Too much math: Figuring out the currency exchange dilemna

Traveling out of the United States usually involves some knowledge of currency exchange and math.  According to the exchange site xe.com.  "Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events."

In most cases the best exchange rate for foreign travel comes from ATM's.  However, because I've gotten freaked out by the security warnings I've read about Brazil including tourists being targeted for robberies after visiting an ATM, I decided that I should maybe get some money exchanged before I arrive.  Especially since I'll be traveling by myself, I want to reduce the risks (and calm my nerves a little more) so I started checking out my options.  What I quickly discovered was that there was a lot more math involved than I first anticipated and the decision might not be easy.

First I started with my own bank.  Even though the first representative told me that I couldn't get money exchanged there, another request on another visit yielded a different answer.  Apparently they must not get asked this very often, as this representative had trouble finding the information online and wasn't really sure about the fees.  But eventually, I was told that there was a $60 dollar fee (which later was reduced to $40) for any order, no matter how much money I was exchanging.   They obviously didn't do this often as the teller had trouble finding the information on their intranet. Later when I went back for the third time to double check on whether or not the exchange rate would be at the market value or the business value, she had trouble finding it again.  This question resulted in a phone call to their main office where she was told that the bank was in the process of redoing their system and that now all transactions should just be done online by the customer through a third party site: www.ezforex.com  Here's how that broke down...
I was trying to figure out what I'd get for $200.  The exchange rate was less than market value.  Plus I'd have to pay shipping fees.  So for $216.19 (on 6-18-2012) I'd get 365 Brazilian Reals.  If I type in 365 Brazilian Reals into today's market exchange converter at http://www.xe.com/ucc/ that translates as $177.05 (a difference in US Dollars of $39.14).


Then I checked with AAA.  For orders under $1000 they charge $15 and need a 2-day shipping. AAA link to currency exchange and fees.  I have to call back to see what type of exchange rates they offer.  Their office runs on bankers hours, so they were not available on Sunday.

There is a Travelex currency exchange at the MSP airport.  Here's where it get's tricky with the math.

For order under $350 there is a $9.95 service fee for exchanging money.  You also are buying the currency at a lower rate.  When I called on Sunday, June 17, I was quoted the rate of 1.76 Brazilian Real. The market rate however for the same date was  2.05159.  You could exchange any left over money upon return at the business rate (lower than market) and the $9.95 fee.

If I exchanged $350 than I would pay the fee for the initial exchange, but would not have to pay it on the way back.  And I could get the market value upon the return for what was left.

If I did $500 then there was no service fee either direction and I would get market value for what was left on the return.  But would still have the lower rate on the way.    Here's how that breaks down.

$100 at Travelex would get me 176 BRL (Brazilian Reals) The market value should get me approximately 205.16 BRL.  So I'm losing about 29.16, which converted back at market value is approximately $14.21 USD (US Dollar).  Tag on the $10 fee and that means that I'm losing almost 25% of my original amount.  So obviously it doesn't really pay to do this option.  (This is assuming I use up all the converted money so I don't have to do the conversion on the way home.)

If I do $350 that means I lose $49.74 in the conversion and still have the $9.95 fee so that would make it $59.74.  The $500 would be $71.05.

A side note is that Travelex recommends ordering a week ahead of time so they can make sure they have enough on hand, otherwise, their currency is on a first come first serve basis.

There are several sites online that deal with money recommendations.  I agree that using the ATM in those foreign countries probably makes the most sense.  However, if you're looking at getting some before you go to just have on hand to get started--be prepared to do the math and know you will have to pay a hefty fee for that convenience.  Here's another website with further recommendations on money your money in Brazil: http://www.rioholiday.com/Money-Management-Trip-Rio-Brazil.htm

Tips for using ATMS internationally: http://www.ihatetaxis.com/advice/foreign-atm-machines/