HOW TO BRING MONEY ON YOUR AIRTREK
Many of you are leaving soon on your “AirTreks” around the world, and we receive plenty of questions about how to handle money while traveling. Continue reading for more info explaining some of the best ways to bring money on your trip, and how to get the best value when you want to change currencies. This should help you while traveling, or may be useful to someone you know who will be traveling.
ATM'S are (ALMOST) everywhere
"I'm going to some off-the-beaten-path places. Will I be able to find ATM's I can use?"
The good news is, "Yes, usually." The bad news is "Not always".
How can you discover in advance if you'll have an ATM at your destination, or if your card will work in a foreign ATM? You can't. If you find an ATM, try your card and see if it works.
There are lots of ATM's in the Third World, at least in cities, and in many places people would never expect to find them. But sometimes the only ATM around isn't connected to your bank, the power is out, the phone connection is down, or the ATM is out of cash because of a local holiday you've never heard of.
When they work, ATM's are the best way to get money while you are traveling. Leaving your money in a bank or brokerage account is ideal because it earns interest until you withdraw it. Almost everywhere, ATM's dispense cash in the local currency, so you don't have to deal with exchanging one currency for another. But don’t count on finding ATM’s *everywhere*, or you might get stuck someplace with no cash and no access to your money. Just in case, have some money readily available.
Make note that most foreign ATM’s do not accept PIN’s (personal identification numbers) longer than four digits, they often do not have the 0 (zero) button, or will not accept PIN’s that start in 0 (zero). So make it a point before traveling and visit your bank to change your PIN to four digits without including a 0 (zero).
CREDIT CARDS
You may have heard that, "You get the best exchange rate when you use a credit card for foreign currency purchases." But this isn't usually true: both ATM and credit card transactions are generally based on the same wholesale exchange rate. So there's not necessarily any advantage to credit cards over ATM cards.
Per-transaction fees (from US$0.50 to US$5 or more) for credit cards and ATM withdrawals make it a better deal to exchange larger amounts of money at a time than to use a credit card for each small purchase. And while credit card acceptance varies, smaller and less expensive local shops and restaurants often accept only cash.
So save your credit cards for big-ticket purchases. For smaller expenses, get cash from ATM's, and if the local ATM withdrawal limits allow, take out enough cash supply to last several days.
CREDIT CARD AND ATM FEES
Fees are the down side to using ATM’s and credit cards. Check with the company that issues your cards, before you leave home, so you know what to expect and can bring the cards with the lowest fees.
Typical fees include charges for each cash withdrawal or purchase outside your home country or in foreign currency, plus a percentage surcharge over the wholesale exchange rate. For example, you might be charged US$3 for each withdrawal by the foreign bank whose ATM you use, plus another US$3 from your bank for using a foreign bank, and your withdrawal might be converted at an exchange rate 2% worse than the wholesale rate. That works out to a total of US$8 (8%) on a US$100 transaction.
Retail exchange rates for changing cash or travelers checks at banks or money changers are typically 8-12% above the wholesale rate. So for purchases or withdrawals above about US$100, you are likely to get a better exchange rate -- taking into account all the fees -- by using plastic. If you are withdrawing money from an ATM, or making credit card purchases in much smaller amounts, you'll probably get a better exchange rate by changing US$100 or larger denomination traveler’s checks or US$100 bills.
TRAVELERS CHECKS STILL HAVE THEIR PLACE
Traveler’s checks have largely been replaced by ATM cards, and with good reason. In most of the world, you have to go to a bank (sometimes only certain banks) to cash traveler’s checks. However, AirTreks recommends you carry a few travelers’ checks in your money belt in case there are no available ATM's, there is a problem withdrawing from them, or their fees are excessive.
DO CARRY CASH -- BUT HOW?
Places with "soft" or devalued currencies often offer good value for visitors with higher valued currencies. For the same reason that prices are low in these places, cash is king. And there are bound to be times when you cross a border at an hour or on a day when the banks are closed and there are no ATM’s in sight.
The most widely accepted banknotes around the world are U.S. dollars and Euros. Banks and money changers generally give better exchange rates, with lower fees, for larger bills. Depending on where you travel taxi drivers and small businesses might take direct payment in U.S. dollars or Euros if you have exact change or small bills. So bring a mix of $100, $20, and $1 bills.
"CHANGE MONEY?"
Be careful where you change money or use an ATM or credit card. Many (although not all) money changers who accost you on the street are thieves and con artists. It is safer to change money at banks or currency exchanges (look for signs that say "bureau de change" or "cambio"), even if they are just simple kiosks.
Keep your valuables out of sight, preferably in a money belt or somewhere hidden under your clothes. Carry your cash for daily expenses separately, in a "dummy" wallet or purse with some convincing-looking but worthless plastic (frequent flyer cards, library cards, etc.) to satisfy a thief who demands your wallet. Never go into your stash of valuables in public, especially not near an ATM, bank, or currency exchange. Get your money to exchange, or your card, out in advance and in private.
WHERE DO YOU GET THE BEST EXCHANGE RATE?
Don't waste too much time and effort chasing after a slightly better exchange rate. At best, it might save you 5% on your travel costs. Choosing more affordable destinations, adapting to local ways, and other choices about how you travel can have much more impact on your travel bottom line.
But you do not need to know what the exchange rate "should" be to tell how well or bad a deal you are being offered. (The exchange rate in the newspaper isn't much help for travelers: it's the wholesale "interbank" rate for transactions of hundreds of thousands of dollars or more, not the retail rate.)
The thing to look at is the "spread" between the "selling" and the "buying" rates for the same currencies. If the ratio between the selling and the buying rates is, for example, 1.3, that means they are making 15% on both buying and selling transactions. That's probably a bad deal, regardless of the underlying wholesale rate. If that's the only currency change around, change only a minimal amount, and try to find someplace with a better rate. On the other hand, if the ratio of the selling to the buying rate is 1.1, that means they are only making 5%, which probably is the best deal you will get.
The bottom line in any form of payment and currency, of course, is that nothing beats the value of world travel for money spent on adventure, education, experience, excitement, and fun. That's the most important message we hope you'll pass on to your friends and family who have yet to experience how an AirTrek can change a travelers life.