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International Financial Tips
Recently, USA today had a great article for those 250,000 Americans planning on attending the Olympics who plan on shopping. It outlines several financial considerations for those shopping in London. Certainly those attending NATSO's International Study Tour will want to keep the financial tips provided in mind as well.
"• The exchange rate - The British pound equals about $1.57. That's better than several years ago, but still adds about 50% to the cost of what you buy. Some brands, including Burberry, which sell around the world, adjust their prices so they're about the same no matter what currency you're shopping in. If you come across a must-have you'd never be able to find back home, the exchange rate is probably not a deal breaker. Load a currency app, such as the one for international currency site XE.com onto your phone so you can instantly convert your London purchase into U.S. dollars.
• Credit cards - Credit card companies often charge a foreign-transaction fee that can total 3% or more of a purchase, although many are starting to drop these fees, especially upscale travel and rewards cards. Check before you go to see if your credit card company charges one, and consider getting a card that doesn't if you're planning to spend a lot. Steven Dengler, CEO of XE.com, recommends swiping your card in pounds, as the rate your credit card company will charge to convert your purchase to dollars is going to be better than the one the store will charge to convert it to pounds.
• Currency exchange - Several USA TODAY Road Warriors (a group of some of the world's most frequent travelers) who travel often to London say it pays to wait to exchange money in the city rather than at the airport. Exchange only as much money as you think you'll need for taxis and other small purchases, Dengler says. The exchange rate for cash is always a bit higher than it is for credit card transactions. If you have more pounds than you need, you may wind up paying currency exchange fees at both ends of your trip or overspending to get rid of it.
• Value-added tax - This VAT totals nearly 17% of all purchases in the United Kingdom. Those leaving the U.K. can apply to have the VAT refunded at the airport if purchases were made at stores that participate in "tax-free shopping." It's not easy, however. The lines can be long, and the process involves a lot of paperwork. You need to keep all your receipts to prove you paid the tax, but some stores won't provide them, frequent travelers say.
• U.S. Customs duty - On your way home, your first $800 worth of purchases will be exempt from duty, but you'll need to fill out a form detailing what you bought and how much each item cost. Have receipts ready in case you're asked to show them. If you spend more than $800, the next $1,000 will be charged a flat 3% duty. After that, duties will be assessed based on what you bought — right down to the type of fabric or precious metal. Don't try to cheat; Customs officers do random inspections based on the answers travelers give to questions, where they're coming from and "past history of compliance," says John Wagner, executive director of admissibility and passenger programs at U.S. Customs and Border Protection."
/// Registration is still available for the tour. To take advantage of the NATSO member discounted rate of GBP 1680 plus VAT tax (estimated $3,158), download and submit the registration form. Or contact me at firstname.lastname@example.org or (703) 739-8562.
/// Photo by Lisa Mullings