Exchanging money abroad

In my previous letter on how to handle money abroad (Oct. ’05, pg. 53), I noted that going to the ATM was virtually always the best way to get local currency. At the time of that writing, ATM withdrawals (straight from a bank account) were usually executed at the interbank exchange rate, and there were few “add-ons” other than the basic usual fee of $1-$2 for using an ATM other than your own bank’s ATM (a fee sometimes refunded by Internet banks, USAA Bank and others).

Using an ATM helped you avoid the potential commissions and fees charged by bank exchange offices or money changers, helped you avoid the risks of “skullduggery” in calculations and protected you against poor exchange rates (large differences between the bid and asked rates) as frequently encountered in hotels.

With regret, a number of banks now are either adding on a percent charge (or making a deduction from the interbank exchange rate) or charging a higher fee for ATM cash withdrawals outside the U.S. To be prepared for or avoid unhappy surprises, question your bank as to its charges for ATM use abroad. Then, if you are unsatisfied (and have time to change), check other banks which might be more reasonable.

Particular banks worth checking would include Internet banks, maybe brokerage house banks and USAA Bank (www.usaa.com), the latter being oriented toward military serving abroad, although all are welcome to open an account.

Using a Visa/MasterCard for cash advances charged to that account has its own set of charges (as a penny-pincher, I avoid this alternative anywhere).

Travelers’ checks remain at the bottom of the list. They’re sometimes hard to cash, they can have poorer exchange rates and there can be extra fees.

There has been a recent development of “cash cards” — buy a dollar-loaded card here and get currency anywhere (like a shopping card for universal use or a plastic travelers’ check). The ones I have heard about are not inexpensive and have not tempted this old penny-pincher.

Finally, in April-May ’06 I recently violated my principle of not changing “greenbacks” in a bank. Would you believe that in Egypt the government regulates the exchange rates, and all banks charge the same with virtually no difference between the bid and asked rates — and with no commissions? Changing cash was “sure,” without risk of “mix-ups” at ATMs.

So, if you are Egypt bound, take along a “wad,” buy a money belt or a pair of pants with an inside secure pocket, and keep your pants on.

New Smyrna Beach, FL