsewhere, he said.

For example, any Citibank customer withdrawing 400 euros on June 21 from one of the bank's ATMs in Germany received an exchange rate of $1.2146 per euro, bank spokesman Mark Rodgers says. A 1 percent conversion fee would have been charged, but no transaction fee, because the customer had an account at the bank.

• Exchanging cash abroad. If an ATM is not convenient, foreign banks are often the next best choice for obtaining local currency, says Doug Delp, an editor at Internet site Bankrate.com. But shop around, because some offer lower rates than money-exchange outlets.

Don't exchange a large sum at a bank to buy a big-ticket item. A credit card is a better choice if you plan to promptly pay the charge on your statement before incurring an interest fee, currency experts say.

Avoid currency-exchange facilities at airports, hotels and tourist areas, he and other currency experts say.

Some hotels are an exception. For $500, The Savoy hotel in London offered 258 pounds; nearby, The Berkeley offered 256 pounds. At Barclays Bank on the same day, 252 pounds could be gotten for the same dollar amount.

• Credit cards. Credit card users get an exchange rate on their billing statement that's competitive with those at ATMs and better than those at money-exchange outlets, currency experts say. The rate used for each cardholder charge depends on the day it's submitted by a merchant and processed by Visa.

Many Visa card and MasterCard holders pay a 3 percent currency-conversion commission on their charges made abroad, says Kristin Arnold, a writer at Bankrate.com. That consists of a 1 percent fee charged by Visa or MasterCard and a 2 percent fee by the bank that issued the card.