Changing Money Overseas: Paper and Plastic

Ed Perkins at is a great consumer advocate for travel, someone who can cut through all the confusion and give you the real deal, especially when it comes to blatant rip-off fees that banks and travel companies are trying to gouge us with. This is the best and most comprehensive article I’ve ever seen on what it will cost you to change money abroad, pay with a credit card, and pull money from an ATM: Foreign Exchange 101.

I have to admit I am way too indifferent about this, chalking it up as a necessary evil for convenience sake, but it’s time to take action. My AmSouth/Regions ATM withdrawals in Guatemala came with a $5 or $6 fee per transaction and my Chase Mastercard slapped me with a 3% fee on top of what the local merchant tacked on. Getting a Capital One credit card will take care of the second problem, but the first one is trickier. I do much of my traveling these days in Latin America and there are very few international banks that have a wide presence there. Every once in a while you see HSBC, ScotiaBank, or Citibank, but it’s far from common. Maybe I should just buy stock in Regions, Citibank and Chase as they seem to keep making piles of money on all kinds of automatic transactions where they don’t lift a finger. Automatic fees mean easy profits if you can get away with it.
Or as Ed says, with his fictional country example, “When you use your MasterCard or Visa credit card for a purchase in Pangaea, the Pangaean merchant’s bank credits the merchant’s account (in simoleons), taking a cut for doing the credit deal; the Pangaean bank transmits the charge to the international MasterCard or Visa network, which executes the exchange (as above), transfers the billing in US dollars to your account at the bank that issued your credit card, and charges your bank the one percent conversion fee; your bank bills you and, in most cases, tacks on a surcharge to cover the one percent international fee plus up to two percent more for doing nothing—a pure gouge.

P.S. – Ed Perkins is a guest contributor to my book, Make Your Travel Dollars Worth a Fortune. Here’s my muddy disclosure policy.


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