Traveler's Checks Passé
I was recently amazed to read a newspaper story which advocated the use of travelers checks in foreign countries rather than obtaining cash from Automatic Teller Machines (ATMs).
While I concede the safety of travelers checks, using ATMs is cheaper, easier and just as safe. My bank (Wells Fargo) charges $2 for each use of my ATM card in Europe. There are no other fees and, since the money is immediately deducted from my account, no interest is charged. In addition I get a much better exchange rate than with travelers checks even foreign-denominated ones.
Recently, for example, I priced travelers checks at my bank. Those denominated in US dollars could be issued at no charge, but there was a 1.5% fee to have checks issued in a foreign currency. In addition, the exchange rate offered at purchase was not as good as I would get using my ATM card. That day my bank was offering 1.97 DM to the dollar on Deutsche Mark-denominated travelers checks. A phone call to the banks foreign exchange department revealed the exchange rate for electronic transactions that day would be slightly better than 2 Deutsche Mark for each dollar. Assuming a need of $2,000 cash I would get about 60 Deutsche Mark ($30) more by using my ATM card. Add to that the 1.5% charge for issuing the checks and the difference becomes $60. (Granted, many American Express card holders qualify for free foreign denominated travelers checks, but be sure to compare the exchange rate to that of your bank).
Of course, if you take dollar-denominated travelers checks to any foreign country you'll be subject to local banks over-the-counter exchange rates, which are much less favorable than from those same banks ATMs. And we can only offer a prayer for the poor soul who has to exchange US currency cash or travelers checks at a hotel.
As to the convenience issue I'll relate a brief story. After dinner one evening in a Swiss restaurant which I had foolishly assumed would accept one of my credit cards, I was presented with a bill that required more cash than I had. However, just a few steps away from the restaurant was a bank with an ATM. My difficulty was resolved in about two minutes. Since this was a business dinner, and I was paying, that ATM saved considerable embarrassment.
Years ago, when I carried foreign-denominated travelers checks, I would occasionally run across an off-the-beaten-track hotel or restaurant that refused to accept them for payment. And banks, of course, have limited hours of operation and aren't open at all on Saturdays, Sundays or on the many European holidays. (For example, in most European countries you'll not be able to cash a travelers check at a bank from the Thursday before Easter until the following Tuesday.) Finally, you cannot purchase travelers checks in the currency of most countries, including Austria, the Czech Republic, Holland, Belgium, Portugal, Spain and many, many others. If you want to rely on travelers checks in those countries they'll have to be in dollars and not only will you pay a fee to exchange them for foreign currency, you'll get a much less favorable rate than with an ATM card.
For travel within the US travelers checks may still have a place but if you're headed for Europe, they are no longer very practical.
Readers are advised to charge everything possible to a credit card and use ATMs for "walking around" cash.
Auto Rental Rates Increase
If you've gotten a quote on a rental car in Germany recently you're aware that the days of dirt cheap rentals in that country appear to be over. Late last year, a midsize Opel Vectra could be booked for about $128 per week including the 12% airport surcharge and the 16% value added tax. That same car is now $174 (Budget Auto Rental, booked through Gemütlichkeitat 800-521-6722) with more price increases on the way.
What's going on you ask, the dollar is stronger against the mark than it has been in years? The main reason prices have risen is that new cars are becoming a hot item in Germany. So how does that affect the price of rental cars? In two ways:
• When cars in rental fleets reach a certain mileage they are sold on the used car market. Most companies make as much or more selling cars as they do renting them. Unfortunately, as sales of new cars in Germany have increased, the used car market has correspondingly weakened. Thus, in order to keep the same profit level, the companies have raised their rental prices.
• With a stronger retail demand for their products, auto manufacturers such as Volkswagen, Opel, Mercedes and BMW are less willing to offer attractive deals to rental car companies. And when Hertz, Avis and Budget have to pay more for their cars, guess what happens to the price you pay as a renter?
Not only have prices been affected, the variety of makes and models available to rental car companies and thus to you, the end user has been reduced. If BMW, for example, can sell all or most of its three-series cars to dealers, there are too few left for the rental companies.
In addition to the base rental prices, there are more and higher ancillary charges associated with renting a car in Germany. Two years ago the charge to pickup a car at a German airport or rail station was a flat 17 DM ($9). Today it's 12% of the rental (usually a maximum charge of 100 DM/$50).
A brand new charge this year is a 2 DM ($1) per day "road tax." Put this one in the it-had-to-happen-sooner-or-later category. Both France and the United Kingdom introduced similar charges two years ago. Look for it next at a country near you.
Charges for additional drivers are also on the march. It used to be a spouse drove free. Now some companies charge as much as $6.50 per day to add a second driver to the rental contract.
In some instances these extras are merely the rental companies finding ways of increasing their revenue. Some charges may be justified, however. For example, all rental companies at the Munich airport are required to have their cars washed at the same airport-operated service center. For each wash job, the company is hit with a hefty 60 DM ($30).
Despite all this, Germany is still the best place to rent a car. To hire a midsize car there for one week is about $155 with tax. In France it's $217; Belgium $174; Holland $199; Switzerland $212; and Italy $526.
However, more increases are on the way. Book ASAP. The Germany car rental honeymoon is over.