I knew the difference, but bank at a small credit union that doesn't have an ATM card. Since then I've moved my account and hope to give it a try. M.

In January a friend and I went to PAris. We split every meal and compared the charges. Am ex was considerably higher. Citibank actually had better rates. It is impossible to get the banks to give you honest info.

It's not that hard to understand. One of the credit cards I have explained that both Visa and MC both basically use the wholesale interbank rate to convert currencies and then add a 1% currency conversion fee. This 1% is passed along by every bank; even if they claim they add no fee for currency conversion.<BR><BR>Many of the big credit card banks now add on an additional 2% conversion fee to the final amount that appears on your bill. Citibank is absolutely one of the banks that does this. The only 2 big credit card banks not doing this at present are MBNA and Capital One. Some of the smaller banks do not do this either. Customers of those banks have their charges converted at interbank + 1%. Where the banks add on 2%, you pay interbank + 3%.<BR><BR>Now the two major shared teller networks, Cirrus and Plus, are owned by MasterCard and Visa respectively. So in converting currencies, they add 1% to the interbank rate before it reaches your bank. Again, every bank passes along that 1%. Several banks, including Bank of America, have begun also adding on the 2% currency conversion fee described above for credit cards. Their alliance only has to do with additional fees. Many banks charge fees ranging from $1 to $5 for using an ATM not their own; this is the fee Bank of America does not impose if you use say Barclay's in the UK. The rules of the Cirrus and Plus prohibit banks from imposing fees of their own if you use their machine. Therefore, no matter what ATM card you use, the European bank does not charge you. You pay whatever your bank charges you. And there are some banks who still charge nothing for accessing your money in a European ATM.<BR><BR>Now as far as comparing rates, just understand that the conversion is done when the charge hits the MC or Visa system. Interbank rates change throughout the day. The rate at 9AM may not be the same as the rate at 3PM. So it is very possible that on charges or ATM withdrawals posted on the same day, there could be 2 different rates.....<BR><BR>Hope this clears it all up.

xxx rehashes mainly what has been said already, except for the Plus Cirrus business, which is not all that pertinent to the discussion.<BR><BR>If the bank computers used a constantly fluctuating exchange rate, they would have to feed a constant stream of data on exchange rates for every major currency in the world. The changes come in a continual stream as rates fluctuate during the day. I cannot believe that the time-date stamp of the transaction is pegged to the exchange rate at that precise moment in time.<BR>The rates would have to be updated so frequently, and for so many different currencies the task of picking a specific rate would be most tedious.<BR>Perhaps it could be done if a super computer was assigned to the task, because those things have computational powers beyond comprehension.<BR><BR>Perhaps that is the reason I got the brush off when I asked. The bozos simply did not know and did not want to bother with finding out.<BR><BR>In my origial question I postulated that the date time stamp on the transaction was keyed to the exchange rate stream. But that question drew no response. Given the hundreds of thousands of charge transactions and bank withdrawals that are converted each day, I still find it hard to believe that the exchange rates used to calculate the conversions are changed every few seconds in a constant stream.<BR><BR>Does that mean that processing stops when the currency markets of Country X shut down for the day??<BR><BR>

This year we were in England. <BR><BR>At one point I pulled out brand X atm card and withdrew &pound;200.<BR><BR>As I pocketed the cash, my not so furry other pulled out brand Y atm card and withdrew &pound;200.<BR><BR>We compared statements later ( a popular thing to do, apparantly).<BR><BR>Brand X charged $497.02CDN plus $3CDN fee.<BR><BR>Brand Y charged 501.55CDN plus $5CDN fee.<BR><BR>The two transactions were seconds apart from the same bank in England.<BR>

Whew, guys, my eyes are glazing over. Thank god someone else is doing all this mathematical analysis! Bottom line (as we financial types like to say):<BR><BR>Getting money in a currency other than your own (whether via ATM or credit card) is going to cost you something. It's a service and is going to HAVE to make money for the provider of the service. So they're going to get it on the rate, on a surcharge, or on a fee. There's nothing you can do about it!<BR><BR>I, for one, am thrilled to have my gut instinct validated by our experts in economics who have posted above. <BR><BR>Just remember -- cash advance on credit card -- NO NO NO!

I actually managed to find out something interesting on this point which probably explains the differences that Patrick found. The main thing I was able to verify was that my Capital One Mastercard, which claims no add-on to the one pct MC network charge, was accurate, they did convert my charges at only 1 pct over the interbank wholesale rate. And my Citibank VISA appeared to add on a total of about 3 pct. <BR><BR>I couldn't tell which rate Capital One used because the high, low and average rates were very similar for the date in question. Cusomer service told me the exact rate used for conversion and the conversion date, but their listing was rounded to two places past the decimal point, so I couldn't tell for sure, but it definitely wasn't the high. It was .64 ($ to GBP) on 8/31 and Oanda says the daily average was .645 (the low was .643, and the high .6473).<BR><BR>In any case, that does answer the question that Capital One is telling the truth and not using some disadvantagous formula to make up the difference. <BR><BR>However, what I found out by calling customer service was the actual date of the conversion because it originally looked almost 3 pct higher than the avg. rate based on the posting date. What they said is that the posting date is always the date the transaction was made, because customers need to match the charge to the slip they signed, but the actual conversion can be done about 4-8 days later, they said. In my case, I had two charges on 8/23 and 8/24, which were the dates on my statement, and both were not converted until 8/31. Their conversion rate was indeed identical and matched the interbank rate plus 1 pct on 8/31, so I believe that. I had originally thought they were adding on an extra 2 pct, but the USD vs GBP did change 2 pct over that week according to Oanda.<BR><BR>So, Capital One really isn't adding on more than the MC one percent, and Patrick probably wasn't getting as good a deal as he thought. Basically, he got about a 1-1 rate which is about 3 pct over .97 (meaning a euro would cost $.97). Looking at the euro to USD interbank rate over 9/30/02 to 10/8/02, there were several dates when it could have been at that level, although most of the days it was around .98.<BR><BR>I have a Citibank VISA and I compared it for other charges during that trip, and it does add on 3 pct total, but I suppose their AAdvantage product might have only a total of 2 pct addon rather than 3 pct, I don't know.<BR><BR>It was interesting for me to learn that the exchange date could be that far from the posting date on my statement, which is always the date of the original charge so you can match it up with your slips. I guess it was also interesting to see that even during that time which wasn't that unusual, the rate varied several percentage points anyway over a two week period.

Your point is very interesting and complete, Christina. There is only one point. I can clearly see from my saved charge slips and the statements that the date Citibank uses as the posting date has to be the date it is actually posted, and not the date of the original purchase. This is clear because on the average, most of the posting dates are one day later, some as much as four days after the actual date on the charge slips. It is also very clear as quite a number of the hotel charges -- my biggest ones -- are a couple of days after we had departed that hotel, clearly not the date that the actual charge was made. I also have charges from three different cities on my statement for the same posting day, clearly not possible to be the dates of the transactions as I couldn't be in three places at one time!<BR><BR>I guess my major point was that although supposedly Citibank is charging me a total of 3% (2% plus the 1% imposed by master card) and my bank is supposedly only charging the 1% (which I didn't even know about until this thread), that the end results on my statements do not show that much difference!<BR><BR>