Archive for July, 2009

Currency Conversion Fees (And How To Avoid Them)

by admin


Financial companies make their astronomical profits in one way or another. Foreign currency conversion fees are one of the ways they accomplish this. Any time you’re using or exchanging money in a foreign land, someone is trying to make money off of your transaction. Banks and credit card companies aren’t letting you make purchases around the world without getting their own cut. Most of the companies add a few extra percentage points onto the transaction and include it in small print on your statement. These “hidden fees” can pile up quick, and are easily overlooked. This can lead to a couple hundred dollars in fees you could have saved on your foreign vacation. The same goes for any foreign currency exchange location.  All of the rates are exaggerated in the house’s favor.  The following list will give you an overview of the currency conversion fees you will encounter and help you find the best options for making payments while traveling:

1. Exchange Rates – Get an idea of the current exchange rates before you leave for your trip. XE provides current exchange rates of currencies around the world. You can also view historical rates. The site also includes a useful Travel Expenses Calculator for keeping track of expenses in foreign currencies) and a Global Payments and Transfers Tool (for sending and receiving payments (with a guaranteed best rate) around the globe) for free.

2. Credit Card Fees – Most people are unaware the majority of credit card companies tack on an extra 3% foreign transaction fee. This usually includes the 1% Visa/Mastercard fee and a 2% bank fee. The chart below shows the foreign transaction fees for mainstream credit cards. Cards from Capital One, which eats the 1% Visa/Mastercard fee to offer a 0% foreign transaction fee, are your best bet for travel purchases. And don’t even think about taking a cash advance from a credit card. The fees for a cash advance usually include 3% on top of the normal foreign transaction fee and 24% interest accrued daily.

Card Issuer Fee
Capital One 0%
Wachovia 1%
Washington Mutual 1%
Discover 2%
American Express 2%
Bank of America 3%
Citibank 3%
JP Morgan Chase 3%
Wells Fargo 3%
US Bank 3%

3. ATM Fees – Call or check online to see what fees your bank charges for ATM withdrawals. Some banks charge a fixed fee (around $5), some charge a percentage of the funds taken out, and some charge a combination of both. Find out which brands of ATMs are in your bank’s network and how much they charge. For example, Bank of America customers who use ATMs with the Global ATM Alliance network can withdraw money from ATMs for free, but are assessed a $5 fee for ATM usage outside of their network. Citi will charge a 1% conversion fee (with no ATM fees) for in-network ATMs, and an extra $1.50 fee for out-of-network ATMs. Doing some extra research and writing down addresses for several compatible, in-network ATMs in every city you plan to visit can save you some headaches and money in the long run.

4. Dynamic Currency Conversion – When making a purchase overseas, always decline when a merchant asks if you want to convert the purchase to your credit card country’s currency before charging it. These rates of conversion are usually much worse (sometimes up to 6%) than the rate you will get from the credit card company. Always check the receipt to make sure the merchant has not done this conversion without asking, which is against credit card merchant agreements. Make sure the purchase was charged in the local currency.

5. Debit Cards – Like ATM cards, check with your bank for the fees (usually around 3% and called “Point of Sale Fees”) you will incur while using a debit card abroad. It is recommended you don’t use a debit card when traveling because, unlike a stolen credit card (in which charges can be easily disputed), a stolen debit card can lead to a largely overdrawn bank account with a significant amount of turmoil to get it fixed.

6. Cash Exchange – Exchanging money at a certified bank is your best bet. You will get the best rates and have the least risk of fraud. At a hotel or airport, you will get the highest transaction fees and worst exchange rates.

7. Prepaid Travel Debit Cards – Visa currently offers the only travel debit card (Visa TravelMoney Card). You can purchase it at US banks and AAA. Fees typically vary from US $4.95 to $9.95. You can reload the card online or via phone, with up to $15 charge. You can use it to withdraw money from any Visa compatible ATM ($2.50 charge) and to make purchases. Making purchases in any other currency than is on the card will incur a gouging 7% conversion fee. It is recommended to pursue other options for making foreign purchases.

8. Travelers Checks – There are many pros and cons to using these. The advantages include: refunded usually within 24 hours if lost or stolen, can be purchased in currencies (Euro, Canadian Dollar, Australian Dollar, Pound Sterling, and Japanese Yen) other than US, no withdrawal fees, and you can cash in your checks for local currency wherever you are. On the other side, you have to first find a bank that will cash the checks (many countries will not cash them), you usually will be given you a bad rate and charged you a high commission for cashing them, and you are charged between 1% and 4% when purchasing them. If you decide to buy some, stick to major brands like American Express, Visa, and Citibank. Also, consider buying checks loaded in foreign currency. For example, checks in Euros will be much easier to use and cash when traveling in Europe.

Never Travel Alone Again

by admin

Travel Friends

Do you find it hard to find people who have the same eagerness to travel as you? Even if you do have a few friends interested in travel, it’s usually difficult to get them to commit to a trip with you in the first place. And when you are finally able to organize a trip, you’re left wondering if your friends will back out of it on you at the last minute. Most people either don’t share the same fervor for traveling, are not interested in going to the destinations you want, or just don’t have the resources. A lot of these people complain about not having money to take the vacation they want, but are then found spending frivolously on what you view to be unnecessary. They’ll spend $200 on a round of drinks or $2000 on new car rims, all while wishing they had enough money to take that dream vacation.  This becomes frustrating for those looking to share new adventures in foreign environments.

Thankfully, with the rapid growth of travel social networking sites, it is easier than ever to find people to travel and make friends with who share the same interests as you. The following sites will help you meet the type of people who are more in-line with wanting to have the same experiences as yourself:

1. WAYN.comWAYN (Where Are You Now?) is the world’s largest travel and lifestyle focused social networking community website.  The site is present in 251 countries and membership has grown from 45,000 users in March 2005 to over 15 million today.  WAYN helps you to keep track of all your contacts from around the world and make new friends based on where you are now, where you have been and where you are going.  If you have a lot of friends who travel the world, or if you want to make a lot of friends who travel world, WAYN has the type of community you need.

2. – Touts itself as “the fun way to share travel advice and meet other travelers”. If you’re looking for a travel partner or buddy, search the 1.5 million profiles on the site to find other travelers who are interested in going to the same places.  You can filter by age, gender and travel preferences to find those with the most similar interests to yourself. Create a free account and share your future travel plans to start finding other people to travel with. TravBuddy will automatically tell you if other people are planning to travel to the same places as you at the same times.

3. TripAdvisor Forums – Over 15 million travelers use these forums every week to plan their trips. The forums are predominantly used by people looking for only travel advice, but many people also use them to find like-minded people to travel with. Get involved in the forums and post a message in the forum of your choice destination to find those potentially interested in traveling with you.

4. CouchSurfingCouchSurfing helps travelers find hosts who will let them stay at their place for free. It is the largest hospitality exchange network with over 1 million members (35% of them are offering a place to stay for travelers) in 232 countries. This large and active community is one of the best portals to making new friends, experiencing local cultures, and traveling cheaply.

5. The Hospitality Club – Similar to CouchSurfing, The Hospitality Club (300,000+ members) is a volunteer-run organization mainly used to exchange accommodation by local hosts around the world. Some hosts may also offer tours and food. Guests and hosts do not pay each other.