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I don't do a lot of international travel, but this time I wanted to do it right so I ordered Indonesian Rupiah from our local Wells Fargo bank prior to traveling. They claim that because I have an account with them I did not have to pay an exchange fee for the rupiah. On the net the official exchange rate is 9,010 IDR (rupiah) to one U.S. dollar, but the amount of rupiah I received from the bank amounted to 7,692 rupiah per U.S. dollar. And that is supposedly without paying exhange fees! That is nearly 15% less value to the dollar than I expected. Can someone please explain to my why there would be such a big discrepency? Is the official rate only applicable to banking institutions, and I pay more as a consumer (15%)? Or did I just get taken for a ride? (I couldn't find this on this blog, but am not sure how to frame it ... "foreign currency exchange" didn't help).
We travel internationally a bit every year (Central America & some European countries to date). We've have found the best exchange rate is to do it via cash withdrawal once we're in country on our Capital One credit card. If an ATM is not handy upon landing, we exchange a minimal amount of cash at one of the airport exchange services just to tide us over (cab fares, misc. items) until we find a local ATM in town. Airport exchange rates are terrible, as are most banks in our experience. That is the advice of several tour companies we use and it seems to be accurate information. In general, we try and use the CC for purchases unless they offer a discount for cash.
The rate you usually see on the Internet is, I believe, for large amounts, not your typical tourist cash exchange size. A 15% differential sounds like a seriously excessive amount to me, but I'm not an expert by any measure. Oddly enough, merchants in some countries' urban areas (Costa Rica) prefer US cash in lieu of their own currency. That is due to the fact that inflation in the local currency is much higher than the US rate and they happily take the greenback. That info likewise applies to our upcoming Russia trip later this year.
One other tip --- in shops and restaurants, if the prices are in English or US dollars --- you are in a tourist spot and will pay considerably more than a local would for the same item or service. We avoid "tourist" pricing whenever possible. Your hotel staff can usually (not always) be relied upon to offer sound advice about where to shop/dine to avoid the tourist premium.
Hope that helps, safe travels to you.
Last edited by Pilgrim21784; 04-24-2010 at 10:06 AM..
Funny that this thread should come up now. I'm traveling to England in a week, so I called my bank to tell them I'd be traveling so they wouldn't put a fraud block on the card, and they told me they charge $3 per transaction plus 3% of the exchange rate. I'm not quite sure of the math, but the rep told me it would cost $10.64 to take out $200 USD in British pounds! I thanked him politely and hung up. Then I decided there had to be less expensive way to do this!
I did a Google search titled "using ATM cards in foreign countries" and found out that there is a Global ATM Alliance, and Bank of America is part of it. Luckily, I already have a small B of A account and ATM card, so I was able to transfer money into it, and that's the account I'm going to access on my trip. Bank of America still charges a 1% "International Transaction Fee" for ATM withdrawals and 3% on any purchases, but that's still better than the 3$ charge plus 3%!
Funny that this thread should come up now. I'm traveling to England in a week, so I called my bank to tell them I'd be traveling so they wouldn't put a fraud block on the card, and they told me they charge $3 per transaction plus 3% of the exchange rate. I'm not quite sure of the math, but the rep told me it would cost $10.64 to take out $200 USD in British pounds! I thanked him politely and hung up. Then I decided there had to be less expensive way to do this!
I did a Google search titled "using ATM cards in foreign countries" and found out that there is a Global ATM Alliance, and Bank of America is part of it. Luckily, I already have a small B of A account and ATM card, so I was able to transfer money into it, and that's the account I'm going to access on my trip. Bank of America still charges a 1% "International Transaction Fee" for ATM withdrawals and 3% on any purchases, but that's still better than the 3$ charge plus 3%!
It seems that most banks charge a 1-3% international transaction/exchange rate fee for withdrawing money from an overseas ATM in foreign currency. But there are a few banks that don't charge the $3 simply for using a foreign ATM. Another bank besides Bank of American that doesn't charge that extra fee is TD Bank (which can be found all over the Northeastern part of the USA).
Put a bunch of US $100 bills in your secure money belt, and change them when you get there. Change them as you need them, not all at once, because it will be very hard to change back again if you still have a lot of local currency at the end of your visit.
The rate you see on the internet is what they call mid-market rates. It is the in between number of the buy vs. sell rate of different currencies. So, for example, 9000 IDR=1 USD is the mid-market rate. You buy IDRs from the bank for 7600IDR=1 USD. When you come back and sell that back to the same bank, they will probably charge 11400 IDR=1USD. That's how they make their money. So, the key is not to exchange too many times as you lose each time. This is the same for all exchange services like Forex or Travelex and you can't get away from that. However, the rates do differ by a few percentage points which make a lot of difference if you are exchanging a lot of money. Many banks claim there is no transaction fee, but their rates are often quite bad.
Best rates are either through credit cards or debit card transactions where the companies get the best rates because they exchange in bulk. However, many credit cards charge annoying fees. Capital One is the best card for traveling overseas as they do not charge a foreign fee. If you prefer debit cards, I would go with something like a Fidelity Visa Debit, which allows you to withdraw cash from visa atms worldwide without fees. They even reimbursed atm fees charged by the foreign bank on some accounts. Good luck.
I bought a small calculator for my trip to England, and on the back of it, I taped this note: "x 1.54464". This is the current exchange rate between the British pound and the US dollar, and that formula converts pounds to dollars. I realize this will change slightly every day, but at least it gives me an idea. I don't want to think, "Oh, I'm not spending that much" when I really am.
It seems that there are hidden and even not so hidden fees in every bank transaction, but it's true that they do have to make money somehow. I'm just trying to ensure that they don't make a lot of money off of me.
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