Thursday, 15 March 2012

ITTP TEFL Prague: Essential tips for changing up money in Prague

It's an all too common scenario:
Person goes to exchange office to change up their local currency into local Czech Crowns (Koruna). 5 minutes later same person is shouting at the exchange office employee behind the reinforced glass using words such as THIEF! and POLICE!
Changing money in Prague is a minefield. It truly is. I'm not exaggerating.
If you are planning on changing money up in Prague then this ITTP TEFL Prague blog post will save you money. There are many ways to change up money in Prague:

1. Changing money on the street.
In this scenario a usually well-dressed and friendly 'local' approaches you - usually when you are hovering outside an exchange office - and politely asks if you want to change money and offers an excellent rate.
NEVER EVER agree to this.
Yes, I'm sure the rate sounds wonderful but you will most likely do the transaction - there may be a Czech note on the top of the pile but the majority of notes underneath will be Bulgarian or Ukrainian low denominations - and the end of the transaction will signal when the 'local' tells you the police are near (exchanging on the street is suddenly highly illegal) and he then rushes off before you have had time to realize that you just lost a load of money.

2. Changing money at a bank.
If you don't know where to change money then this is definitely a safe option and all banks run pretty much the same daily exchange rates. All banks though will also charge a commission and the size of the commission varies between banks. At CSOB for example they charge a standard 2% per transaction fee regardless of whether you are a client of the bank or not.

3. Changing money at an exchange office.
There are many many exchange offices in the center of Prague offering 0% commission and seemingly attractive exchange rates. The 0% commission is correct. The attractive exchange rates in the vast majority of cases apply only if you are selling Czech Crowns and not if you are buying (i.e. if you have USD and want to exchange to CZK). Their buy rates are often at first glance reasonable but if you look further you will see that those rates only apply of you are changing up huge amounts - if you are changing up an amount which most normal people would want to change up then the rate will be in most cases MUCH lower than the official rate for the day. The official exchange rate changes daily and is published by the Czech National Bank:
(Kurzy devizoveho trhu)
In Prague there are only a few exchange offices which offer excellent buy and sell rates and with 0% commission and finding them is like that needle in the haystack analogy.

4. Withdrawing local Czech currency from an ATM machine.
This is definitely a recommended method if you don't want to be lugging large amounts of cash around with you, or if your bank offers low or zero bank charges for foreign ATM withdrawals. If your bank does charge then you will need to make sure that you take out large amounts each time to make it worth the ATM bank fees. Please note though that many banks have daily or weekly cash withdrawal limits and also that not all ATMs are born equal. My advice is to use one of the ATMs of a Czech bank so you avoid excessive fees which some of the foreign banks charge (because they assume that you will automatically consider them as safe places). Remember to cover your hand when typing in your digits and be wary of anyone suspicious hanging around - credit or debit card fraud and theft happens everywhere so this rule applies generally too.

5. The other option is to change money up at home.
This is only ever recommended if the rate is comparable with the local Czech official exchange rate.

Please note that Travelers Checks are not common in the Czech Republic and although you may find a few places in Prague which change them up, the exchange rate will be awful and the fees high. Therefore it isn't recommended to bring travelers checks to Prague.

On Monday I checked what I could get for US$100 and this was the result:

At our company bank (CSOB) the exchange rate for buying CZK with USD was 18.63 plus the 2% commission charge, meaning that for US$100 I would receive 1,826 CZK.

At one of the many exchange offices on the main Wenceslas Square the exchange rate (after working out the misleading exchange boards) for buying CZK with USD (under their 'limit' - although the employee couldn't actually state the limit) was 13.02 and with 0% commission, meaning that for US$100 I would receive 1,302 CZK.

At the exchange office which we always use for currency transactions (photograph below) the exchange rate for buying CZK with USD was 18.60 and with 0% commission charge, meaning that for US$100 I would receive 1,860 CZK.

Recommended exchange office located at Namesti Franze Kafky 2, Prague 1

Hope it helps!

Hezky den!/Lovely day!

Neville :-)