Getting Euros before traveling (is this a good deal???)
 

I have an opportunity to possibly purchase my Euros here in the US before my trip to France/Italy in Sep/Oct (traveling solo). Turns out the Travel Agency that usually book my travels (I had fun making my own arrangements on this trip, but we won't tell them) bought about 6000,00 euros (increments of 500,00) for a family that was traveling to Europe. Unfortunately, they cancelled their trip. Now the TA is stuck with the Euros. They are willing to sell some of the euros to me at $785.00 for 500,00 euros. Is this a good deal based on the exchange rate? Or would I fair better by waiting until I arrive in Europe to purchase them? I planned on a budget of only about 1000,00 euros for the 18 days (food and transportation). My accommodations are already paid for. I would very much appreciate your comments and opinions.

Thanks,
jdc

At today's rate (with no fees) you'd pay about $779 for 500 Euros. But when I was in Germany a couple of weeks ago, the dollar was a bit lower (perhaps $800 for 500 euros). Do you think the upcoming presidential election will make the dollar go up or down?

Exchange rates are online or in your paper, so you can compare.

I think it is a pretty good deal if they really are not going to charge you anything else, just give you 500 euro and you give them $785. That's almost eactly the current interbank rate (1.57).

I wouldn't "puchase" any euros in Europe. If you get them there, you should get them from an ATM, and some banks charge some fees for that use, so I'd say there isn't any way you could beat the $1.57 per euro price (unless the rate changes a lot, of course). As long as you are comfortable carrying around that amount, I think it's a reasonable thing to do, as you don't seem familiar with foreign currency and methods of getting it abroad, so you could spend a lot more.

It's a good deal right now (assuming there are no other charges), but will it be a good deal in 2 months from now?

Another issue to think about if you buy the euros is that you will be carrying 500 euros with you. Make sure you invest in a money belt. And put the extra cash in the hotel in-room safe when you're out sightseeing.

Right now €1.00 costs $1.559 at the interbank rate, like at 4:55 edt July 29. At the price you cited, the cost per €1.0 is $1.57.

If you go to an ATM in Europe today, you will pay a rate in that neighborhood plus 1%. Whether nor not your bank charges anything depends on the bank. Bank of America for example has the ugly habit of hitting its card holders with a $5.00 flat fee for any off net transactions. (On net means that you use a partner bank such as Deutsche Bank in Germany or BNP Paribus in France. Switzerland and the Czech Republic where I was this summer have no affiliates with B of A, nor does either country use the euro as the official currency although some places may accept them.)

So do you have a good price? Assuming you walk away with nothing added to the $785.00, you would get a good rate for today, but it is not a blockbuster savings for you.

As asked earlier, will the euro decline in price between now and late Septeber?

Who knows? If I knew that I would sell a flock of euro notes short and pay it back the cost October at a profit.

In the interim, you will be sitting on euro currency that is not drawing any interest. Of course rates are so low right now that any interest you would earn on your dollars is only a minor factor.

If the TA is stuck, you might be able to bargain a little. Make a counter offer. Look at it this way, if he takes the stack of currency to a bank, he will probably lose about 5% in the exchange. So perhaps you can split the difference at 2.5% or half of whatever a local bank would charge!!

Right now those euro notes are not doing the TA much good! If he wants to unload them quickly, I think the buyer is in a position to bargain a little.

Of course depending on where you are and what the local bank is, you might be looking at more than 5%. You might ask a couple of banks what the sale of €6,000.00 would net in dollars and negotiate from there.

I work with travel agents and I've never known ONE who would put themselves out to the tune of $6000 (or was it €6000) Either way - something doesn't smell right to me about this story and I wouldn't bother to get that much in advance anyhow. I never would have thought of getting Euros ahead of time until I was the very LAST person in line to get cash from the ATM at the Dublin airport before it conked out, leaving a long line of sad people behind me. It wouldn't hurt to have €100 or €200 to get going but beyond that I'd use the ATM.

I agree w/ sheri_lp: This sounds very, VERY odd to me. TA's don't buy € on spec. How well do you know this person?? My first thought was money laundering of some sort.

€6000 is nearly $9500 - why on Earth would a TA fork over that kind of money - OR advise her clients that they needed that kind of money ahead of time?

You aren't saving that much and I personally would not touch this deal w/ a barge pole.

I agree with janis and sheri. I can't imagine a TA buying that amount in Euro without having the dollars from the client first. Something's not right.

I think the others have a good point about the whole issue. I was reacting to the rate and did not wrap around the whole scenario.

Who the heck buys that kind of loot without as guarantee?? Not I.

I want to know what idiot kind of travel agent wouldn't have talked the client out of buying 6000 euros to begin with. Really sounds fishy to me.

NP: Since the client didn't buy the €, the TA did - that just makes the TA even MORE of an idiot ;)

Oh, I agree. I was just saying that even before buying them, he'd have to be an idiot to NOT talk a client out of getting that many euros before going. The fact that he ended up doing it without getting cash does make him a bigger idiot.

"... 6000 euros in increments of 500..."

Yep, there's more to this story.

BTW, there are federal reporting (Patriot Act) requirements for the purchase of large amounts of foreign currency, but I don't know the threshold amount. The "increments of 500" might have been an end-run around the regulations, and I wouldn't want to be connected to anything like that.

There is a 500 euro note. Is this what you meant? I'd sure hate to fork over that money and be given one 500 euro note which you'll have trouble doing anything with. Just a thought.

I don't know all the specifics except it was a large family going to Greece and at the last minute canceled the trip. The TA purchased the euros for them to travel with. They would not charge any additional fees on top of the $785 per 500,00 euros. Since most of you don't think I would be saving that much, I can wait until I get to there and use the ATMs. I have some leftover euros from my last trip to Europe so I'll be ok for at least one day.

jdc

If this means she's trying to sell you €500 notes, be VERY afraid.

They may or may not, as urban legend claims, be the most widely-used instrument in the world drug trade and so cocaine-impregnated they set every sniffer dog in Europe haring after you. But they're close to unusable for taxis, public transport, airport cups of coffee and any of the other good reasons for buying foreign currency before leaving home.

Flanneruk, are you saying that even if one would agree to get the €500 notes, they would have been difficult to change, even at say a bank or exchange office?

jdc

Not necessarily. I've never tried taking a €500 note to a Eurozone bank.

I'm saying they'd be difficult to use for most daily needs. The only point in buying foreign currency before you go is to avoid having to mess about with ATMs or bureaux de change when you get off the plane. Taking notes you've already got to a bank, then queueing up to change them into usable currency seems to defeat the purpose of getting them in the first place.

And it's not just the €2 cup of coffee €500 notes aren't any good for. Many establishments - even quite high-ticket retailers - refuse to take them

Flanneruk, I see your point.

At the same time, if I would say, choose to travel with a €500 note, it would only be for the sole purpose of, after having reached my destination go to a Eurozone bank to change that €500 note into smaller denominations not to purchase a €2 cup of coffee or even making a purchase at any other establishment just to get change using the €500 note. I could understand why any establishment would frown on this.

However, I've never had a problem here in the US going to any bank and have them make change for a $100.00 bill. On the other hand, I've had problems making a purchase with a $20.00 bill and have the merchant asked if I didn't had anything smaller.

jdc

I WILL say that a 500 euro note would be hard to change. I went into a number of banks in Italy trying to change a 20 euro note and all refused. You need an account to do that. Banks do not seem to consider themselves obligated to change bills at all for people who do not have an account there. All I wanted was some money for parking and it was impossible to get change. I finally went into a store and bought something small just so I could get change. I can't imagine what you'd do with a 500 euro bill.