Currency Conversion from USD to Cayman Dollars

Question

So its pretty easy for the wifey and I to get away to the Caymans and try to do so once per year. However, we are kind of getting killed with currency conversion.

If you use a credit card, you are typically charged in USD. The store gives you a good rate, but not perfect, then the back converts it back to Cayman dollars (CD) and then the credit card converts it back to USD. This three way conversion is about the most efficient, but each transaction takes a bit.

So I tried ordering CD from my bank (Chase), the conversion rate was outrageous, they were taking a 5% fee. Other banks in the area had a similar policy.

So how do I get from USD to CD at a good rate?

I don't mind coming home with money as I will likely spend it on a future trip.

Answer 1

1. Get a credit card that as no international transaction fees (some do, some don't)
2. Insist on being charged in local currency. Do NOT let them charge in US$. Don't fall for a scam called "dynamic currency conversion" (see below).
3. Get an ATM card that has minimal fees for currency conversion (I use Wise).

the conversion rate was outrageous, they were taking a 5% fee

For cash exchange that's actually quite reasonable. You'd be hard pressed to find anything better than this.

Regarding bullet 2) (dynamic currency conversion): That's a fairly recent scam invented by the banks: They offer to charge your cards in your home currency, but they take a hefty "convenience fee" for it. It adds absolutely no value to the customer. The charge will be converted either way. It's just another way banks like to take advantage of their customers and line their pockets. See for example https://www.cnn.com/travel/foreign-travel-pay-local-or-home-currency/index.html

Answer 2

I live in Mexico but because most of our banking is in New Zealand we use our NZD credit cards a lot. This is what we've found has worked best for us (other than using our Mexican bank accounts).

1. Always pay in local currency. Let your bank handle currency conversion.
2. Use a bank that has no international fees (ours has a currency conversion fee but no other transactions fees)
3. Don't accept the vendor offering a USD rate - they just figure out an amount that benefits them, but sounds reasonable to you, and they then convert that to the local currency and charge you in that, and then your bank is converting it back again. It's better to just let the bank do it the first time (see point #1)
4. Don't accept the conversion offered by the CC payment terminal - this helps people that have large international fees or possibly those that aren't allowed foreign transactions, but that rate is awful. Your bank rate will still be better.
5. If you need cash, withdraw the cash from an ATM when you get there rather than trying to obtain it before you go.
6. Use Wise or another similar transfer service and their debit card. They'll usually give you a much better rate than you'll get anywhere else (we transfer cash from NZ to Mexico through Wise - it's way cheaper than withdrawing from an ATM or using our own bank to do the foreign transfer).

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@gerrit commented: "What's the difference between (1) and (4)?"

#1 is where the vendor says "do you want to pay in US dollars or Pesos?" - many here in border-zone Mexico just assume dollars and will give a price in dollars, and so we ask them for the price in pesos. A lot of the time they've done a conversion (favourable to them) and if charging to card will charge in pesos (or whichever currency) anyway, since that's what their terminal expects. This has the potential to lead to the 3x conversion that the OP was talking about.

#4 is something that many vendors don't understand, where the CC terminal recognises that the card is a different currency and offers to do a conversion at the terminal. It's something offered by the payment processor rather than the vendor, and is not a favourable rate, so it's better to have them select "NO" to the conversion (or whatever it asks) and have the transaction process in the local currency.

Answer 3

Just in addition to the other excellent answers: since you mentioned you go there quite often, you may want to consider opening a bank account there, ideally with no fees; then use one of the many international transfer services out there to add money to your account there with super low fees and great conversion rates - I use CurrencyFair, but there are others too.

Then you just pay everything there from your local bank account - no fee.

Answer 4

Consider a wise.com card (formerly known as "transferwise") which gives you a physical chip-based debit card.

You can pay your local currency into it, and set automatic exchanges to happen to Cayman Islands dollars (KYD) when the exchange rate exceeds a limit you set.

When on holiday, you can "spend local money" for simplicity.

Only downside - wise does not pay interest on balances.