Rethinking obtaining foreign currency

By Carl Dombek

For years, travel experts from Rick Steves to TheTravelPro have recommended a specific way to obtain foreign currency economically. An experience I had on our last cruise put a twist on that advice.

Travel writers have long advised people to obtain local currencies from an ATM in the country of their destination for the best exchange rate. I go a step farther and recommend bank-affiliated ATMs to avoid additional service charges that some independent ATMs charge. I have withdrawn cash in many countries without issue.

This time was different.

In the days before our cruise, I used my debit card at an ATM at Amsterdam's Schiphol Airport and at an ATM in Copenhagen, Denmark. Apparently, my card was skimmed or shimmed because the day of our cruise, some miscreant took €100 from my account at an ATM at the train station in Malmö, Sweden, which is a short train ride from Copenhagen.

Swiss francs

When I spotted the transaction upon returning home, I alerted my bank which reversed it pending an investigation and sent me a new ATM card because mine had obviously been compromised.

What happened next is what has caused me to rethink this practice.

My bank, one of the major national institutions, said it completed its investigation and determined that THE WITHDRAWAL WAS LEGITIMATE. I asked them how they could have reached that conclusion because a) my card had never been out of my possession, b) I never authorized anyone to use it on my behalf, and c) we were actually aboard our cruise ship in Copenhagen at the time of the withdrawal. I even provided them an email from Holland America cruise lines providing the time we’d boarded.

Their response was that the card was "present" when the withdrawal in question was made and the person only entered the PIN number once; in other words, no multiple attempts to get it right. They insisted that it was "impossible" to clone an EMV chip despite several studies, including one from the University of Cambridge, that show it is possible to spoof an EMV card, even if cloning the chip itself isn't possible.

When I protested further, they said they were “just following the rules VISA set down” and refused to refund my money. Despite the evidence I presented, they were essentially saying, “We don’t believe you.”

I kicked it upstairs, emailing the president and CEO, who put someone on it. While their conclusion was the same – that the withdrawal appeared to be legit for the same two reasons cited previously -- they refunded my money “based on my 14-year relationship with the bank.”

The clever crook or crooks must have been counting on one of two possibilities. First, that the victim would simply conclude that they’d forgotten to enter the withdrawal or, second, if they spotted the fraud (as I did) then the amount would be too small for local authorities to bother pursuing.

Here’s why I am “rethinking” the advice to use a local ATM to obtain your foreign currency.

If I hadn’t been a long-time customer and stubborn enough to kick it to the CEO, would the US$116 I lost have been more than what I saved in preferential exchange rates by using overseas ATMs? Or would I be better off getting the foreign currencies from my local bank before I left and accepting a somewhat less favorable exchange rate as the price of added security?

The answer will be different for each traveler, depending on how often one travels overseas and how much foreign currency they withdraw. But it's something to consider before your next overseas trip.

U.A.E. dirhams
Use your credit card

Another option is to rely exclusively on your credit card, though you should ensure it is one that does not levy foreign transaction fees.

When I spoke with a manager at my local bank branch, he confirmed the wisdom of that approach. Should an issue arise, the bank simply reverts the questioned charge to the merchant, who then bears the loss. In my case, the bank had to dip into its own coffers, so it was much more stringent about following the "rules".

Regardless of the missteps, withdrawing cash during our trip provided an excellent basis for comparison. The currencies we obtained from bank ATMs yielded effective rates of roughly $0.16 per DKK, and $1.16 per euro; a good deal compared to other currency exchange facilities but still not as good as simply using our credit cards.

Our last night overseas was at a lovely hotel in Copenhagen called the Absalon. Our room was DKK1,800, for which our credit card charged us US$269.58, or $0.15 per DKK. We received the same rate on many other purchases in Denmark.

There is one caveat when using your credit card: if you are offered a choice by the merchant - and more and more are doing so -- always choose the local currency and let your bank make the conversion.

Polish złoty

Finally, I recommend a specific approach to maximize safety and preserve your options (and sanity) should a card be lost or stolen: take two credit cards issued by two different banks, but only carry one at a time. Keep the other one in your in-room safe. Also, write down the international customer contact numbers for each ATM card and credit card, and keep that list separate from the cards. The list should look something like:
  • SeaFirst National Bank, ATM/debit card, 206-333-1234; MasterCard, 206-321-1234
  • Security Pacific National Bank, ATM/debit card, 213-455-5909; VISA, 213-459-3829.
Do NOT write down the card numbers. If something should happen, the bank will be able to find the card numbers after getting some personal information from you.

Safe and happy travels!

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Photos by Carl Dombek
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