Hi folks,
I've noticed that the dollar has strengthened significantly against Pounds Sterling and I would like to "lock in" that rate by exchanging the dollars we have saved to this point for Pounds. Is there a way to do this so that I won't be carrying a lot of cash on me when we arrive in England? Right now we have US$1,000 saved, which at current rates is L650. We'd like to use a cash card for purchases in England if possible.
Any advice would be appreciated!
Thanks
Andy
Alton IL
Are you asking can you get a bank account in pounds? If your bank doesn't allow it, you would have to find a British bank that allows overseas accounts... and I doubt many will do so for only $1,000. You could possibly look into getting a money order in pounds sterling, but you'll have to eventually cash it. If you really want to lock into the current rate (which is always a gamble), probably the easiest way to do is order pounds from your bank, but you'll pay a steep mark-up.
A short answer is No.
But if you want to "lock in" the value of the dollar against the pound today and still get interest, you can do so by buying FXB, which are currency shares that pay monthly dividends at the current rate less than 2% (has been yielding up to 5.55% according to yahoo.finance). If you have an account with a discount broker, you can buy $1,000 worth for as little as $9. Hold the shares until you are ready to leave for GB and compare with the then current exchange rate. If the GBP is back up to say 1.75 you can sell and pocket the difference as "gain" partially offsetting the increased costs for your trip. However it's not a zero sum game, as you will have to pay taxes on the distributions (interest) and on any capital gains.
No. You shouldn't. No matter when you go, you are gambling with whether the dollar will be up or the pound will be up. You could exchange them and put them in a shoe box under your bed only to find out when you go that the exchange rate is $1.00=$1.20 GBP. You never know which direction that will go.
In the end, the amount you are saving is (in terms of your entire life) rather minuscule. In my opinion, if that amount of money is a "make you/break you" kind of situation, you probably shouldn't be spending money on an overseas trip.
I know you are just trying to get the best deal, but there does come a time when you spend too much time worrying about the details and not enough on enjoying the trip.
Just my opinion.
Your trip is kind of far away to consider this, but I was thinking of doing this for a trip this summer. You can get a "Travelex Cash Passport" that is a prepaid foreign currency card. I'm not sure about expiration dates or anything but it is one option I might do. You can read the news reports for long-range currency predictions, which should be taken with a grain of salt, since it is basically like stock market investing...you don't know if you'll win your prediction, but with education you might be able to make an educated guess. Maybe you can get a few cards...just get a small chunk of what you need at today's rate, get another later?
Don't be foolish, you don't know what will happen next year? We have a new President coming into office and who knows what will happen? It would be a shame to lock in now and then next year it's lower!!! Wait!!
You are attempting to engage in currency speculation and you will lose. The deck is stacked against you. First, if tie up a 1000 US you lose the interest on that money -- maybe 30 or 40 dollars. Second, if you buy pounds on this side you buy at retail and will pay a premium ranging from 5 to 10 %. So your initial 1000 may have shrunk by a 100 plus dollars. So just to break even in one year you would have to have dollar decline of at least 10 to 15%. That would be a significant swing. Lot of risk
You mentioned using a cash card. (I am assuming you do not mean a debit/ATM card) Be very, very, careful with cash cards. Historically cash cards have had a lot of undisclosed fees associated with the card. Be sure you understand the fee structure AND the exchange rate used. Cash cards bury their fees in the exchange rate.
It has been repeated many, many times on this site and others, that a debit card tied to a checking account is the most economical AND CONVENIENT way to obtain foreign currency when traveling.
Thanks to all for their replies. I think I'll just hold on to my money in savings and not do any currency trading!
It's all good - I'm hedging my bets and going to London now - have you seen the specials :) - 2010 is too far in the future to make the guess - keep your money in the bank.
I would ! I think very good gamble Understand I lost 500,000 in stock market in 5 monthes so what the he-- do I know but the pound has nver been cheaper then aqbout 105 or higher then 205 and 150 seemed to be a balnce point over 40 years so I guess time to buy some L
Hi Andy, last summer I spent $1000 at B of A prior to our July trip to the UK and received 512 British Pounds. Last Friday I spent $1000 at B of A prior to our July '09 trip to the UK and received 695 British pounds. You do the math!
Sure, your trip is in '10 and the pound may fall further. But remember, greed is a two edged sword.
Have a terrific trip!
Hopefully they won't switch to the Euro before then.
Last Friday had I gone into Thomas Cook I could have bought 500GBP for $762.56. I was also told me they charge no fee for purchases of over 450GBP. Today AAA will order 500pounds for me at today's rate of $1.4791 but charge a fee of $12.00 and will not buy them back. Nice advert for Thomas Cook.
I went to our local bank this past Sat and purchased 1000 GBP for $1471. Other local banks here in OH do the same. It was a bit cheaper than AAA ($1485).
Currency spec is risky, but looking at recent history, GBP may go down some more (maybe 10-15%), but I think there is a chance it could go back up 25% or more from here.
Anyway, I purchased some now and will keep my eye on exchange and decide whether to do again prior to a Summer 09 trip.
Good luck!
Today Thos. Cook wants $803.96 for £500.00
