Q & A
I recently changed a large amount of money in dollars into euros in the United States. On arriving in Europe, I discovered that I could have saved myself a lot of money by changing the dollars there. Is there a way to carry out foreign exchange transactions in the United States without being gouged?
Allen Scott, New York, N.Y.
To find out whether you will do better at home or when you arrive, you need to make comparisons between similar institutions. It is easiest to ask how much in foreign currency you will get for $100, after all charges. For example, on Aug. 25 the American Express office at Herald Square in New York sold £1 for $2, or £50 for $100 (plus a $3 charge for the transaction), while American Express at Victoria Station in London gave a rate of $1.93 to £1 (£51.75 for $100) with no commission fee. I recommend prepaying as many travel expenses as you can, like hotels and car rentals, or getting guaranteed dollar rates before you leave.
Banks and currency exchange offices make their profit from the spread between the buy and the sell rate (but don't expect to get the cross, or interbank, rate you see in the financial pages). The buy rate is the rate at which the bank will buy your dollars and sell you euros; the sell rate is the rate the bank will pay to buy dollars. The narrower the spread, the better the deal. You may pay a commission of around 1.5 percent. Avoid double commissions by, for example, never changing dollars to, say, Swiss francs in another country, where you are generally charged a commission for each transaction between currencies.
You can get cash in local currency at an A.T.M. at the official rate minus about 1 percent, depending on your bank or card company and the color of your plastic. You can usually draw up to $500 a day.
Several readers are concerned that their United States credit cards do not work, or are discriminated against, abroad. For example, Lawrence Bond, who lives in Paris, writes: 'Recently, lastminute.com in France refused to accept my Visa platinum card, issued on a U.S. bank, for a ticket on US Airways from Paris to the United States. They would only take a French Visa card.'
Airline and travel sites officially say they often refuse foreign credit cards for phone and online bookings to help prevent credit card fraud. But new security safeguards should eliminate that concern. However, you can always book by phone and show your card at the desk when you pick up your ticket at the airport.
ROGER COLLIS
Q & A