Traveling Overseas? Profit From the Exchange Rate

by Jean Chatzky
Photograph: Illustration: Chad Hagen

Once you’re abroad, the best place to get foreign currency is at an ATM. If you can find a machine that belongs to your bank, there will generally be no transaction fees and, typically, lower currency-exchange fees. On a machine not belonging to your bank, you’ll be charged three times: once by the bank that owns the machine, then twice by your bank, for the currency conversion and the transaction. Those rates vary: Bank of America, for instance, charges a 1 percent currency conversion fee plus a $5 transaction fee; Citi charges 3 per­cent plus $1.50; Chase charges 3 ­percent plus $3. On a $500 transaction, the fees would be $10, $16.50 and $18, respectively. Check your bank’s website before you travel.

Then pay for most things with your credit card. You’ll be able to use the consumer protections to dispute a purchase gone awry even after you return home. And you’ll be charged for your purchase at (or close to) the current exchange rate on that day. But here too you’ll probably pay a currency conversion fee, depending on the card you’re using. The fee is assessed on your purchase amount after the local currency is converted to dollars. These fees vary widely. Capital One charges nothing; Discover, 2 percent; American Express, 2.7 percent; and Chase, Citi and Wells Fargo, all 3 percent. Spend $10,000 abroad, and you’re looking at $300 in fees. If you travel overseas frequently, it may pay to open a Capital One card.

And don’t forget to call your bank and say you’ll be traveling. Though I used my credit card plenty in Argentina, I made one nearly fatal error. I didn’t call Citi, the issuer of the American Express card I share with my husband, to tell the company where we were going and how long we would be there. So when we tried to check out of Cavas Wine Lodge (an amazing ­vineyard-spa-restaurant-inn in the heart of Mendoza, the Argentine wine country), our card was denied. Twice. Knowing better, I asked the innkeeper to dial the toll-free number on the card; I told the rep what was going on, and our transaction was processed. I learned my lesson: From now on, every time I go somewhere unusual, I’ll let my credit card company know. “Notify your bank and credit card issuer about your trip,” says Bill Hardekopf, CEO of LowCards?.com. “Otherwise foreign charges may raise a red flag with your issuer, and a freeze can be placed on your account.”
 

If you’re buying a house

The numbers are difficult to track precisely, but the U.S. State Department estimates that Americans own as many as 640,000 homes overseas. What’s the appeal? For one thing, houses in other countries are often much cheaper. If you own property in the U.S., you could sell it when you retire and easily relocate to Mexico, Canada or parts of Europe. You’re also likely to find better values on vacation homes abroad. For example, a 2,200-square-foot, four-­bedroom, single-family home that would cost an average of $363,401 in the U.S. would cost $207,020 in Mexico City, $265,000 in Heredia, Costa Rica, and well under $200,000 in Venezuela.

Of course, as terrific as those prices sound, real estate values shouldn’t be your only consideration. If you’re looking at this property as a retirement home, think about whether you’ll feel isolated and also investigate the cost and availability of health care and home health aides. “Women in their fifties, like me, want places to stay that are modern, vibrant,” says Maria ­Masvidal-Visser, director of international relocation for Century 21 in Coral Gables, Florida, “where we’ll have a good time and continue to grow mentally.” Rent a home for several months before you buy to get a sense of the culture, and check out expatify?.com and alloexpat?.com for blogs and forums about specific countries.

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