Travel to Scotland Question: Money Exchange

[Fresh]

I work for a credit union in the U.S., and we serve a very international membership, so we deal with a lot of currency exchange issues. I'm also fairly well travelled in Europe. Much good advice has already been given, but here's my $0.02 (that's about 0.01 GBP):

1. Get some cash before you go. There are many exchange rates. Generally, big currency exchange firms get the best rates on the market, something at or near the interbank rate. You won't get this rate. ATM cash withdrawals will hover around 2% over the interbank rate, and other than maybe getting a deal from your bank, are probably about the best you will do. Credit cards are closer to 3% over the interbank rate, and kiosks at the airport or on the street are more like 5% over the interbank rate. Use these only if you're desperate. Note there are also buy and sell rates. Currency exchange places have to make money somehow, so they do this on the margin between what they will sell you currency for (higher rate) and what they will buy it from you for (lower rate). So you may see buy/sell rates listed at places, just realize that's why.

It's generally good to have some cash in the local currency--you never know when you'll have an issue with your credit card or you can't find an ATM. If you're staying in the big cities, will be less of a problem, but if you get out in the country, you could easily get hosed. (Not related, but if you travel to Greece, they will want cash and cash only a lot of places.)

2. Make sure you have chip cards. Much of Europe adopted Chip and PIN a long time ago as the standard, versus the simple signature transaction. You can and should set a PIN on them, if for no other reason than to withdraw cash from an ATM. This is a cash advance, and the interest rates on cash advances are notoriously high (and there may be fees as well), but if you're in a bind, it's a good option to have. Depending on where you are, they may ask you for a PIN, or they may accept a signature--it really depends on the merchant.

3. Using credit where you can is great for a couple of reasons. First, there is a zero liability policy. If you were charged erroneously or your card number is stolen and used improperly, you can always file a claim with your credit card issuer. This may not apply if you are not using a chip card--part of why the U.S. is moving to chip cards is because Visa is trying to combat fraud. The responsibility can fall on the merchant if they are not offering chip equipment, but if they are and you still use a standard 'swipe and sign' form of payment, that liability starts to fall on you if there is fraud. I'm not sure where policies are on this at the moment, and it may vary overseas, but as noted above, just get a chip card if you don't have one.

Second, it's a nice record of your transactions--the dollar amount will appear on your statement, so you'll have a true record of what you spent. Third, there are a lot of benefits that come with credit cards that many people aren't aware of. For instance, if you book a rental car with your card and pay for it, chances are your policy has insurance that covers any damage to the vehicle, so you can decline the extra insurance the rental car company always tries to sell you. Check your card benefits statement to verify, but it's pretty popular on both Visa and MasterCard cards.

4. Using credit cards can have some drawbacks. First, most cards charge a foreign transaction fee. This is a separate charge of typically up to 3% that is applied to your transaction, and is separate from the exchange rate, but most banks/credit card companies do not list it as a separate line item on your statement. Capital One Venture Card is aimed at travellers, and does not charge a foreign transaction fee. There are others out there that also don't charge a fee. Read your card agreement or ask your card issuer what the fee is on your card. It may be worth opening a new card without a fee and use it as your primary means for purchases.

5. As Jock noted, do give your credit/debit card issuers a heads-up when/where you will be travelling. There may be a form in your online banking system to do this, but if not, call them or stop in a branch. Card networks have pretty sophisticated fraud detection systems called neural networks that monitor not only general fraud trends (ie, people who visited a certain store are suddenly reporting fraud), but also your specific usage patterns. It would not be unusual for someone who does not travel or make purchases overseas very often to be flagged the first or second time they use their card in a new country if you haven't listed your travel plans. Many card issuers now allow you to receive these types of alerts (that your card was blocked due to suspected fraud activity) through e-mail, text message, or within an app on your mobile device. In the past, they always tried to call you, which is not always convenient when you're overseas. Even if you report your travel plans, your card may still be blocked. For that matter, if you fly across the U.S. and use your card for something you don't normally purchase, it could be blocked--this happened to me. It's another good reason to have cash on hand, just to tide you over until you get it sorted.

6. Keep a list of your card issuer contact information for lost/stolen cards and general services. Yes this info is on the back of your card. No, you can't read it off the back of the card when the card is lost or stolen. Many will have international toll-free numbers. Just make a list, print it out, and keep it with the photocopies of your passport you should also have for those just in case moments. Also not a bad idea to have the information for the local embassy (and/or consulate) in the areas you will be visiting, again, just in case.

7. No one uses traveler's checks anymore. Don't bother with them, even though you can probably find them in GBP.

Hope that helps. Have a great trip.