Best exchange rate?
Sep 14th, 2006, 09:21 AM
#1
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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!
Sep 14th, 2006, 09:27 AM
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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.
Sep 14th, 2006, 10:35 AM
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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.
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.
Sep 14th, 2006, 10:47 AM
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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....
Sep 14th, 2006, 11:12 AM
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< 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
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
Sep 14th, 2006, 11:20 AM
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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.
Sep 14th, 2006, 11:46 AM
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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.
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.
Sep 14th, 2006, 12:39 PM
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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.
Sep 14th, 2006, 12:48 PM
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...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.
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.
Sep 14th, 2006, 12:55 PM
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"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.
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.
Sep 14th, 2006, 01:05 PM
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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.
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.
Sep 14th, 2006, 01:10 PM
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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 £1 transaction, so they just refuse to accept any sale they can't make money on.
How greedy is that?
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 £1 transaction, so they just refuse to accept any sale they can't make money on.
How greedy is that?
Sep 14th, 2006, 01:12 PM
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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)
Sep 15th, 2006, 10:49 AM
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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.
Sep 15th, 2006, 10:52 AM
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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 "fixed" part of the discount schedule.
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 "fixed" part of the discount schedule.
