Learn Your Foreign Currency

We recently returned from a trip abroad, and I'm constantly amazed at stories from fellow travelers about how they grossly overpaid for services because they didn't understand the local currency. If there's one bit of homework you should do before you visit another country, find out what the exchange rate is.

It's especially confusing when you have to add lots of zeros to the currency unit to reach the USD equivalent. Local currency can seem like monopoly money. But tack on an extra zero or two, and suddenly you're handing out serious funds for tips and cab rides.

For example, we talked to a guy who thought he was tipping his bartender a generous ten dollars. After comparing notes with a local customer at the bar, he found out he'd just given the guy one hundred dollars. On the bright side, he got great service for the remainder of his stay!

When you exchange money, take a moment to look at the bills and coins you receive. Get a feel for how much each is worth compared to your home currency. Some denominations may look similar but vary greatly in value.

If the exchange rate for local currency versus your home currency is not easily divisible (i.e., two to one, three to one, ten to one, etc.), don't be afraid to whip out a calculator if you're not good at doing math in your head. We spoke to some women who'd paid three times the amount they thought they were negotiating for a cab ride from the airport into downtown Buenos Aires. (At this writing, there are approximately 38 Argentine pesos to the U.S. dollar. They'd just come from Chile, where the exchange rate is about 650 to one; they'd assumed the two currencies were similar in value.)

Sometimes it's easier and more cost-effective to pay with a credit card than to exchange money so you can pay with cash. However, many inexpensive services cannot be paid for with credit cards or foreign currency: bus rides, purchases at street markets, meals at small local restaurants, lots of taxis. If you do pay with a credit card, try to use one that doesn't assess foreign transaction fees, which can add up. Also, make sure you're clear on the amount charged. The vendor may quote the price in dollars but the charge will be entered in local currency. Verify that the amount on the slip you sign is equivalent to what you were quoted.

We had an overnight stay in Buenos Aires before boarding a cruise ship and we were able to pay for our hotel and transportation from the airport with a credit card. But when we inquired about a taxi to the pier, we were told the drivers only accepted local currency. The pier was quite close; the desk clerk advised us the fare should not be more than 300-400 pesos.

So, we set out to get cash from an ATM, which we do frequently when we travel abroad. But every machine we encountered assessed a transaction fee of between six and ten dollars. The fee wouldn't have been so onerous if we were withdrawing a large sum of money, but for the small amount we wanted, it did not seem cost effective.

After four or five unsuccessful attempts to withdraw money without an excessive fee, we decided to return to the hotel and cash a twenty-dollar bill at the desk. We knew the exchange rate would be worse, but they shouldn't charge a fee. Except then we found out our hotel did not offer currency exchange.

The desk clerk suggested he could call the taxi company and give them our credit card number, which they could charge when the ride was complete. We agreed, and he called us a cab.

En route to the pier, we verified the arrangement with the driver. Credit card number to the home office? He knew nothing about it. Frantically, he started texting back and forth with his dispatcher.

As we neared the pier, we eyed the meter, which still showed less than 200 pesos. "What if I just give you cash in U.S. dollars?" my husband asked.

"Much better," the cab driver replied. When we arrived at our destination, we handed him a five-dollar bill, and he was happy.

(When we got home, I checked my credit card statement to make sure no duplicate charge had appeared from the cab company. Fortunately, there was nothing.)

On board the ship, we played trivia with an Argentine native of Buenos Aires, and we told him the story of our cab ride.

"Ooh… you got ripped off! Five dollars!" he guffawed. "That ride shouldn't have cost you more than 100 pesos."

So we, too, were gullible, overtipping tourists. But the ride still cost us less than withdrawing local currency for the fare out of the ATM.

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