Lower Exchange Rate for Foreign Coins

Question: We bank with Security Pacific and with a recent statement there was an advertisement for “Jet Pack,” an offer through which one could get $50 worth of any foreign currency. It said you could change any leftover currency when you returned.

Because we were going to England on vacation, we bought one Jet Pack. On our return, we had 14 in currency left over--one 10 note and four one-pound coins. I went back to the bank to exchange them. At the time the currency rate was $1.61 to the pound. I was given a $1.48 exchange rate for the 10 note ($14.80), but then came the shocker. We were given 75 cents for each of the pound coins--$3 for four pounds. When I asked, the teller didn’t know why there was such a low rate for coins. I would appreciate any light you can shed on this seemingly excessive difference between coins and paper money.--R.B.

Answer: I was pea-green with envy at your ability to “do” England on $32.20 until I realized that having $17.80 left in British currency on your return didn’t really translate that way.

Coins have a nice, comforting jingle to them and they’re indispensable for vending machines, but other than that--on international money markets--they’re a pain in the neck. Vacationers taking off for foreign shores don’t want them because of their bulk and the fact that, at least in the interim, they’re going to get all mixed up with American coins.

However, it is a good idea to have some “walking around” foreign currency before you take off--for cab fare, tips and minor purchases immediately upon arrival. British cabdrivers accept $50 traveler’s checks with the same enthusiasm that Los Angeles cabbies do.

But on your return from England, a Security Pacific spokesperson said, the local bank is almost as nonplussed as you are about what to do with the coins. Some banks, in fact, just flatly don’t accept them.

“The normal exchange rates simply don’t apply to coins,” she said, “because about the only way we can get rid of them is to sell them to a dealer by weight.”

The solution: Pick up a few last-minute gifts at the airport before flying back or have a couple of stiff drinks at the terminal--using up all of your foreign coins.

Q: It seems to me that American Cablevision, which services South Pasadena and San Marino, has reneged on a deal after luring a lot of subscribers. It advertised a substantial discount--pay for 11 months all at once and you’d get the 12th month free--but as soon as a lot of us had done this, it then announced a monthly rate increase, which, in effect, wiped out the discount. When you buy a three-year magazine subscription at a flat dollar amount, you get the magazine for three years even if the rates are raised two or three times. Is this cricket for a cable TV company?--L.D.

A: It depends on your definition of cricket . According to American Cablevision’s general manager, Antonio Dominguez, the deal offered to you is still in place despite of the rate increase.

Shortly after the offer was made, he said, the cable company added three new basic channels (or expansions of ones already being offered). The Arts and Entertainment channel, for instance, had been available only after 6 p.m. and this was expanded to all-day service. Nickelodeon, which had been available only in the morning, was expanded to 24-hour coverage and the Learning Channel, an educational programming package, was added. The basic monthly service rate went up from $11.95 to $12.95.

Despite of the increase, which apparently did, indeed, go into effect shortly after you sent your check in for 12-months-for-the-price-of-11, you are still going to get 12 months at the old rate of $11.95. On that 12th “free” month, Dominguez said, you will get an $11.95 credit (the old rate at the time of the agreement) and you will owe $1.

Your interpretation, which was logical enough, certainly, was that you would get the prepaid 11 months’ service, all right, but then, on the 12th month, you would get slapped with a bill at the new rate, $12.95, which, sure enough, would indeed wipe out the “free” month in the prepayment agreement. Not taken into account is the credit you’re getting for the 12th free month--$11.95.

The analogy between this and a three-year magazine subscription, Dominguez feels, is a little shaky. “Magazines operate on a yearly subscription basis. Cable TV, essentially, is month-to-month. I don’t really see how you can compare them.”

Q: The California State Lottery advertises that it returns to ticket buyers, in prizes, 50% of the revenues from gross sales in the lottery. This is false. Paying big jackpot prizes in 20 annuities is nothing less than a smart gimmick to legalize rip-offs.

To pay any big prize by annuities, it costs (the lottery) only a small percentage of the legally due prize money. Why do we allow the lottery to advertise 50% in return to the public when the amount hardly reaches 25%? What will happen to the other several hundreds of million of dollars annually that rightfully belongs to the public? --M.A.

A: Well, that’s an interesting theory but, according to Bob Taylor, the lottery’s communications manager, that’s not the way it works.

“When we say we’re paying out 50% of the revenues in prizes, that’s exactly what we’re doing,” Taylor said, and the “how” of the pay-out over 20 years has nothing to do with it.

For one thing, the annuitization of the pay-out is not “only a small percentage of the legally due prize money.” The winners are paid off through the purchase of zero-coupon Treasury bonds (19 of them with 19 maturity dates--the first year’s being in cash), and for every $2-million annuity bought in such bonds it costs the lottery $1 million.

“As a matter of fact,” Taylor adds, “if the big Lotto actual pay-outs were paid in cash, we would only be able to offer about half the amounts now offered.”

But, as Taylor emphasizes, the accounting mechanism is immaterial anyway--for every $1 in ticket sales, 50 cents is paid in prizes.

Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.