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getbak · 08-01-2008, 02:37 AM

I posted similar information in another thread earlier today, but I'll repeat the basic idea here. I went to Europe last spring and, as an anal over-planner, did a lot of research into this very question.

I did not find a single website that recommended using traveler's cheques. In fact, almost all of them specifically say not to use them because they are not widely accepted, and can often be difficult to cash. Usually, a bank is the only place that will accept a traveler's cheque, and they'll charge you a service fee for doing so.

The main advantage of using traveler's cheques is supposed to be that you can use them the same as cash at any store and the only fee is what it costs to buy them (free for AMA members, and certain bank account holders). If you have to pay a fee to cash the cheque, you lose the advantage of carrying them.

I have used traveler's cheques extensively in the USA (where it's no problem to use them same as cash pretty much anywhere), but I didn't even try in Europe because of all the warnings. I also never saw anyone try to use one for payment, so I can't even tell you what I observed.

If anyone posts here saying they traveled through Europe using traveler's cheques without any difficulties, they would honestly be the first person I've ever seen say that (and I was looking for any information that said using traveler's cheques would be just as easy in Europe as it in the States because it was what I had originally planned on doing).

The big thing that Visa is trying to push now is a "Travel Cash" card, which they promote as basically the evolution of the traveler's cheque, but when you crunch the numbers, it's hard to see how it's a good value.

AMA sells them if you're a member: http://www.ama.ab.ca/cps/rde/xchg/am...a_Travel_Money

Here's the fee info for them: http://www.travelex.com/ca/personal/...asp?content=cp

$4.50 to reload it (per transaction)
$2 to withdraw from it overseas (per transaction)
5% foreign exchange markup (on top of the standard bank exchange rate)

You can also use the card just like any other Visa credit card, but you're limited to the amount of money you've pre-loaded onto it (I believe you'll save the withdrawl fee though if you pay the merchant directly with it, but I'm not positive).

If you have a normal credit card, with a decent limit (and the means to pay it off in full when it comes due), you'd be better off just using it. With a regular Visa, you have a 3 week grace period for paying it off (assuming you don't carry a balance) before being charged interest; they don't charge you $4.50 every time you want to put cash against your account; and the foreign exchange markup on regular Visa/Mastercard purchases is "only" 2.5% compared to the Travel Card's 5%. The only problem is if you do a cash advance against your Visa or Mastercard, you pay interest immediately, and (I believe) pay the standard $5 transaction fee for using a foreign ATM.

What I found was by-far the best option for me was the previously mentioned "Select Service" account at TD-Canada Trust: http://www.tdcanadatrust.com/accounts/select.jsp

It costs $25 per month to have it (or free if a minimum balance of $5000 is kept in it), but you pay no other transaction fees to withdraw money from the account. You only pay the current exchange rate for the day of the transaction. I believe RBC has a similar account, but it's $30 per month (when I was looking, none of the other banks in Canada had anything similar).

This was by far the cheapest and easiest way to have access to money when I was in Europe (I didn't have any problems at any ATM anywhere, although, I only used the major banks, and not any random convenience store ATMs), and because there are no fees per transaction, I didn't have to worry about taking out a lot of cash at once.

As was mentioned, if you make sure you only do 4 transactions in a month, you'll only pay $20 in "foreign ATM" charges on you regular bank account (plus whatever fees you already pay for it), but limiting yourself to 4 transactions per month means you have to withdraw a week's worth of cash per transaction. That's a lot of cash to be carrying around, especially if you're buying every meal (and drinks, if you're so inclined) and paying for your room every night with it. With the TD account, you can make one withdrawal per day, or even many per day (sometimes you drink more than you had planned, or buy something on impulse), and not have to worry about wasting money on transaction fees.

You could go the route of using your credit card for most transactions and using cash sparingly (this is what I do at home because it's much easier and ultimately cheaper because I pay off my credit card every month), the only problem with this is the previously-mentioned "premium" that Visa and Mastercard tack onto the exchange rate. They don't tell you that they're charging a 2.5% markup on the regular exchange rate (unless you read the microscopic print in your cardholder agreement -- which I did, told you I was anal), but they do it.

I did use my credit card for the occasional large purchase if I didn't have enough cash on hand, so I did a side-by-side comparison of my statements on days where I purchased something on my Mastercard and withdrew cash from an ATM in the same day (sometimes within an hour of each other), and the exchange rate on the Mastercard was always a little over 2% higher than the exchange rate on the cash withdrawal from the bank account.

The only thing that's cheaper is to carry enough cash for the entire trip because you never pay a transaction fee, and you'll get the best possible exchange rate. The biggest problem with this option is that you're carrying a lot of cash, and if you get mugged, you're screwed (and if anyone finds out you're carrying that much cash, you will probably get mugged).

For comparison's sake, let's take a look at spending 1000€ in one month the various ways (assuming you withdraw 100€ at a time from the ATM)...

Visa TravelMoney Card:

$4.50 charge to load money onto the card (flat) = $4.50
$2 per transaction (flat) x 10 transactions = $20
5% markup on exchange rate = $50 (above exchange rate)
TOTAL: $74.50 (plus bank exchange rate to convert CAD to Euro)

Combination of Withdrawals from regular bank account and Credit Card for purchases (assume 800€ on CC, and 200€ for cash)

$5 per withdrawal transaction x 2 = $10
2.5% markup on exchange rate (CC) = $20
TOTAL: $30 (plus bank exchange rate to convert CAD to Euro)

Combination of Withdrawals from regular bank account and Credit Card for purchases (assume 500€ on CC, and 500€ for cash)

$5 per withdrawal transaction x 5 = $25
2.5% markup on exchange rate (CC) = $12.50
TOTAL: $37.50 (plus bank exchange rate to convert CAD to Euro)

Cash withdrawals from TD-CT "Select" account

$25 monthly service fee (unlimited transactions) = $25
0% markup on exchange rate = $0
TOTAL: $25 (plus bank exchange rate to convert CAD to Euro)

08-01-2008, 02:37 AM	#7
getbak Franchise Player Join Date: Feb 2006 Location: Calgary, AB Exp:	I posted similar information in another thread earlier today, but I'll repeat the basic idea here. I went to Europe last spring and, as an anal over-planner, did a lot of research into this very question. I did not find a single website that recommended using traveler's cheques. In fact, almost all of them specifically say not to use them because they are not widely accepted, and can often be difficult to cash. Usually, a bank is the only place that will accept a traveler's cheque, and they'll charge you a service fee for doing so. The main advantage of using traveler's cheques is supposed to be that you can use them the same as cash at any store and the only fee is what it costs to buy them (free for AMA members, and certain bank account holders). If you have to pay a fee to cash the cheque, you lose the advantage of carrying them. I have used traveler's cheques extensively in the USA (where it's no problem to use them same as cash pretty much anywhere), but I didn't even try in Europe because of all the warnings. I also never saw anyone try to use one for payment, so I can't even tell you what I observed. If anyone posts here saying they traveled through Europe using traveler's cheques without any difficulties, they would honestly be the first person I've ever seen say that (and I was looking for any information that said using traveler's cheques would be just as easy in Europe as it in the States because it was what I had originally planned on doing). The big thing that Visa is trying to push now is a "Travel Cash" card, which they promote as basically the evolution of the traveler's cheque, but when you crunch the numbers, it's hard to see how it's a good value. AMA sells them if you're a member: http://www.ama.ab.ca/cps/rde/xchg/am...a_Travel_Money Here's the fee info for them: http://www.travelex.com/ca/personal/...asp?content=cp $4.50 to reload it (per transaction) $2 to withdraw from it overseas (per transaction) 5% foreign exchange markup (on top of the standard bank exchange rate) You can also use the card just like any other Visa credit card, but you're limited to the amount of money you've pre-loaded onto it (I believe you'll save the withdrawl fee though if you pay the merchant directly with it, but I'm not positive). If you have a normal credit card, with a decent limit (and the means to pay it off in full when it comes due), you'd be better off just using it. With a regular Visa, you have a 3 week grace period for paying it off (assuming you don't carry a balance) before being charged interest; they don't charge you $4.50 every time you want to put cash against your account; and the foreign exchange markup on regular Visa/Mastercard purchases is "only" 2.5% compared to the Travel Card's 5%. The only problem is if you do a cash advance against your Visa or Mastercard, you pay interest immediately, and (I believe) pay the standard $5 transaction fee for using a foreign ATM. What I found was by-far the best option for me was the previously mentioned "Select Service" account at TD-Canada Trust: http://www.tdcanadatrust.com/accounts/select.jsp It costs $25 per month to have it (or free if a minimum balance of $5000 is kept in it), but you pay no other transaction fees to withdraw money from the account. You only pay the current exchange rate for the day of the transaction. I believe RBC has a similar account, but it's $30 per month (when I was looking, none of the other banks in Canada had anything similar). This was by far the cheapest and easiest way to have access to money when I was in Europe (I didn't have any problems at any ATM anywhere, although, I only used the major banks, and not any random convenience store ATMs), and because there are no fees per transaction, I didn't have to worry about taking out a lot of cash at once. As was mentioned, if you make sure you only do 4 transactions in a month, you'll only pay $20 in "foreign ATM" charges on you regular bank account (plus whatever fees you already pay for it), but limiting yourself to 4 transactions per month means you have to withdraw a week's worth of cash per transaction. That's a lot of cash to be carrying around, especially if you're buying every meal (and drinks, if you're so inclined) and paying for your room every night with it. With the TD account, you can make one withdrawal per day, or even many per day (sometimes you drink more than you had planned, or buy something on impulse), and not have to worry about wasting money on transaction fees. You could go the route of using your credit card for most transactions and using cash sparingly (this is what I do at home because it's much easier and ultimately cheaper because I pay off my credit card every month), the only problem with this is the previously-mentioned "premium" that Visa and Mastercard tack onto the exchange rate. They don't tell you that they're charging a 2.5% markup on the regular exchange rate (unless you read the microscopic print in your cardholder agreement -- which I did, told you I was anal), but they do it. I did use my credit card for the occasional large purchase if I didn't have enough cash on hand, so I did a side-by-side comparison of my statements on days where I purchased something on my Mastercard and withdrew cash from an ATM in the same day (sometimes within an hour of each other), and the exchange rate on the Mastercard was always a little over 2% higher than the exchange rate on the cash withdrawal from the bank account. The only thing that's cheaper is to carry enough cash for the entire trip because you never pay a transaction fee, and you'll get the best possible exchange rate. The biggest problem with this option is that you're carrying a lot of cash, and if you get mugged, you're screwed (and if anyone finds out you're carrying that much cash, you will probably get mugged). For comparison's sake, let's take a look at spending 1000€ in one month the various ways (assuming you withdraw 100€ at a time from the ATM)... Visa TravelMoney Card: $4.50 charge to load money onto the card (flat) = $4.50 $2 per transaction (flat) x 10 transactions = $20 5% markup on exchange rate = $50 (above exchange rate) TOTAL: $74.50 (plus bank exchange rate to convert CAD to Euro) Combination of Withdrawals from regular bank account and Credit Card for purchases (assume 800€ on CC, and 200€ for cash) $5 per withdrawal transaction x 2 = $10 2.5% markup on exchange rate (CC) = $20 TOTAL: $30 (plus bank exchange rate to convert CAD to Euro) Combination of Withdrawals from regular bank account and Credit Card for purchases (assume 500€ on CC, and 500€ for cash) $5 per withdrawal transaction x 5 = $25 2.5% markup on exchange rate (CC) = $12.50 TOTAL: $37.50 (plus bank exchange rate to convert CAD to Euro) Cash withdrawals from TD-CT "Select" account $25 monthly service fee (unlimited transactions) = $25 0% markup on exchange rate = $0 TOTAL: $25 (plus bank exchange rate to convert CAD to Euro) __________________ Turn up the good, turn down the suck!