How to Avoid Getting Ripped-Off on your Currency Exchange

Before I get started, please note that I am not affiliated with any of the products mentioned in this blog. I am just an individual who was fed up of getting bad exchange rates and decided to do some research and I would like to share my findings with you. You might be able to find some better deals, in such case I strongly encourage you to share them in the comments section so other readers can also benefit.

This article is aimed at individuals like me who are based and work in Japan and who are looking to convert their hard-earned JPY into a foreign currency and get a decent rate. The main reason why I started looking into this was to purchase some travel money for my upcoming trip to the US.  Another reason was to be able to build up some savings in EUR and GBP and convert at a good time.

My Requirements

My extended trip to America was approaching and I started doing some research to get good value in buying dollars. I am aware that the spread for USDJPY is narrow and that even when you get a sub average deal the commission is borderline negligible (especially when converting small amounts for travel money), however this time I wanted to find some providers that would allow me to get decent rates in future transactions.

When travelling, I decided that I wanted to have a portion of dollars in cash and have the flexibility of paying by credit card.  I wanted to:

–       Avoid getting rubbish rates when converting to cash or when getting charged on my credit card

–       Avoid getting additional credit card fees when paying via credit card

–       Have some flexibility in watching the FX rate and converting at a good time

Getting Cash

I initially started by looking at physical shops but I soon realised that online FX brokers were the most competitive ones in terms of the spreads offered. An interesting service that really appealed to me was the ability to buy dollars at online broker FX rates and to have the cash delivered to the airport. For example, as of 29th October 2019, the spread for USDJPY is 0.3 pips which is really good. Compared to that, the banks tend to stick to TTM and TTB + commission (FX rate published by Bank of Tokyo Mitsubishi) which will have a spread of 100 pips for USDJPY. I am not even wasting your time with airport exchanges which will blindly rip you off.

The company that I liked is called “Money Partners”. Being an online broker, their focus is on providing FX trading services and CFDs, but what stood out to me at on their website was their “airport cash delivery service”

I have been trading FX for a while and I was also drawn to the fact that you can set a delivery date and in the meantime also pocket the swap rate which is non negligible when you are long (is that correct, idk what i means?) USDJPY (usually it’s about 60 JPY/day per contract). I don’t want to digress too much though from the primary purpose of buying travel money at a cheap rate.

With Money Partners you pay a flat fee of 500 JPY and can collect your money at the airport with the conversion rate being pretty much what you would get on your online FX brokerage account. You just go to the Travelex counter and Money Partners will have sent them an envelope with your cash (you need to collect the money by the designated collection date). I tried picking up my dollars at Haneda airport and the overall experience was positive; as soon as I got to the counter and showed my Partners Receipt the employee just asked for some form of ID and handed me the envelope (please note that the money will be taken out from the/your online brokerage account).

Sorting out the Card Part

In addition to cash I also wanted some flexibility in being able to pay by credit card. After looking online, I found a few blogs which recommended Sony’s Money Kit card.

This is a prepaid debit card which allows you to hold non JPY denominated accounts (ex. EUR, USD, GBP).

Info regarding this product can be found here:

This is how it works:

I pay abroad, let’s say in New York and pay via this debit card. If my USD balance is positive then the transaction will come out directly from the USD denominated account at no additional fee. The fee part was very important for me as a lot of Japanese card companies allow you to use their cards abroad but then to charge you 1-2% in fees.

If instead I only had JPY in my account Sony would have deducted the charge from my JPY account charging me a flat fee and converting at the prevailing spot rate. If the current exchange rate is favourable to you and you want to lock into it I recommend holding a reserve of foreign currency so that you can access that when you go abroad. Another positive in holding non JPY is that (with the exception of EUR) the prevailing rates will be higher (although you are taking FX risk so please be careful).

Lastly, another thing/something that is worth noting is that the Sony Card also allows you to withdraw cash abroad from ATMs. However, I did notice that usually local ATMs tended to charge you $4.50 for that luxury.

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