“Is this yours?” a nice looking man in a suit asked me. He thrust 300 pounds of British currency in my direction.
Indeed, the money was mine, but I was embarrassed. The London ATM machine across the street had rejected my request for this amount, spit out my card and I thought that was the end of the transaction or lack thereof. Unbeknownst to me, after I left, the machine did produce the money (even though it said it couldn’t). The noble gentleman, next in line took it, ran after me and gave it to its rightful owner. The man was honest even though the bank machine wasn’t.
When I described this to a friend who works for a large NYC bank, he said, “This is one reason I only use my credit card when I travel.”
My bubble was burst. I was following the guidance of Rick Steve, a travel expert, who suggests that accessing an ATM debit card to get cash is preferable over several other possibilities. Was it just the sticky bank machine that was the problem or was the banker right? Maybe the ATM card was not working in my best interests compared to credit cards.
On April 4, 2012, I had a chance to find out the differences in Positano, Italy. I used my ATM debit card plus two different credit cards the same day. This gave me the opportunity to compare the ATM debit charges versus the credit cards using the exchange rate of the day for all.
To my surprise, the ATM debit card cost me the most; not only was the exchange rate poorer, but there was a fee for using it as well. On the other hand, my Capital One credit card gave me the exchange rate of the day (not a higher rate as the debit card) and there was no added charge. The platinum American Express credit card did the same.
This flies against logic because the debit card is taking money directly from my account. Fees should be minimal. The credit card, on the other hand, is giving me a cash advance so one would expect a higher charge. This was not so with my two credit cards. My costs were higher for my Chase ATM debit card (Visa).
The advantage of Capital One and the Platinum American Express isn’t true for other credit cards, however, according to Bankrate.com. Every other credit card listed on the website had higher expenses for currency exchange than either of the cards I used.
Platinum American Express charges a fee of $450 every year to the cardholder. This means that the Capital One card without this barrier would be more appealing to most.
So, in summary, at least during my recent trip abroad, my Capital One and Platinum American Express cards were my best bet. The debit card — not so much. But, it was a good way of getting some embarrassing attention.
Dr. Shirley Mueller is a physician turned financial consultant and investment educator. Her fee is hourly, not a percentage of assets. She welcomes comments at ShirleyMMueller@MyMoneyMD.com. For more information, visit her website at MyMoneyMD.com.
Shirley Mueller, MD is a physician turned financial consultant and investment educator who specializes in guiding clients, both one-on-one and in groups, about how to effectively self-invest using a simple and effective three-step approach