Save Money When You Change Your Money
By choosing the wrong venue for your exchange transactions, you lose several percentage points on every transaction
With a fluctuating world economy and the U.S. dollar selling at varying rates against other currencies, it becomes more and more important to avoid or reduce the 10% loss that most of us incur on changing our currency or traveler's checks into foreign funds.
That statement--with its 10% reference--will come as a shock to many. Yep, whenever you exchange money, chances are you're giving away around 10% of its value during the transaction. The dollar is not doing so well nowadays, so it's silly to needlessly give away a decent slice of currency to middlemen. Might as well get as much as you can, right?
Every little bit counts, and the place to begin saving is in the initial purchase of traveler's checks for the trip. For years, the U.S. Department of Justice has investigated the strange coincidence that almost all sellers of traveler's checks (most of them banks) charge a uniform fee--ranging from $1 to $2 per $100--for doing so. Since these banks enjoy other forms of income from the lucrative travelers check business, they really don't need that fee, and a few of them waive it. As the first step towards saving that ultimate total of up to 10%, you should seek to buy your checks from a bank that charges no fee.
Often, the friendly manager of a small bank will waive the fee for a good customer. Some banks waive the fee for people with special accounts, or for members of their travel club, or for senior citizens, or for any number of other promotional reasons. Ask your own bank manager to consider waiving it for you, a long-time depositor. Saving the fee is the first step towards enjoying even greater savings overseas.
Once abroad, you'll discover to your horror that most exchange offices charge both a fee and a commission for changing your traveler's checks into the local currency, in addition to imposing a hideously-weighted (in their favor) exchange rate in doing so. Calculated even conservatively, those fees and commissions can often add up to as much as 8% of the average transaction at those little, one-person booths called "Bureaux de Change" that are scattered about Piccadilly Circus and Leicester Square, Place de la Madeleine and Via del Corso, in London, Paris and Rome.
Therefore, the first, unbreakable rule of smart travel--I wish it were written in neon in the heavens above--is never to change your traveler's checks (or dollar currency) in any such exchange office, but only in a big, huge bank in the very center of the city.
Not only in a big, huge bank, but in a bank affiliated with the issuer of the traveler's checks you're using. Cash Barclay's Travelers Checks at a Barclay's Bank in London, cash American Express Travelers Checks at an American Express Office, Thomas Cook Travelers Checks at a Thomas Cook office, and so on. If you do, you'll usually save the "encashment fee" that alone can amount to 5% and more at a "bureau de change."
(I say "usually" because a handful of European countries require a fee by law, and in those countries, even the well-known travelers check companies can't avoid it. Since the mandated fee is a flat sum per transaction, regardless of the amount you cash, it pays--in those countries only--to cash a fairly large amount of traveler's checks at a time, in order to reduce the percentage of your loss).
But even if you can't get to a bank affiliated with the issuer of your brand of travelers check, go to a bank nevertheless; they invariably impose much lower commissions for cashing traveler's checks than do the small "bureaux de change" to which I've referred. It almost always pays to stifle that impulse to dart into a closet-sized Piccadilly Circus currency shop, and walk a few further blocks instead to a big, stuffy bank. You'll save.
The only place where banks themselves turn into the polite equivalent of highway robbers--no matter how prestigious their names, no matter how venerable their lineage--is at airports. In my experience, the moment a bank is given an airport location, it becomes just as rapacious, just as immoderate, as the flashiest, cockney money-changer. Possibly because they must pay heavy concession fees to the airport for the right to deal with a captive audience, the rates, commissions and fees of airport banks are calculated to cost you as much as 8% of the amount you exchange--considerably more than you'd pay at the very same bank in town.
The other locations where you should never cash traveler's checks are hotels (you should also never send laundry from, or make international phone calls from, a hotel). Hotels regard money-changing as a "profit center" opportunity. While their fees and commissions may be reasonable, the exchange rates they use are ridiculous.
Get Inspired with more from BudgetTravel.com
Budget Travel Real Deals