We’re all in the same traveling school of hard knocks, and it’s OK to compare notes. I have to admit, I’ve never done the math to see how much I lose in fees and conversion rates with my debit card at ATM machines in Europe. While I’m pretty sure it’s a lot less than the old traveler’s checks, I bet it’s a pretty substantial expense. It’s important to remember that no one changes money because they’re nice. It’s done to make money (either in fees or exchange rates). Tips like taking big withdrawals rather than many small ones to minimize your transaction fees are pretty common sense. There are ways to get better rates and lower fees depending on which card you use and which bank you visit. My gut feeling is that I’ll get a better rate at an actual bank than using an ATM at a convenience store or gas station. Many travelers fall victim to an aggressive scam where the shop or restaurant offers to convert your bill “for your convenience” into dollars. Because of my cynicism for anything in the financial world, I’m pretty confident that this is just a costly little scam to give the unknowing traveler a lousy rate.
What are your insights and tips so we can minimize our money exchange expenses?
Just returned from Europe. My credit union doesn’t charge a fee for ATM withdrawals. Both my credit and debit cards were issued by my credit union and charge very low transaction fees for purchases. I checked my account when I got home and the exchange rate was in line with what I found before I left home when I Google’d usd to euro exchange rate m if you can’t tell, I love my credit union!
When I travel, I usually use the credit card that allows charges with no foreign fee transactions .
Many banks have reciprocity agreements with other banks, so using their ATMs is free. Bank of America has deals with Deutsche Bank and BNP Paribas among others.
Several things I’ve learned:
– Find a credit card with minimal or no transaction fees. Some cards that charge an annual fee might be a better deal if you travel alot. There are several to choose from.
– When purchasing using a credit card, ask to pay in the local currency if they don’t ask. It reduces the number of transaction fees and charges you will incur.
– Cash from a bank is always good. Avoid stand-alone ATMS, airports, tourist sites and other places as the costs will be higher there.
– There are free apps (at least two I know of) that will provide you with the current exchange rates.
– When you can, purchase before you go, such as travel, museum and event tickets though check the effective exchange rates.
– Finally, given the total cost of the vacation, don’t let a few extra dollars ruin your trip.
I use Capital One Debit Card for ATM cash withdrawals, and Capital One credit card sometimes for purchases. Both have no transaction or conversion fees. Debit card requires a checking account. Cap One does not charge any membership fees.
I always call and talk to a banker before we go. Things will change in a year and most large US banks are associated with banks in other countries, so many times the fee’s are less or not at all if you use the bank that is suggested. It is a good thing to go over your credit cards and debit cards you intend to use on your trip.
Before we leave we order the amount of cash we think we might spend in that country’s currency from Travelex. We only have to change money if we spend more or do so where we can’t use our credit card–one that doesn’t charge transaction fees. It always feels so good to have local money in hand when we arrive. And we can also become familiar with it. Further, I make a small card with conversion rates (ours to theres on one side, theirs to ours on the other) in commonly used denominations like $10, $20, $100. I laminate the card and carry it in my purse or pocket. It helps!
I always take clean, crisp, new American bills in $100s to exchange at banks or local change places making sure of the best rate in the area. Be sure to ask if the country you’re going to will accept new bills. I’ve traveled to certain countries that think our newer bills aren’t real and refuse them. Many poorer nations charge more to exchange smaller denominations and refuse older bills or ones with any marks on them. I have a travel friend who washes and irons dollar bills for tipping. I use the cleanest bills from my credit union. They will go through bills if given a days notice of need.
I always take roughly $200 in foreign currency with me; it helps not to have to find an ATM the day I arrive and am trying to settle in (find the hotel, check out the area, the room, ensure hair dryer works, etc.). Then I either pay with a Capital One credit card or cash.
Greetings fellow travelers:
Step 1: I put on my moneybelt that I bought at Rick’s store;
Step 2: I go to a currency shop in a mall by the airport and get lots of Euros. In a mens room stall I stuff the bills in my moneybelt;
Step 3: I put my passport, flight info, 1 credit card and large bills in my Rick Steves neck wallet;
Step 4: I put my other credit card, more euros, and trip itinerary in my moneybelt;
Step 5: I put an old empty wallet (called my decoy) in my back pocket;
Step 6: Enjoy a worry-free travel experience!
Happy Travels,
Jeff “Doppelganger”
WEDU Tampa
In preparation for upcoming Paris trip I’ve ordered a chunk of euros from Santander Bank (I have an account) to have cash on arrival (for cab, etc.) without an ATM stop. We’ll carry (as usual) CapitalOne credit and bank cards (in money belt) and a Santander debit card as backup. I’ve replaced all our “old” cards with chip-and-PIN versions, backed by checking (not savings) accounts, because ATMs in France require the new, more secure cards.
Rick, as a travel writer I am surprised that you did not do the math on exchange rates or have one of your staff do so for you.
My Capital One Visa card really has no exchange markup for charges and reimburses me 1%. Costs on my fall trip varied from the interbank exchange rate shown at Oanda for that day by tenths of a percent, sometimes in my favor. As a better customer, my bank marked up ATM withdrawals by roughly 1% over the interbank rate, their normal markup is 3%.
Before the trip I also bought €300 for 3% over the interbank rate of $1.10/€, gambling that the euro couldn’t stay that low. It did stay that low, lost that gamble. Just my luck, the euro dropped to $1.05/€ as soon as I came home.
Most people in the USA will pay roughly 5.5% markup to buy euro or pounds from Wells Fargo. That is the cheapest place I have heard of in the USA. Anyone know better?
For comparison, the Travelex website just quoted a 10% markup on euro and pounds, however I think they charge an additional fee that is not listed until checkout.
A phone call to Travelex in Atlanta returned quotes of $150.93 for £100 (a markup of 23% over the current interbank rate of $1.22183) and $132.47 for €100 (a markup of 25% over the current interbank rate of $1.0579). It is Travelex’s $9.99 fee that really socks it to you on these small amounts, an extra 10% on $100 worth of currency, 5% on $200 worth of currency, etc. I believe they drop the fee for purchases of $500 or more. Avoid travelex.
I use the debit card from my friendly Northwest credit union to make cash withdrawals from bank-only ATMs in Europe. My credit union only charges a 1% fee for the conversion, so if I withdraw $1000 worth of Euros, I pay $10.
For hotel stays and larger, big-ticket items, I use my “fancy” credit card, which features no foreign transaction fees. I get a straight and fair conversion based on the market.
One thing to watch out for, just as much here in the U.S. as in Europe: some ATMs, even bank ATMs, can have sophisticated “credit card skimmers” that steal your card number and information and even track your pin number. It’s certainly rare, but it’s worth making sure you’re using a safe machine, and if it doesn’t look or feel right, look for another one.
I have a debit card from Fidelity that I use at ATMs which reimburses me for any fees incurred when getting cash in foreign countries. Charles Schwabb also has a similar debit card. You must first open a Brokerage account and make a small deposit, then open a checking account and you will get the debit card associated with the checking account. You can then link your local bank and make easy online transfers to fund that checking account. There are no fees for set-up, and no monthly fees to maintain your accounts. It is fun to check my “activity statement” after a month of travel and see all those bank fees just magically get reimbursed.
I don’t know whether this still works, but it *used* to be the case that if you’re going to use a credit card to draw foreign currency abroad, you could make it an awful lot cheaper by estimating your needs in your home currency and then prepaying that much on your credit card account. ATM withdrawals on a credit card generally attract interest from the moment of withdrawal, so if the money is already there to pay it back, you can save paying a lot of interest, particularly if you’re going to be away for a while. You do have to cover ALL of your purchases, though, so you’d need to have one card which you just use for drawing cash and nothing else, otherwise you’re likely to find out that all you did was to pay off the bill for your airline tickets in advance!