10 Currency
Exchange Swindles
How To Avoid Them
And Keep Your Cash!
©BookingWiz 2011
What’s Inside:
 How Currency Exchangers Make (And Take) Your Money
 10 Currency Exchange Swindles To Avoid
 Bonus: “Before You Leave Home” Checklist To Save On
Currency Exchange!
 Bonus: Traveler’s Check Issues To Avoid
 Bonus: 5 Tips To Convert Back to Dollars For Free!
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Money Exchangers Have Many Tricks To Part You
From Your Hard-Earned Cash.
Tired or jet-lagged? Travel newbies and veteran travellers alike
fall easy prey for the money exchangers when they change
money from one currency into another. It’s tricky math.
Constantly changing exchange rates make your head hurt.
Fear not!
You’ll learn all the swindles and tricks money exchangers have
cooked up, how to avoid them and how to convert your money
to and from foreign currency at the cheapest rates.
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The Basics
You need to turn dollars into local currency for your trip. This is called a
“currency exchange.” As you travel, lots of people want to “help” you do this.
For a fee! But before your trip, you are anxious. You need local money to take
an airport cab to your hotel. Can you get local currency at the airport? Your
flight arrives late. Are money exchange booths open late?
Relax. Your questions all have simple answers – which you’ll find here.
In a few minutes, you’ll be able to exchange currency like a pro.
First, let’s see how the money exchange people make money. And how they
charge you. Then you’ll know how to compare them – and who to use to get the
best deal, anywhere you travel.
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How Currency Exchangers Make Money (And Take Yours).
Right now $1 dollar is worth .7 euros.
This is the “exchange rate” or what your money is worth. Currency exchange
companies pay you less than your money is worth. Then they sell your money to
someone who will pay more – say, to a bank. This is how they make money.
At the airport, you see currency exchange kiosks. They post exchange rates on boards.
The boards list the currencies they buy and sell. Dollars, Euros, Yen, etc. Next to each
currency, you see a buy and sell rate, like: Euro: Buy 0.70 USD, Sell 0.82 USD.
The actual or real exchange rate they can sell your money for is usually in between
these two numbers. They buy your euros for 70 cents and sell them for 75 cents. They
usually make 6% to 7% on each transaction whether you buy foreign currency when
you enter a country, or sell it back to them when you depart.
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By way of comparison: Airport ATM machines charge you 1 % to 3% to give you local
money. Your credit card company would charge you 7% to 11% to exchange your
money before you go. If you have the right credit card, they might charge you 0% to
3% to use your card where you travel. You can see from these comparisons that an
ATM is probably your best deal.
Let’s look at an example to understand how much you’d save at the different places.
Example: Change $500 dollars into Euros. Real exchange rate: $1 USD = .6941 Euros
ATM
Exchange Rate:
3%
$500 = 336.62 Euros
Exchange Fee= $14.05
Kiosk
6%
326.61 Euros
$27.57
Exchange Before You Go Service
9%
315.8 Euros
$42.16
ATM Savings: $13.52 (Kiosk) $28.11 (Exchange Service)
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If you read no further – here is your take-away.
1. Pay the lowest % exchange rate possible.
2. If in doubt - use an ATM. They are at all airports, hotels, and even on street corners
in most cities and towns. Ask your bank in advance if they add on foreign fees. Use
ATMs in the PLUS or CIRRUS network. Private local ATMs charge steep fees.
3. If you can find a credit card that charges 0% for foreign transaction fees – get it! Be
safe of course. Use it at reputable shops, hotels, restaurants and activities instead of
cash. Each transaction you make with it saves you the cost of currency exchange.
4. If you must use a credit card with a foreign transaction fee – only use it for large
purchases. That way the fee will be much smaller as a percentage of the money spent.
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10 Currency Exchange Swindles To Avoid
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#1
Avoid “Free!” Credit Card Exchange Services
Avoid credit card company services that offer to convert your dollars into local
currencies.
These services may offer to mail the local currency right to your home for no
charge. They may charge “no fees!” They may also offer “FREE SHIPPING!”
Sounds good, right? Well these services charge as high as a 15% exchange rate.
So if you convert $2,000 you will pay $300 and get just $1700 in local currency.
Compare this to the 1% to 3% rates you’d pay at a local ATM when travelling.
Avoid this swindle!
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#2
Avoid Exchange Rate Services That Don’t Tell You Their
Exchange Rates – And Online Exchanges in General
Avoid credit card services or internet exchange services (if you must use them at
all – which we do not advise) that tell you they don’t know the “true” rate – so
they must “pad” so as not to take a loss when they convert. If you don’t get the
exact exchange rate – don’t use them! These services are just another rip off
charging high rates. Their conversions are done electronically and the rate is
known instantly – they are just hiding the rates from you.
Speaking of rip-offs – online currency conversion services were designed to part
you with your money. A recent check of these services found that the cheapest
among them charging 9% with the worst charging 11%.
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#3
Avoid Prepaid Travel Cards
Avoid “Prepaid Travel Cards.” These are special cards offered by your credit card
company. You preload these with cash (for a fee) and reload them (for another
fee).
Their currency conversion fees can run 7% and higher.
Also, they say you can use these card at ATMs worldwide when you travel to
withdraw local currency as you go. But many travelers report these cards as
difficult or impossible to use at local ATMs abroad.
These cards are a swindle to avoid.
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#4
Avoid Currency Exchange Kiosks (Airports, Hotels, Malls)
Avoid the local currency exchange kiosks that line the halls of local airports.
Avoid the currency exchange booths in your hotel and at the local shopping
malls.
They all share one thing in common: currency exchange rates of 6%-7% or
higher. Plus some charge fees on top of that.
Again - use the local ATMs whenever possible or your credit card if it comes with
a low-rate foreign transaction fee.
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#5
Avoid Paying In U.S. Dollars by Credit Card Abroad
Avoid paying in $ USD when paying with your credit cards at foreign shops,
hotels and restaurants. If you must pay, insist that the transaction be in local
currency if at all possible.
Otherwise, it is possible for the merchant to “float” your charge until more
favorable exchange rate happens for them at which time they will post the
charge to your disadvantage.
There is an additional risk of local merchants stealing your card number and
running up fraudulent charges. Cash is your best bet whenever possible even if it
means walking out of the store and going to the local ATM and returning.
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#6
Avoid Hotel “Exchange Rate” Rate Changes
Avoid getting taken by hotels that may use “exchange rates” to actually increase
your per-day room rate. When you get to the hotel, ask what your daily room
rate is before you check in. They will tell you this using local currency. So use
your mobile phone currency conversion app and convert it to USD.
The rate charged should be the room rate on your reservation. They may try and
adjust based on the current exchange rate – or just flat out increase it.
Not all foreign hotels feel obliged to keep the rate they quoted you. So it is really
important to inspect your room rate on check in. Check out is too late.
If they don’t honor your booked rate, it is easier to change hotels before you
check in if you feel you are being treated unfairly, don’t make a scene. Ask
politely to speak to the manager. Then ask that he honor their reservation
commitment.
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Worst case, check rates of other local hotels before you let the manager know if
you want to check in. Once you know your options, make your best decision. If
you make a scene you may burn a bridge that you regret after checking your
options.
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#7
Avoid Using U.S. Dollars to Make Purchases
Avoid using U.S. dollars to buy things abroad. Many times local merchants will
ask you if you would like to buy using $ USD. This may actually seem like a relief
to you if you are tired of converting local currencies in your head.
But beware! Merchants will try to charge you fees as high as 15% to convert USD
into local currency. Plus they will try and jack up the price higher than if you paid
with local currency.
Local merchants know all the angles to part tourists from their money.
For things like food and shopping, just pay cash using the local currency you
withdraw from the ATM on an “as you need it” basis.
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#8
Avoid Credit Card Foreign Transaction “Convenience” Fees
Some credit card companies charge foreign transaction “convenience fees”
charged when you use your card abroad, or at home when shopping from a
foreign company.
If you’re in doubt, call your credit card company and learn how much they
charge you both for foreign transaction fees and for convenience fees.
There’s nothing convenient about these fees!
To avoid multiple credit card fees pay in cash using local currency whenever
possible.
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#9
Avoid Out-Of-Network ATMs
Avoid using ATMs that are outside of your bank’s network. These will charge you
additional transaction fees beyond what you’d normally expect.
If you want to know all the networks that your card works with, ask your bank
before you go. Typically, as long as your bank is part of the PLUS or CIRRUS
network, your ATM card should work abroad and not result in outrageous fees.
Frequently the signs on ATMs abroad are in the local language – and can be very
confusing if you can’t read them. The PLUS and CIRRUS logos are easy to read in
any language. If you don’t see them on the ATM (or the network your bank
belongs to) find another ATM. Privately owned ATMs charge high transaction
fees.
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# 10
Avoid the Travelers Check Trap
Avoid the Traveler’s Check trap if you plan to use these abroad.
You must cash these either at the office of the issuer, like American Express, or
at a local bank. If you must use a local bank they will likely charge you a fee to
do so – even if they are made out to local currency. This is particularly
maddening – since you paid a fee for the checks to begin with.
Local merchants also will try and charge you fees to cash these checks.
See the bonus section on Traveler’s Checks below for more details.
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#11
NEW - Avoid ATM Overseas’ Bank Charges Swindle
Everyone knows the banks are hurting and creating new fees to bail out their
foolish investments.
Recently some banks started applying overseas charges plus conversion fees to
ATM withdrawals abroad. If you tack on local ATM transaction fees to the new
bank fees being charged, you can get to $9 per transaction in a hurry.
BEWARE and ask your bank before you go what charges will apply to ATM
transactions abroad. Some banks still charge no ATM fees for foreign
transactions depending on your account status.
So shop around – or plan on taking out larger amounts of cash to reduce the
percentage of money deducted from local ATM transaction fees, which can be as
high as $3 to $5 per transaction.
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Bonus Checklist:
7 Things You Must Do
Before You Go On Your Trip
To Save Money On Currency Exchange
Here’s a great to-do list that will save you
headaches and cash when you travel.
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 Find Out If Your Bank Levies Overseas ATM Charges
Recently, some banks started applying overseas charges plus conversion fees. If you
tack on an ATM transaction fee, you can get to about $9 per transaction in a hurry.
Learn all the fees before you go. Some banks charge no fees. You might need to shop
around for a new bank so do this “to-do” first to give yourself time.
 Get a Good Mobile Device App for Currency Conversion that Works
Without an Internet Connection.
You may not always have this connection when travelling. (Turn off your internet
connection and double-check this feature!) You should upload the new rates to the
app once a day at your hotel before you hit the street. Make sure the app is super
easy to use…even when jetlagged. Remember your mind turns to mush and even easy
things are hard when jetlagged. Even if you aren’t exchanging $ to local currency daily,
you’ll be spending money every day. Your app will help you convert your purchases to
dollars to make sure you aren’t getting ripped off. A good one for the iPhone or iPad is
called Converted. It converts currency, energy, measurements and much more. But
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there are many good apps on the market.
 Plan To Use Local ATM Machines At The Airport and in Cities and Towns.
Unless you have a 0% foreign fee credit card, this will be your cheapest option. We
like to do our largest withdrawal in the beginning of a trip. That way if there are
unexpected fees, the % of fees will be less. Typically, ATMs charge the lowest rates of
1% to 3% to convert your money to local currency. ATMs are in every airport – so you
will have a source of local currency as soon as you land. Use the airport’s website map
to locate the ATMs in advance if you’re nervous.
 Ask Your Bank If Your ATM card Is On the Cirrus or Plus Networks
Ask your bank if they can confirm that your ATM card will work where you’re going.
The Cirrus and Plus networks seem to be at most ATMs worldwide.
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 Ask Your Bank for a 4-Digit ATM PIN
Abroad, most ATMs only use 4-digit PINs. In the US a 6-digit PIN is very common. But
your 6-digit PIN may not work abroad! Get yours changed before you go.
 Ask Your Bank How To Use Foreign ATMs
Many foreign ATMs default to a single account and will not give you a choice between
savings and/or checking. Find out how this will work with your card.
 Get Your Bank and Credit Cards To Record Your Travel Dates And Countries
If you don’t they may put a security hold on your account and freeze all transactions
until they contact you to confirm that you are using your cards abroad. You don’t
want to experience this while travelling – trust us.
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Bonus:
What You Need
To Know and Avoid
With Traveler’s Checks
Traveler’s checks used to be a good way to get foreign currency at a
reasonable cost and without added fees. No longer.
Here’s a primer on what you can expect and what to avoid.
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The good part about Traveler’s Checks is that they are a secure form of payment.
Unlike cash, you can replace them if they are stolen. Plus, they require that you
countersign them to use them – so they are worthless if stolen. But the problem is that
even if you get them made out to foreign currencies you might still have to pay fees to
cash them.
1. Traveler’s checks can be expensive to buy – you will pay a service charge from your
local bank or a shipping charge if you order them on the internet. And you’ll pay a fee
to convert them back to USD if you have them left over upon return.
2. You’ll need to go to a bank or your issuing company’s local office to exchange your
Traveler’s checks for foreign currency. So you must learn the location of the local
offices and plan to cash these during banking hours – this can be its own sort of fee if
these locations are out of your way. Plus, some local banks will charge you to cash the
checks.
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3. Be aware - Traveler’s Checks arent recognized by many local merchants even if made
out to the local currency. Even if accepted, locals may charge a fee to do so.
4. If you plan to pay for big expenses, such as hotels with Traveler’s Checks, call and
confirm that they will take these checks without charging fees - before you go. If they
charge fees, you may want to pay by credit card. But call your credit card company and
ask what their charge is for foreign transactions. Credit card companies charge a
“convenience fee” for foreign transactions. You will have to compare this fee to the
fee charged by the hotel for accepting your Traveler’s Checks to figure your lowest cost
alternative.
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Bonus:
The 5 Best Tips We Know
To Convert Foreign Currency
Back Into U.S. Dollars For Free
We’ll do anything to avoid converting money at local exchange kiosks. Here
are 5 of the best tips we know to that rip off.
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#1
The American Express Tip
Leaving a country with local currency that you want to convert back to USD?
Here’s a tip we learned in Singapore that cost us 0% for the conversion.
Once, we managed to have about $6,000 Singapore Dollars in our possession as
we were leaving the country. Exchange kiosks wanted fees of almost 15%. So
we looked around and noticed an American Express booth.
On a whim, we asked the agent what he could do to save the fees. The agent’s
answer was simple, “If you have an American Express card you can use the
money to pay on your account and there will be no fees at all involved!
So, if you have an Amex card and a local Amex office or booth nearby on your
way to the airport, consider this!
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#2
The 0% Credit Card Tip
This isn’t really a true currency conversion story – but it does feature a 0%
conversion rate. So read on.
Recently, some credit cards have started going against the grain and offering 0%
foreign transaction fees. As of this writing, Capital One is making such an offer.
Now, if we could use our Capital One Visa for most purchases while travelling
abroad at no added cost, we’d have the likelihood of much less local currency in
our wallet at the end of a trip to convert.
Enough said.
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#3
The Trade With Your Friend Tip
This tip requires finding a friend or acquaintance who will be travelling to the
country you visited.
If you have such a friend or acquaintance, you can arrange to trade your
currency at current exchange rates. That way you’ll both get a deal.
You will get USD without paying a fee. Your friend will get local currency with no
fees.
Everybody is happy.
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#4
The Nothing To Convert Tip
Travel can be a game. And this tip taps into the gamers’ mentality.
There are some countries which we visit and know we’ll go back to soon. If we
have currency left over we put it in our drawer or safety deposit box for that day.
There are other countries which are “once and done.” For these countries, we
budget our ATM withdrawals carefully. The goal of the game is to end up with no
local currency in our pockets by the time we get on board the plane to depart.
Of course we can “cheat” and buy a snack or a meal in the airport to win the
game. But it’s fun to play the game just the same.
And more often than not – we win!
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#5
The Free Currency Conversion Exchange At Work Tip
If your company requires foreign business travel, this tip could save your
company money and make you look good in the boss’s eyes!
Get someone (the accounting department) to act as the bank to oversee a free
currency exchange where people can exchange currency without fees.
Or, just create an informal system – like a bulletin board in the lunch room – or a
page in the company newsletter or an intranet bulletin board where you can
post how much and what type of currency you have that you’d like to trade back
into dollars. Again – no fees.
You get USD without paying a fee. Your colleague will get foreign currency to use
upon landing. Your company will pay zero exchange-rate fees.
Everyone wins!
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