Ari's Planet

Getting local currency overseas can be done several ways.

- Carry convertible foreign currency, usually US dollars or Euros, and have it converted at banks or on the street. Have some of this. Good for paying for visas and when first arriving in a country. Always have stashed in several secret places (along with a bit of local currency).

- Carry travelers' checks, e.g. Amex or Thomas Cook, , and have it converted at banks or on the street. Good to have some of these on hand for places where no ATMs or need quick cash. Replaceable in case of loss or theft.

- Use credit cards to pay for things and to get cash advances at ATMs or banks. Most of Asia you can't pay for anything with credit cards. Cash advances on credit cards charge interest. Bad idea.

- Use bank cards to get cash advances at ATMs.

I use this last method the most. At first I carried a regular ATM card from the US, but a lot of ATMs were not on the same US banking networks, so I got a Visa debit card. This works at every ATM I have tried to date.

For each of these methods you will pay. My bank charged me 5% commission to give me my travelers checks and one gets a reduced conversion rate, compared to cash, when converting to local currency. I haven't used my travelers' checks yet. Changing cash also has a cost, but shop around for the best deal. The cost of ATM cards varies. My bank seems to charge me a flat $2 withdrawal fee plus a 2% conversion fee (a stinking commission); this is about typical for many US banks. Some are cheaper and some are more expensive. I thought using HSBC, which has branches in many countries, might save me money, but they have a 3% fee, which would be worse, though they have a lower ATM flat fee. These fees add up. I minimize withdrawals but it still gets expensive. If I withdraw just twice a month, or 24 times a year, that's $2 * 24 = $48 plus the 2% fee. You also need to check the currency conversion rate, but this seems to be close to the published rates for my bank, though a bit hard to determine. I'm still searching for a cheaper solution worth the hassle of opening a new bank account.

I did a bit of research today, 23/2/2008 in Pai, Thailand at local exchange counters.

My bank, Wachovia, charges a 2% foreign transaction fee on my Visa debit card. The effective rate for 23/2/2008 for a withdrawal with my Visa debit card would be 31.79. still not very good. But, my bank also charges a $2 flat ATM fee, so the rate depends on the withdrawal amount. For a zero-fee transaction the rate would be 32.44. On a $100 withdrawal, we would have $100 + flat fee + percentage fee = $100 + $2 + $2 = $104. One hundred dollars at 32.44 THB/USD are 3244 B, but 3244 B / $104 = 31.39 THB / USD, a pretty measly rate. For a withdrawal of $200, $300, and $500, we have $200 + $2 + $4 = $206 @ 31.15, $300 + $2 + $6 = $308 @ 31.60, $500 + $2 + $10 = $510 @ 31.80. Basically, using an ATM gives through my bank gives poor exchange rates. If I had a no ATM fee 1% foreign fee card I would get a rate of 32.11 BHT / USD.

There's a dated, but informative thread at Lonely Planet.

Bankrate.com posted foreign currency conversion rates for several banks, though the information is old (2005) and is presented in a terribly inefficient manner.

Bankrate.com has several articles on the topic. For instance, Best cards for foreign travel says that Capital One comes out on top for ATMs. The article Cutting currency conversion charges says that Visa passes a 1% fee to banks, so if using Visa cards, this would be the minimum you can expect from a bank. Currency conversion costs has a table showing fees for several banks; updated 11/12/2007, Capital One is the current winner.

Over at Capital One, No HassleSM Prepaid Visa® Debit Card account has a 1% ATM fee plus $1.75 per withdrawal, plus $5.95 account maintenance fee (waived with direct deposit).

One of the biggest costs is the mismanagement of the dollar by the US government resulting in the current weak dollar. When my SEA LP guide was published, in March 2006 (two years ago) the Thai Bhat was trading at 41 to the dollar. It's now closer to around 33 to the dollar. Similarly for the Indian rupee, historically at around 50 to the dollar but now down to around 40 to the dollar. Etc. So because of Bush and his minions (the US Congress) and various financial messes my trip is costing me about 20% more than it otherwise would have. Thank you Bush.

Smarter Travel has a column on money and a summary of some banking costs:

http://www.smartertravel.com/travel-advice/foreign-exchange-101-update-p...
http://www.smartertravel.com/travel-advice/fall-foreign-currency-report....