Best exchange rate?
 

I'm going to Rome/FLorence next month and have heard that the best exchange for dollars to euros is an ATM? Would you agree? Or do you think I should exchange my money at the airport? Any advice is appreciated! Thanks!

Use a credit card for major purchases and get cash from ATMs for everything else. Take a few hundred US dollars to use in an emergency, but plan to bring them home with you. Read this article about changing money which includes some important information on what to do BEFORE leaving home to be sure your ATM cards and credit cards will work in Europe: http://tinyurl.com/k3vy6.

Please do a search for ATM

Yes an ATM offers the better exchange rate over exchanging at the airport. I don't think anyone has or will argue or disagree with that statement.

Let me suggest that you take a look at the bank wholesale rates of exchange which are published each business day on the Internet in a variety of locations.

Yahoo's home page has an entry for Finance along the left side of the screen, and you can go to the subheading International, and then to currency as a subtitle under International.

For example, today's exchange rate between the US dollar and the euro was $1.2733 = €1.00.

That is to say if you wanted to buy €1 at the bank wholesale rate, it would cost you $1.27 US.

In my experience, I have received the bank wholesale rate plus a 1% markup when I used my ATM card. Some American banks limit you in the number of off net transactions you can make in a month without paying an ATM surcharge.

You might inquire of your bank, if you can find a person who knows about such things, and find out if it has a correspondent agreement with a bank in Italy. For example Bank of America has an agreement with Barclay's Bank in the UK. Transactions with my BOA ATM card are treated like "on-net" transactions at Barclay's.

You cannot do better than the wholesale bank rate of exchange because that is what the huge financial institutions charge each other when they swap currencies by the bushel basket full.

Why use a credit card only for large purchases? Use your credit card for every purchase, large or small, as even if you're using one of the credit cards from the near criminal banks that add 2% for currency exchange, even though they have nothing to do with the currency exchange, you still come out ahead as opposed to spending cash....

< Use your credit card for every purchase, large or small >

Many places in Italy don't accept CC's for small amounts (ot at all) - and some CC companies impose a minimum charge on all foreign transactions, so your €5 latte may cost you a $2 fee

How do I come out ahead by using a charge card instead of cash that I got from an ATM machine? I don't get the logic.

I don't think there is any, except that you wouldn't have to carry around as much money with you, that's all. So, you wouldn't have to go to the ATM that often. I think that's what people sometimes worry about, and I admit I'd rather not go every day or carry around lots of extra cash when I can use a card (and get some points on mine). I do not like to use it for every purchaSe, even small ones, because I do keep track of all the receipts, and compare them to the bill, and eyeball the exchange rate, and I don't want to do that for tons of small purchases.

suze: It depends on your credit card company and bank ATM card charges.

It doesn't cost me anything to use my credit card. The 1% Visa foreign exchange fee is more than offset by my card's cash rebates.

However, the 1% foreign fee for using my Visa-logo ATM card is not offset by any rebate. And some people's banks charge a per-withdrawal fee that can be several dollars for using other bank's ATMs.

Thanks Rufus. I figured it would have to depend on your banking arrangements. That's why I didn't understand how/why someone would make a blanket statement saying credit cards are better.

You should check your ATM withdrawal rules carefully. The Insured Money Market accounts that many of the online banks offer come with a 6 withdrawal per month limit, with fees ($10?) for going over.

...the obvious reason for using credit cards for every purchase no matter how small is you don't usually run out of plastic...you don't have to keep looking in your wallet to see how many euro you have left etc. etc. etc.

Unfortunately, you are right...while in America visa and mc do not allow merchants to set minimum fees for use of a credit card or to surcharge a credit card, great protections for the consumers, these protections usually do not extend to Europe.

"great protections for the consumers,"

Wrong.

Great protection for credit card companies. But simply a cartel- something that's a criminal offence in countries committed to free enterprise.

The laws America's credit card companies bribed onto the statute books distort the market so that the poorest subsidise the comfortably off, and so that small merchants are forced to inflate banks' profits.

Elementary economics 101.

xyz123-- I am a cash spender at home, so it's easy to do the same when I travel. For me it is not a problem to have money in my wallet!

I said this once before but I think many don't believe me.
Comparing my credit card charges (Citibank) and my ATM withdrawals (BofA) this summer, I found something very interesting.
As I knew, Citibank starts with the current exchange rate as shown on XE, then adds 1% which is the Visa charge, then 2% more. No surprise.

But the BofA ATM withdrawals now show a 1% charge as well. At first I was a bit angry, but in checking some 15 or so of those withdrawals, I discovered that every single one started with a rate of exchange that was actually 1% lower than that day's XE rate. Sure enough, even if I matched a particular date on both a CC and an ATM posting of transaction, every single one from BofA was a percent lower. That means that BofA was starting with a discounted rate and although they were adding on a 1% "fee" it was actually costing me nothing.

I'm not going to go out on a limb and say that all BofA accounts will work that way. I have a number of advantages on my account in addition. But no one could tell me about this discounted ATM rate. I'll keep my mouth shut.

And yes, I realize that there are CC than won't charge me 3%. But since I get basically 8% back on my charges for FF miles, I really don't mind that much.
Yes, I said 8%. I invariably use 90,000 miles for a $7000 ticket. You do the math.

The rate that a <i>merchant</i> pays the credit card company is determined by a grid having average ticket size as one axis and monthly volume the other.

The more you pump through their coffers, the less the issuers charge for each increment.

But it's not a percentage of the ticket at every point of the chart. In the bottom left-hand corner (low volume and/or small ticket size), the pound of flesh is a fixed fee plus a hefty percentage. Small merchants don't want to wind up paying 12-15p or so for a &pound;1 transaction, so they just refuse to accept any sale they can't make money on.

How greedy is that?

BofA has ATMs in some countries without fee. So if you're transfering through Germany, visit the Deutsche Bank ATM at the airport. Better rate than AMEX and most VISAs (assuming you don't count whatever reward program)

I'm very happy that Visa and MC require merchants in the USA to take credit cards no matter how small the purchase. And I seriously doubt that doing so causes additional financial distress for the poorest.

Well, all I can say is that you're wrong.

When a merchant's gross margin (sale price minus cost of goods) is ten percent, having to give up five percent of the sale to Visa cuts his profit in <b>half</b>.

Many businesses can't operate at five percent profit and cover their overhead and taxes with anything left over, so they just don't bother with credit cards.

Either that, or they package their product in such a way that every ticket falls above the &quot;fixed&quot; part of the discount schedule.

I assume that is why many small merchants and local restaurants in Mexico do not accept credit cards.

For a lot of them, even the normal 2-3% discount is more than they want to (or have to) give up - so they don't.

My attitude about credit cards remains the same...

The cost of taking credit cards is indeed a cost of doing business whether it be to rent the store, to pay the utilities on the store, the fees to the bank for a checking account and to deposit the receipts, the credit card processor whatever. One does not break down these fees in setting prices. Prices as a whole are set so that the merchant can make a profit.

Taking credit cards might bring additional customers into a store who wouldn't come in otherwise..that is presumably one of the selling points of taking credit cards.

If a store has credit card decals in its windows, it might cause me to go in when I might not have done so otherwise. The prices being charged reflect the decision to take credit cards. Therefore no matter what I buy, the prices has been adjusted however microscopically to reflect the costs of taking credit cards. Therefore, I believe that since I am being charged for using a credit card anyway, it is my right to insist the merchant live up to his contract to take my credit cards....whether this is right or wrong it remains my opinion on the matter. A store owner in the USA knows what he is getting into when he signs the agreement to take credit cards and as part of that agreement is the stiulation that he must accept all credit cards for every purchase no matter how small if it is authorized by the credit card company.

To me, it does serve as a customer protection.

Precisely.

And outside the US, no such near-criminal requirement exists that a merchant accept a transaction that he will lose money on. (I personally think it's a Restraint of Trade infraction under US law, but I don't really care.)

Take off your consumer's hat and put on a merchant's, and see if your attitude changes.

Actually Robespierre..

It is not a doctrine of US law...it is the merchant agreement signed by merchants who wish to accept credit cards..it all averages out anyway...obviously a merchant makes more on a large purchase than a smaller one...even if the merchant makes less because I use a credit card for a small purchase, the fact is that perhaps the credit card decal is what brought me into the store and without the credit card decal, he doesn't make the sale to me ot to the next person who comes in and makes a very large purchase...in the end it all averages out.

I think you still don't know how this works. If the merchant's volume/ticket size point on the grid is low enough, there is a &quot;floor&quot; on the discount he has to pay. In an extremely unfortunate case, the 25&cent; fixed fee might be equal to his gross profit on a small sale. Who wants to be in business for the benefit of the card issuer?

I see terms and conditions in contracts every day that are illegal. The provisions of the agreement and their legality are totally separate issues. Coercive and exploitive merchant agreements are the industry standard - because the networks own enough congresscritters that they can have their way - whether it's ethical or not.

The ability to charge a merchant 3% for a $20 ticket but 25% for a $1 ticket is an abuse of the power the card issuers wield. The merchant should be free to take or leave any deal s/he wants to. It's called <i>laissez-faire</i> capitalism, and it's the system we defended against all comers for 50 years.

...I know the argument is boring but chances are no merchant only makes credit card sales for $1.36 so it is very rare that the merchant will be at the bottom of the scale..like I say it all averages out in the end and you can't discount, although it is not easy to compute, the number of customers a credit card decal brings into a store and at the same token the amount of pilfering of loose cash it avoids.

I think it's na&iuml;ve to think that just because US merchants aren't allowed to require a minimum purchase that it logically follows that European ones should be similarly constrained.

I have not a scintilla of doubt that if our countrymen weren't constrained by their Operating Agreements, they'd maximize their profitability exactly the way their European counterparts do.

Let's put it this way - would you prefer to see the PROFIT on your nice latte just off St Marks Square go to a CC company or the cafe that sold it to you?

Polite Comment: Your question is impossible to answer! We need to know if 'your money' is American dollars or something else. Practically speaking, A check/debit card withdrawal should be your most advantageous way to acquire Euros. Any airport or hotel cash exchange will cost more than a street one as they use a higher conversion rate. Remember that an ATM can be used to acquire local cash by using a credit card. Before you travel check expiration dates of your cards.

Thanks to all for your help! I forgot to mention I live in the U.S. :)

Maybe it's false thinking but after years of using this travel board, I always suspect that if someone doesn't say otherwise and starts talking about money, they probably are talking about US dollars.

no, it's a common thing on most travel forums

Actually we've stayed at some hotels over the years that, as a convenience to their guests, gave whatever the current institutional rate was on currency exchange with no fees of any kind. Not many, but enough that it's worth asking at the check-in desk. I think it's a good-will thing, and they usually limit how much you can exchange since they're probably losing a few cents on each transaction.