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Converting US $ to European Currency

Old Aug 17th, 2000, 07:30 AM
Bob Brown
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Converting US $ to European Currency

Would you go to the grocery store and willing add 6% to your bill and hand it over to the cashier? Well, that is how much more foreign currency will cost you when purchased in the USA as opposed to using an ATM in Europe.
You can expect that a foreign currency purchase from an American bank will cost you an extra 6% to 8% depending on quantities and who you buy it from.

This subject comes up frequently, but rarely do we see hard figures. Well here are some:

If you use your ATM card at a bank in Paris, you most likely will obtain French currency at the day's wholesale bank rate.
Yesterday that rate was $.1394 for one French franc. The bank rate, had you bought at Bank of America, was $.1475 per franc.
Had you bought 1000 francs at the bank, you would have paid $147.50 for the purchase.
Had you used an ATM on the streets of Paris, you would have paid $139.40 for the same amount. So, it will cost you 5.8% more to buy your francs over here, less any ATM usage fee over there.

Had you purchased 1500 Austrian schillings yesterday from B of A, you would have paid $107.46. These same schillings from an ATM, in Vienna probably would have cost you $99.64. That is almost 8% more than the ATM rate, before deducting any transaction fees.
So my suggestion is that you think several times before buying foreign currency in the US before going to Europe.

I find those rates quite high. Sure, you have the convenience of ready money upon arrival, but would you withdraw 1000 francs in Paris and then walk up to some local and hand the person 50 francs for being such a nice pedestrian? Or would you throw in a 50 franc tip for lunch, in addition to the service charge already on your bill?
Well, if you would, and you are in Paris on September 2, 3, 4, and 5, let me know when and where you are withdrawing and I will make a point to stand there looking as French as possible. (Which isn't too easy!!)
Old Aug 17th, 2000, 08:06 AM
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Bob Brown, we'll be in Paris on Sept 4th. We have dinner reservations at Altitude 95 at 7:00 pm. Don't know where you'll be but would enjoy meeting my first fodorite.
Old Aug 17th, 2000, 08:53 AM
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While I fully agree with you about the utility of ATMs for getting foreign cash, I'm not so sure about the cash savings that you calculate.

1. I would never pay anything near 6% above wholesale to buy French francs. The exchange agency I use is currently quoting $.13745 to buy francs and $.14219 to sell. Assuming the wholesale rate is half way between ($.13982), the purchase commission is about 1.7%.

2. With the exception of my American Express card (which makes up for it in higher transaction fees), I do not believe I have ever received a wholesale rate in an ATM cash transaction. Further, I cannot imagine why any bank would be so eleemosynary (haven't used that word in years - hope I spelled it right) to offer such a rate, since it is clearly a retail transaction, and banks are not noted for leaving money on the table.

Anyway, I don't suppose you could even buy a glass of decent armagnac for 50 francs in Paris these days.
Old Aug 17th, 2000, 09:55 AM
Bob Brown
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I don't see how you can question my figures when I have in front of me a piece of paper from the bank quoting me those rates. I am going soon go France and Austria, so I started checking rates to see what a little pocket money would cost me. Give me your fax number and I will send a copy of the document to you, if that is what it takes to validate the accuracy of my statement.
Perhaps you live where there is more competition and exchange rates are more competitive than where I do.
As for the value of the francs, would you not pick up a 50 franc note if you saw one lying on the pavement??
Or, are you like Bill Gates, who would lose money if he stopped to pick up $500.00.
Old Aug 17th, 2000, 11:34 AM
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Thank you Bob---I totally agree. But, I
also hear the comment" they told me there was no transaction fee". Well, of
course not when they are making 6% on the exchange. ATM and Visa--nuf said.
Old Aug 18th, 2000, 09:00 AM
Bob Brown
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I will make one more comment on this subject. I think the additional figures bear out my previous conclusions.
I dug out my bank statements and charge records from last year and compared bank wholesale exchange rates with those I actually experienced "on the street" when using both credit card and ATM card.
On August 20 in Paris I withdrew 600 francs from an ATM machine at a cost of $96.28 cents. This divides out to a rate of 6.231823847 francs per dollar.
The best I could find on the web by accessing historical data was that the exchange factor that day at the bank wholesale rate was 6.2700 francs per dollar. (Using this figure presumes that rate of 6.27 francs per US dollar is uniform throughout the Western banking system. That is, I presume that banks in Paris, New York and Atlanta are using the same factors when calculating exchanges.)
To calculate in round numbers, had I withdrawn 1000 francs that day, I would have paid $160.47.
Had I gotten the 1000 francs at the presumed wholesale rate, I would have paid $159.48. Just $1.01 difference out of $160, or about .63%. (The transaction fee for the 3rd ATM usage was $1.50, which B of A added on after the fact. Throw that in and my fee was 1.56%) My charge card purchases were converted from French francs to American dollars at the same rate as the ATM currency exchanges, but there was no $1.50 transaction fee attached.
I do not deny that I quite possibly would pay more locally for foreign exchange than I would at a bank in New York or Boston. But my options are somewhat limited. I was told at the local bank that I would have paid the same price at a BOA branch in Atlanta. So I again submit that for me, purchasing foreign currency locally is about 6% more expensive than it would be in Paris using an ATM card. If I could estimate my expenses better, and limit the use of the ATM card, then the transaction fee would be a much smaller percentage of the currency obtained.
The bottom line is still this: you will pay more per unit for foreign exchange if you buy it from B of A in Athens Ga than you will if you buy it from an ATM machine at a Parisian bank. The convenience of pocket money carries a price.
Old Aug 18th, 2000, 09:10 AM
Bob Brown
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Hi Art. I will be at Fontainebleau and Vaux-le-Vicomte that day.
I finally compromised my principles and decided to take a bus tour that goes to both places. Trying to do both in one day free lance was getting a little dicey and the bus provides convient transportation, with commentary. It is the only such tour I am taking, but the convenience is what convinced me. I want to see both places; my time is limited, and the tour enables me to see what I want to see during the time available. We should be back by 6:30 PM. Why don't you take the same tour?

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