Friday, May 30, 2008

Avoid fluctuating exchange rates

A new card product can lock in exchange rates, taking away some risk in a falling dollar environment.

Launched earlier this month by Travelex, a London-based foreign exchange company, the Cash Passport allows prospective travelers to lock in exchange rates for euros or pounds before crossing the Atlantic. The prepaid foreign currency card functions like a debit or credit card and works at ATMs and retailers all over the world. (The card itself is issued by MasterCard).
In addition to locking in an exchange rate, use of the card incurs no currency conversion fees. The card costs $9.95, and there are fees for making an ATM withdrawal with the card. There's also the risk that the dollar will rise (U.S. travelers keep wishing for this), which will make the foreign currency account to which the card is tied less valuable.