Credit Cards Ensure the Best Exchange Rates
Q: How do I get the best currency exchange rates when traveling overseas?
A: Use a credit card whenever possible. Convenience and security aside, swiping plastic is the best way to ensure a consistently good exchange rate and avoid the often unpredictable costs associated with travelers checks, cash and automated teller machines.
While American Express, for example, tacks on 2 percent for each transaction made in foreign countries, the cumulative cost will most likely be less than the myriad fees incurred from breaking travelers' checks, converting cash or withdrawing currency at an ATM, said Greg McBride, an analyst with the personal finance Web site bankrate.com.
Visa International customers pay anywhere between 1 percent and 5 percent in currency conversion charges, depending on the policy of the bank that issued the credit card. Still, it "doesn't necessarily negate" the benefit of getting the favorable foreign exchange rate assured by a major U.S. financial institution, McBride said.
Because not all merchants accept credit cards, it is important to consider other ways to spend wisely. There are a few basic strategies when withdrawing money from ATMs: Make fewer withdrawals of larger amounts to avoid multiple surcharges from the owner of the ATM and the bank from which the debit card was issued; always opt for the local currency to avoid the unnecessary expense of converting dollars at a foreign bank or currency exchange outlet.
Rather than carry large amounts of cash, many vacationers feel comfortable carrying at least some travelers checks, which can be replaced if lost. …