Posted by: ramblinrobert | April 9, 2008

How did I pay for the trip? (A catchup posting)

No, I don’t mean where did I get the money to pay for the trip. I don’t like to borrow money, so all those pennies I’ve been saving for 50 years have added up and the trip will be paid for in cash. But, apparently, it’s not an uncommon approach to “travel now, pay later”; one of my co-workers wished me well on the trip, then commented that I would come back to some big bills. That’s not my way.

What I really mean is how did I get the money to Nadine, the trip leader? She created a challenge—and an educational opportunity—because she had an unusual requirement for paying for the tour: payment by foreign draft in UK pounds. No checks or credit cards accepted, just a foreign draft (i.e., a check written in a different currency). I think she does this simply for her convenience. She pays her tour vendors from an account she maintains in the UK, so it’s easy for her to be paid in pounds, because all she has to do is mail the drafts for deposit to her bank in the UK. This way she has no hassles with processing credit cards or converting currencies and has the benefit of protecting herself from exchange rate risk. This makes sense for someone who isn’t a large tour operator, but someone who runs just this one specialty tour a year.

But, what’s easy for her is not easy for travelers, at least not this newbie traveler to Europe. So, I got another learning adventure out of this. I do my banking through a credit union and am very happy with their online checking, saving, and credit card services, which are as good as any bank. However, they don’t provide foreign drafts. I have one banking relationship with a major bank, a local branch where I keep a safe deposit box. I went there and asked if they did foreign drafts and was pleased when they said yes. However, I was immediately disappointed when they asked for my checking account number and explained that they only provided foreign drafts for their checking account customers.

Not to be stopped by this, I decided to take the easy way out and asked a friend to get a draft at her bank and I would repay her. A couple phone calls from the branch while she tried to do this made it clear this was no easy task, so I gave up on this approach.

I then posted a question on my neighborhood email list, a very active list with lots of people who know lots about lots of things. Not surprisingly, several people responded with suggestions. (Gawd, I love the Internet.) One suggestion was to find a Thomas Cooke office. I found such an office in Berkeley (to my surprise, I couldn’t find one in San Francisco). I called, and the woman explained that, yes, they did foreign drafts. All I had to do was come down to their office and that for a $15 fee, they could issue one right away. Out of curiosity, I asked what the exchange rate was. She said it was $2.29 per pound.

Again, out of curiosity, I looked up exchange rates online. I found that banks were generally running about $2.20 per pound. An online foreign exchange service recommended by someone from the neighborhood email list was running about $2.09 per pound, with no extra fees.

All told, I figured that with differences in exchange rates and fees, I could save about $400 on trip costs by ordering through the online exchange service. However, this would take time to set up the account and make the transfer. (BTW, the foreign exchange service I used is XE Trade. I recommend them.) Setting up the account took a few weeks. The application process is complicated, mostly because they need to confirm your identify, for their purposes and to satisfy the Federal government, which is concerned about money laundering. But, once the account was set up, it was an easy online process to point and click my way through their menus and the account information I had set up to make the transfer. Although it took a while, I’m happy I went this route. Not only did I learn something, but I saved considerably on fees and exchange rates. Plus, I’m ready for my next trip where I need to send a foreign draft to someone.

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Responses

  1. Good Blog. I will continue reading it in the future. Nice layout too.

    Aaron Wakling


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