is 4% a high exchange rate?
 

I am goning to get a few euros at my BOA bank so i have some in my pocket on the way to Italy. BOA is going to charge 4%. do you think this is high? iif so i will get less and then get more cash out of the ATM when I get there.

4% on what???? With the ATM provided you use a BOA partner you get 1% over interbank....in this day and age it is not really necessary to have euro before you arrive. Upon arrival, you will find ATM's or I don't know how you intend to handle your arrival details but you may well not need any euro until you arrive in town where you will find oodles of ATM's.

Figure out how much you're getting and then look at whether or not 4% of that is worth it to you. That's all that's important.
But if you take your ATM card and you get money out of a partner bank in Europe you WILL be saving at least 3% of that. Does that make it more worthwhile for you to wait?

I don't deal with BOA, but I'm always a little skeptical when people say they are getting currency for x%.

Years ago my son spent a school term in Finland, and felt he needed some Finnish currency before leaving. Banks in our town no longer have foreign currency exchange desks, so he went through an agency, and paid the price. They cited x% as their cost, but in fact that was a fee they tacked on to an exchange rate that greatly benefited them, and of course a hefty delivery fee, as one wouldn't want to just mail currency.

So if BOA is just charging you 4% above a legitimate market rate, and you would be uncomfortable without having some euro before you depart, that may be a good deal. But it is almost certainly not as good a deal as you would get from an ATM on arrival, assuming you have selected an ATM card issuer that doesn't have heavy fees.

I have gone many places without getting their currency in advance, and the ATM's have served me well, without exception.

ok- like we talked on other posts... i am going to use mostly atm in italy. i just feel it is smart to have some cash going over there. you know for spending on layovers etc...
i just wanted to know if 4% was high?

=)

If it is 4% over the published interbank rate (which is in the newspaper), then I would say that is pretty good and you should take it if you want some upon arrival. A lot of exchange bureaus in airports or downtown areas charge 10 pct and up, so 4 pct isn't bad. For a bank, you'd think they might do better than that, but it's okay for your purposes.

If it's only a few euro, it doesn't really matter as it can't amount to much whether it is 2 vs 3 vs 4 pct.

sounds resonable cleveland brown-
maybe i'll just grab a few 20's and then get the rest on arrival.

besides the 4% at BoA, I believe there is a flat fee to get foreign currency (something like $10, even if you are a BoA customer).

i did this last summer to get 200 CHF (swiss franc) before a trip. so yes it is expensive compared to an ATM once you are in Europe, but no it is not expensive compared to other methods of buying foreign currency in the US (Thomas Cooke for example).

if you are going to get anything, i really think it is worth getting at least a few hundred. a few 20's isn't going to do much for you IMO.

I just called. Bank of America charges a $7.50 "shipping fee" per order whether you order online or buy in person at a bank branch. They mentioned the exchange rate "is what it is", "set by the bank".

With a "bureau de change", there is the implication that you need to know "4% of what" - - what I look at is: what is the total percentage spread between the buy and sell. It's only logical that "their source" which HAS to be as close (i.e., timely) to the interbank rate as possible (otherwise they're losing money in one direction, perhaps they make it up slightly, in the other).

I think it is almost unheard of to see it as low as 4% (i.e., 2% in the buy direction, 2% in the sell); 8% is not rare, and at hotels and other "convenience" (translation: ripoff) exchanges, spreads of 12-15% are sadly, quite common.

So, if your objective is to buy some peace of mind by paying 4% (instead of the 1% you ought to be able to get from the ATM), then it's no worse than going to a "Change" window in the street(s) of (wherever, in) Italy. You can do the math as you wonader by their windows.

Best wishes,

Rex

This is probably less than you would pay at the airport. I usually get about 100 euros before I leave. Whether the cost is 4% or 10% of the 100, that is the cost that I pay for having local money and to me it is worth the cost. Not everyone agrees with this but when I land, I want to get something to drink, get to town and start walking. I don't want to have to worry about finding an ATM right away.

Agree totally with the above poster, while I am a reasonably frugal person I have never sweated over percentage points of currency exchange. If I can afford a plane ticket and place to stay in Europe, I figure I can afford to pay what it takes to get the money I need to spend there.

SUZE- my brother works for BOA so i don't think we are getting the $7.50 fee. just the 4% exchange fee.

REX- i am only want tsome pocket cash for the first few hours untill i actually get in Italy and find an ATM. then i will be happy w/ the $2 charge or whatever.

Thanks !!

AGREED !!
thanx guys. i have never dealt w/ foreign currency before (except peso & that's a cinch) so that is why I asked the question in the first place.

kimberline01: You seem to be concentrating on that 4% add on. That means absolutely nothing unless you know how much they are saying each € costs before the 4%.

For instance, some banks may say they charge 1% or in your case 4% -- but their exchange rate is very bad to begin with. Today the € is running about $1.23. So is BofA charging $1.27-$1.28? That would be a 4% surcharge and not terrible if you want to get a few €.

Or is the bank using an exchange rate of $1.26, or even $1.30? If so, when they add the 4% you will actually be paying $1.31-$1.35 per € -- or nearly 10% extra.

SO - you need to know their base rate before you can possibly know if 4% is reasonable . . . . . .

i don't understand why you'd think peso are a cinch but euro are so complicated. it's exactly the same deal.

Getting cash is a moving target, and the rules seem to change every year, or every trip, which ever comes first.

I am currently finding that MasterCard and Visa charge a nominal currency conversion fee of about 3/4 of 1% plus a 3% transaction fee for foreign purchases on CREDIT cards. I am finding that MasterCard DEBIT cards are only charging the currency coversion fee, and hence, I only use my DEBIT card to withdraw cash from the ATM, or I use the DEBIT card for other purchases.

To sum it all up, I believe that taking enough Euro with you to get you a coffee and snack, plus taxi etc is all you need until you get to your destination. Pay what ever you have to pay to have some Euro on hand to get there, and then immediately go to the ATM. By the way, it may be just me but I can only withdraw 200E at each day due to ATM restrictions but that is more than enough for me (must be my checkered past that caused the restriction!)

winesipper...

Mastercard and visa charge about 1% above the interbank rate to convert foreign currencies. Most banks pass thatalong to their customers. Many banks, not mastercard or visa but the banks, charge an additional 2% which is where the 3% figure comes from. But there are many which do not...most money changing operations in Europe charge something about 8% above interbank plus in many cases transaction fees when changing cash into local currency so you are always better off using a credit card. Debit cards follow the rules for credit cards and many banks add additional fees abouve the 1% mastercard and visa impose.

It is almost always better to use a credit card than to pay cash. Which is why, it is usually the best way to handle travel expenses whether at home or abroad to use a credit card for every transaction, no matter how large or small, wherever credit cards are taken and to try to see to it that it is a credit card which does not charge the additional 2% fee.

I do that and have found that a 20€ withdrawal can easily last me 2 days as it is very rare that I have to pay cash for anything, be it meals (breakfast usually included), souvenirs, sightseeing admission fees, local transportation passes.

Drinks, snacks and internet cafes are pretty much the only places I use cash.

Winesipper,

Its not you, its the ATM. There are two limits involved: a daily limit imposed by your card issuer, and a transaction limit imposed by the ATM owner. The transaction limit is just an irritation, as without exception I have been able to make a second withdrawal at the same ATM when I need more than the transaction limit will allow. It does become a complication when you don't know how much of your daily limit was used on your first transaction, as your second transaction could take you over your daily limit, and the transaction would be rejected.

It may be advantageous to use a credit card in the US, as the credit card companies restrict the merchant contractually from offering a lower price for cash. I'm pretty sure that doesn't apply in Europe, where it is common to ask for and receive a discount for cash. So if you use a credit card to buy a 100 euro item, it will cost you 100 euro, plus the cost of converting the transaction to dollars, which can be as much as 3 or 4 percent, according to postings here. On the other hand, if you are comfortable haggling, you might get the 100 euro item for 95 euro, so even though the ATM will charge a fee for giving you euro, you will often come out far ahead by paying cash. And of course, many merchants, particularly smaller ones, or those in remote locations, will not accept credit cards.

i called last night, the fees are as follows...
MC/Visa charge 3% on every purchase made oversees.
BOA ATM card used to withdraw $$ from an ATM get a $2 charge from BOA. If using the ATM card like a debit/credit card you get charges from Visa the 3%.

By my estimates if i spend $500 whether it be cash (assuming i get that much out at once) or credit... the$2 fee is cheaper than the 3%. of course this is all in addition to the exchange rate at the time... but that is what those fees are for... calculating the exchange for you.

If you use your BOA ATM card to withdraw funds from its affiliates - Barclays, Scotia Bank, Deutsche, BNP or Westpac there are no fees.

It sounds like you mostly understand what things will cost you, but the fee is not for calculating the exchange for you, I'm sure that's what those institutions told you.

It's just because they want to make more money and think that kind of charge is not as noticeable to many people, and a good way to make more money. It's not for doing anything basically that actually costs them. A computer calculates the exchange and that costs hardly anything, it's done by machine.

well said Christina. i had never heard of the calculating the rate of exchange as any kind of service that needs paid for.

MC/VISA charges 1 percent, sometimes a little less. The 3% fee cited to you is because your bank pads the MC/VISA fee. There remain some banks and credit unions that do not pad the MC/VISA fee, and if you are looking to minimize your costs, you should find one of them.

The idea that there are no costs involved in currency trades, and in processing charges through a worldwide network is laughable. It assumes that there are no equipment, software, and personnel costs involved, and that simply is not the case. My feeling is that MC/VISA provides a valuable service, and I don't mind paying their small fee; I think the banks that pad that fee are unreasonable, and I don't deal with them. However, many people have pointed out that even the highest ATM/credit card fees are a relatively small fraction of the expense of travel.

I agree wiht you clevland brown, except for this...

<MC/VISA charges 1 percent, sometimes a little less. The 3% fee cited to you is because your bank pads the MC/VISA fee.>

I talked to Citibank (my credit card holder) and they told me that the 3% fee is charged directly from VISA/Mastercard. Unless your telling me that Citibank itself 'pads' the 1% and is blaming the entire 3% on VISA.

kimberlina...

Visa charges 1% over interbank...Citibank indeed pads it by adding on an additional 2%.

<<The idea that there are no costs involved in currency trades, and in processing charges through a worldwide network is laughable. It assumes that there are no equipment, software, and personnel costs involved, and that simply is not the case.>>

Amen.

The same people that complain about the very real cost of buying and selling currency, on the customer's behalf, seem to have a field day defending the escalation of <i>tipping</i> from 10% to 15% to 20% to who knows what figure in our children's futures!

i am sure you're right XYZ... maybe the Citibank personnel are un-educated in WHO exactly does the charging. They definitly blame it on VISA tho.

Not that 3% is a BIG deal but, You have inspired me to call my other C.C. companies and find out what their % is. Why pay 3% if I don't have to.

Clearly the idea that all that is involved in a currency exchange is to &quot;calculate the rate&quot; is very wrong. This topic is confusing enough without these silly statements.

Fun with numbers! Friend asks wealthy neighbor how he does so well. &quot;Easy, I mark up 3%, buy for one, sell for three!.&quot; If currency exchange rates are a concern would bringing US Dollars and trading them on the street or private exchange be almost the least expensive? Obviously, dealing directly in US Dollars involves no exchange costs. American whisky is expensive in England and Europe. Consider loading up in duty free and selling or trading later. The price of cigars is another attractive hedge material. If not traded the items mentioned are also super gifts.

We have gotten Euros from American Express before via telephone and they do not charge for delivery. I'm not sure how their exchange rate compares with other USA banks or credit cards but it is very convenient since you never have to leave your home.

Sometimes we just arrive with no euros and immediatly hit an ATM in the airport. Getting currency from ATMs is always the best way!