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Posts tagged getting the best rate to change convert USD into yen

Exchanging USD $ for Yen

RyogaeOn our prior trip to Japan I discovered that you can save several percent on currency exchanges by purchasing International Postal Money Orders with US dollars and then changing them into yen in Japan. Before this trip/move to Japan I called my bank and credit card company to see what their new rules are for international transactions. The banks and credit companies have increased fees on nearly everything in the past year and international transactions are no exception. My credit card company told me they will charge $3 plus 3% for every transaction I make in Japan. My bank will charge me $5 per withdrawal, but they wouldn’t say how much they will take on the spread between the market exchange rate and their rate. I’ll find that out when I use my ATM here soon. In any event, options 7, 8, and 9 on the above link no longer look very attractive.

I was going to purchase thousands of dollars in International Postal Money Orders and convert them into yen at the Narita Airport. Then I found out that the post offices in the airport close at 4 p.m., and our plane doesn’t land until 4:30. On to Plan B. I need to convert money at a bank in the airport. After researching the current Narita airport rates I decided it would be much better (almost 2% better) to use traveler’s checks (also spelled traveller’s cheque, travellers cheque, and traveller’s check) instead of cash. I recently opened a “Complete Advantage” checking account to go along with my “Wells Fargo Money Market Savings” account. I’m not sure which account has it, or if it is a combination of the two, but having them allowed me to obtain traveler’s checks for free. So that is what I did.

You may be thinking, “boy, this is a lot of effort to save a few dollars,” but this is more than a few dollars. I asked the teller how much these traveler’s checks would cost me if I didn’t have my accounts. She said they would have cost $325. I purchased $15,000 worth since we are going to be in Japan for a year. With travel’s checks getting almost a 2% better exchange rate, that adds up to almost another $300. So doing a little research will save me at least $625. Had I just used a credit card everywhere in Japan the damage could have been far worse.

I’ll soon let you know some exact rate differences for your planning purposes.

The characters in the graphic to the above left are 両替 (りょうがえ or ryogae) which means “money exchange” or “changing of currencies”.

Beware of banks ripping you off on foreign currency wire transfers!

I had the unfortunate experience of wiring a large sum of money to Japan yesterday to pay for part of my children’s education for the next school year. The amount was large (about 3 million yen) so even minor fluctuations in the rate meant I would be paying, or saving, hundreds or thousands of dollars.

First of all, setting up a wire transfer through Wells Fargo (and I’m guessing the other major banks as well) is anything but quick and easy. The fees are large if it is a one-time wire so they encourage you to set up a repetitive wire transfer to make it a bit cheaper. To do so requires filling out pages of documents. I spent more than an hour with the banker. Then my wife had to go into the bank to sign papers too. I then had to send two faxes and fill out more paper work when things weren’t set up correctly. I also spent more than a half hour on the phone.

At long last things were ready to go. I called to make the transfer. The Wells Fargo agent processed everything and then said she was going to conference in a currency exchange agent. He got on the phone and quoted a rate of .0108. She finalized things and asked for my approval. I asked for a minute to run some numbers because things didn’t seem right.

The internet was quoting me a current rate of .01048. I ran some numbers and figured that the rate of .0108 was going to cost me about $1,000 more than .01048 so I told the agent that. She asked if we should try again. WTF? Try again? What does that mean in this context? I was trying to make a wire transfer of funds not roll dice in a casino.

I answered that if trying again could result in a better number then yes we should try again. She got the agent back on the line, told him I was unhappy with his quoted rate, and asked for a better exchange rate. He said, “How about .0106?” I couldn’t believe my ears. Was I dealing with a major bank or a loan shark? My hands were pretty tied as I had to get the money to Tokyo. I asked for .01048. He said no. I asked for .0105. He said he could only give me that rate if I was wiring more than 5M yen. So I was stuck with .0106.wells fargo scam rip off foreign currency exchange rate quote yen dollar wire transfer

Some important points to note:
1) If Wells Fargo, or likely any bank, tells you that wiring money to another country will cost you $15 or $30 or whatever their service fee is do not believe them. They will ream you on the rate so that they will make hundreds or thousands of dollars on the transaction.
2) Do not accept their initial rate! Had I accepted their initial rate I would have paid more than $600 than I ended up spending. I got taken by Wells Fargo, but it could have been worse.
3) Avoid wire transfers, or any conversions of dollars to yen, in the USA. The banks in the US will legally rip you off.

Foreign currency exchange can be a scam. The middle man is doing next to nothing for huge profits. The amount of the profits are determined by the desperation and degree of ignorance the person needing the other currency holds.

The stage coach is heading off with my money as fast as it can in the opposite direction from me.

Changing U.S. dollars into Japanese Yen

One of the more popular questions in Japanese travel forums on the internet relates to finding the best rates for changing U.S. dollars into Japanese Yen. That being the case, I did a comparison last year and posted my results here.

Subsequent to creating that web page, others have emailed me their experiences. In the future, people can compare stories by responding to this blog entry.

Here is one that I just received yesterday:

I found your study to be very thorough and just what I was looking for. Some new info as of June 2008:

Bank of America skims off 3%, so you get approx. 104 yen (exchange rate is 107) but no “additional” service fees if you change $1000+. Narita airport website now lists exchange rate. If you bring cash, it is 104 yen (I’m guessing there is a fee attached as well, but can’t confirm). If you bring Traveler’s Checks, the exchange is 106. So that seems to be the best option, if you can get your TC for free at your bank, then wait until you are in Japan to do the exchange.

(Lonely Planet (newest version) says you will pay fees at Japanese banks and airports to exchange, so I’m undecided at this point about what to do.)

There were no fees at Japanese post offices if you had international postal money orders in hand, and I don’t believe that has changed.

I’ve noticed in preparation for my trip to Europe next week that my credit card companies are charging more than they previously did. My MasterCard is taking 3% off the top for currencies other than U.S. dollars, and my American Express is taking 2%. Since my American Express gives 3% cash back on restaurants, and 2% back for travel-related purchases that won’t be bad. Hopefully people will take American Express, and I won’t be forced to use my MasterCard (which only gives 1% back).

Leave a reply if you have additional, first-hand experiences that can help people save money on currency exchanges.

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