It is vacation season once again — time to get away from everything domestic, to find a pleasant beachside accommodation for you and your family, and, last but not least, to be sure to get the most from your hard earned bucks when you do travel abroad.
For many experienced travelers, the best path toward saving money and having a good time for all is to find a good luxury timeshare rental. The savings in room rates can be formidable when compared to the nearest hotel, and there are quite a few great deals in some of the most popular locations, especially south of the border in Mexico and the Caribbean, where the Dollar goes a lot further and amenities abound. Before you take off for sandy beaches and sun-drenched shores, however, you should take as much time packing your wallet as you do your various travel bags.
No, we are not talking about carrying a wad of cash or travelers’ checks. Now is the time to check the fine print in your plastic cardholder agreements, down under the section entitled “Currency Conversion Fees”. One of the great innovations in convenience that banks brought to us over the past few decades is the ability to access our bank accounts or credit lines from anywhere on the planet, within seconds if you find an ATM that supports international withdrawals.
The result is that travelers’ checks are no longer necessary, and you need not rush to the forex exchange window at the airport before you leave home either. For both of these “antiquated” cash access methods, you would have paid dearly in fees and currency markups that reflect an overall consumer retail rate of from 5% to as high as 15% in some cases. These fees are “hidden” and not fully disclosed, but you realize that you have less money than you thought would be the case. Currency exchangers have a lot of overhead and labor costs to cover, not to mention the cost of maintaining large inventories of foreign cash reserves.
Banks never do anything for free. Their costs for supporting your card while you are overseas are much higher than for domestic transactions. For this reason and their need for profits, banks also charge currency conversion fees that are disclosed in your cardholder agreement.
These fees typically range from 2% to 3%, much less than at exchange windows, but some banks have fee rates higher than these. The average American has roughly five plastic cards in his wallet. Now is the time to find out which one has the lowest fee for international travel. A few percentage points on your total spending overseas can amount to more than you might think.
This information is presented by guest blogger Tom Cleveland who is a writer for ForexTraders, an online resource for the foreign exchange market and currency pair charts like the EUR USD. For families on a budget Tom also suggests checking out The One Income Dollar.