The Vagaries And Viccisitudes Of Currency Exchange

Every year American travellers to Europe waste thousands of dollars needlessly as the result of their ignorance about currency exchange. To help members of the H&B Expeditionary Forces avoid this pitfall, I asked my Scottish banker, Angus Macdonald, to summarize the most convenient, least costly methods for our clients to obtain the Sterling or Euros they require for their golf tour. As a Scot and a banker, Angus is both genetically and professionally disposed to save a few guineas whenever he can. Here is his advice. If you have further questions on the subject, you should, by all means, consult my adjutant who has planned your expedition.

Major Basil Haversham, OBE

Dear Basil,

Thank you for this opportunity to help your clients save money on currency exchange. I consider the undertaking nothing less than a semi-religious calling.

International currencies are nothing more than commodities with prices (exchange rates) which result largely from the eternal economic laws of supply and demand. Every morning, the Financial Times of London, the Wall Street Journal and hundreds of other newspapers print the price of the dollar against the Pound and the Euro from the previous day's trading on the major financial markets. A price of $1.6325 for the Pound Sterling, for example, means that anyone wishing to purchase large quantities of British currency would have paid slightly more than $1.63 for each Pound they purchased. This quoted price is "the commercial rate of exchange" and is similar to the prime interest rate in that it is the lowest price reserved for the best customers; most will pay somewhat more to obtain their currency. The price your clients will actually pay for their Pounds and Euros depends upon how and where they obtain these currencies. Their goal should to pay as close to the commercial rate as possible and to avoid or limit transaction fees. After all, why waste money?

Here are four methods of obtaining currency presented from the least to most costly:

ATM
These handy little machines are becoming almost as prevalent in Europe as they are in the States. Every major airport, for example, has one or more in its arrivals area just outside customs. Moreover, most European ATMs are linked to most ATM networks in the States. All your clients on a golf tour need do is insert their ATM card, enter their PIN and ask for the amount of Pounds or Euros they require. Their checking account will be debited in dollars at the commercial rate of exchange plus an ATM transaction fee equal to about Ł1.00. You would be well advised to have your members obtain the PIN numbers of more than one credit card or ATM card prior to departure to avoid any problems while in country. Finding oneself without cash can be somewhat stressful I am told.

Credit card cash advance
Most European ATMs accept major credit cards. Also, Visa and Mastercards may be presented in a bank for cash advances. Either way, the exchange rate and fee for a credit card advance will be about the same as for using an ATM card. The primary difference is that most clients will pay their credit card issuer interest on the debt until it is repaid.

Travellers checks for cash
All banks and currency exchanges plus some shops and hotels will trade dollar-denominated travellers checks for the local currency. Most banks are open only during weekdays. Currency exchanges are open every day and are in all the airports as well as every tourist city or location of significance. Depending upon where you make the trade, the exchange rate will be $.10 to $.20 above the commercial rate and you will be charged a transaction fee of as much as Ł5.00. In other words, obtaining Ł200 with travellers checks can cost $40 or so more than using an ATM.

Cash for cash
American dollars can be traded for the local currency in the same manner and at the same locations as travellers checks. The primary difference is that the exchange rate will be slightly higher (worse).

If your clients do not obtain their Pounds and Euros using my preferred and recommended ATM approach, the exchange rates they receive and the transaction fees they are assessed can vary considerably depending upon where they make their currency trade. In general, it is less costly to obtain Pounds and Euros in their countries of origin than in the United States. I do not recommend that your clients planning a golf tour purchase Pounds or Euros from a bank in the States unless their name appears on the institution's letterhead. Within Europe, banks usually offer the lowest exchange rates and transaction fees followed by currency exchanges. The most expensive places to trade for the local currency are shops and hotels. Clerks in these establishments should be required by law to wear a mask and carry a gun so that all will know their true profession.

That, dear Major, is my advice as succinctly as I can present it. I do hope your clients will conserve their money to spend on our fine British goods and services rather than needlessly line the pockets of a currency exchange merchant who will do nothing more productive with his larcenous profit than purchase some expensive motorcar, most likely German.

Very truly yours,

Angus Macdonald
Bank of Scotland

P.S. My computer literate nephew, Ian, informs me that one can find the location of foreign ATMs on the Web. The Plus system is at "visa.com"; the Cirrus system is at "mastercard.com".

So the most important tip is: contact Haversham & Baker Golfing Expeditions. We are purveyors of the finest golf travel experiences to Scotland, Ireland, Spain, Portugal, Wales and England. Why the finest? Your arrangements will be custom-planned to your precise requirements from the widest array of choices by the most knowledgeable golf tour and travel planners in the industry. You'll receive unlimited consultation and service from your first conversation until long after your expedition is over. The result? You and your friends will enjoy an experience with memories that last a lifetime.

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