Hi:
It seems to be common wisdom that, these days, the best way to travel and pay for your vacation is to use your credit cards. Traveler's Cheques are not well used nowadays, and you can always get cash in the local currency by going to an ATM.
What many people do not realize is that the foreign exchange rates vary with credit cards. Some charge a transaction fee of 1 to 3 percent. Others charge a premium on the conversion rate, while still others do both.
For example, I bought something in the U.S. last week when the dollar was well above par. However my credit card showed the conversion to Canadian at a premium. The credit card company got their bite.
With ATM's the biggest problem is that the dispensing bank charges a fee, usually $2 or $3 dollars and your home bank also charges a foreign transaction fee. The solution of course is to get larger amounts of money out, but that solution means you are carrying around wads of cash.
I'm going to be phoning my credit card companies and checking on their rates. While it may be a simple few dollars if you only travel once in a while, even a $5,000 vacation could cost a few hundred extra dollars if you do use credit cards that charge the higher fees.
More on this tomorrow.
Mahara
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