Purchasing Euros ahead of time?
Jan 22nd, 2008, 05:16 PM
#1
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Purchasing Euros ahead of time?
We are planning a trip to Italy in October. Because of the falling dollar, I had the idea of of purchasing Euros now - of course gambling that the exchange rate would swing the way I'm guessing it will.
Of course the sticking point is how to go about doing this. Our broker could do this for us, but I was wondering if there is anyone that offers a convenient service for travelers. It would be great if you could load Euros on a debit card or something and have them at your disposal.
Has anyone else done this before or heard about this?
Of course the sticking point is how to go about doing this. Our broker could do this for us, but I was wondering if there is anyone that offers a convenient service for travelers. It would be great if you could load Euros on a debit card or something and have them at your disposal.
Has anyone else done this before or heard about this?
Jan 22nd, 2008, 05:36 PM
#3
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It's easy to do the math.
Let's say you want to exchange get 1000 Euros today for October trip.
If I were to withdraw cash from an ATM in Italy today it would cost me ~$1475 (exch rate = 1.46:1, add 1% forex fee, and $0.00 ATM fees).
If I buy those 1000 Euro through a bank in the US, it would cost me ~7% higher, or $1560 - an added cost of $85.
That $1560 will no longer be earning interest or be invested in the stock market. Let's, for the sake of this discussion, assume I'd make a 4% return on that $1560 - or roughly another $50.
Total cost now up to $135, or 9%. If the dollar falls another 9% from now to October, to 1.59.1, then it's a complete wash. I've gained nothing, and I have 1000 Euro cash sitting around.
You can do the math yourself with your own assumptions & #'s. If you feel the dollar will drop far enough to make the Euro purchase now worthwhile for you, then go ahead.
I would not.
Let's say you want to exchange get 1000 Euros today for October trip.
If I were to withdraw cash from an ATM in Italy today it would cost me ~$1475 (exch rate = 1.46:1, add 1% forex fee, and $0.00 ATM fees).
If I buy those 1000 Euro through a bank in the US, it would cost me ~7% higher, or $1560 - an added cost of $85.
That $1560 will no longer be earning interest or be invested in the stock market. Let's, for the sake of this discussion, assume I'd make a 4% return on that $1560 - or roughly another $50.
Total cost now up to $135, or 9%. If the dollar falls another 9% from now to October, to 1.59.1, then it's a complete wash. I've gained nothing, and I have 1000 Euro cash sitting around.
You can do the math yourself with your own assumptions & #'s. If you feel the dollar will drop far enough to make the Euro purchase now worthwhile for you, then go ahead.
I would not.
Jan 22nd, 2008, 05:42 PM
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What if one has a bank that will exchange dollars for euros at no charge? My bank is one that is a "trust" and has international branches. They will exchange dollars for euros at no charge here at home. They do not have branches in the European countries I am visiting, however. I need to pay for my apt in Rome when I arrive in cash. I have really been considering bringing some euros with me--no ATM or credit card or exchange fees.
Jan 22nd, 2008, 05:49 PM
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You need to know two things
1. actual exchange rate (the words "today's rate" aren't enough info - you need the actual #)
2. charges/fees
Ask them how much it will cost to get 1000 Euros. If it is close to the $1475 I quote, then you are in fact getting a great deal. If it is higher, then either the exchange rate is higher, there are fees, or both.
1. actual exchange rate (the words "today's rate" aren't enough info - you need the actual #)
2. charges/fees
Ask them how much it will cost to get 1000 Euros. If it is close to the $1475 I quote, then you are in fact getting a great deal. If it is higher, then either the exchange rate is higher, there are fees, or both.
Jan 22nd, 2008, 05:59 PM
#6
"<i>What if one has a bank that will exchange dollars for euros at no charge? </i>"
They have to pay for that transaction somehow, so I'm willing to bet if there are no fees there will be a really bad exchange rate.
They don't provide foreign currency for free
They have to pay for that transaction somehow, so I'm willing to bet if there are no fees there will be a really bad exchange rate.
They don't provide foreign currency for free
Jan 23rd, 2008, 07:47 AM
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My son is going to Rome in March on his honeymoon--we ordered 300 Euros (more in US dollars) from our bank and gave them to the kids as part of their Christmas present--
did not want them to have the hassle of changing money at ATM in FCO so they would be able to get their train or cab to their hotel...
not much and yes, we did pay a little more to do it that way--
but it was a nice reminder of their honeymoon
Gave them the Rick Steves Rome book and an archeological guide to Rome to go with...
did not want them to have the hassle of changing money at ATM in FCO so they would be able to get their train or cab to their hotel...
not much and yes, we did pay a little more to do it that way--
but it was a nice reminder of their honeymoon
Gave them the Rick Steves Rome book and an archeological guide to Rome to go with...
Jan 23rd, 2008, 08:27 AM
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I'm going to agree with the above posters. Apart from perhaps having a few euros on hand to get from the airport to hotel, I see no reason to not use ATM as source of euros while on holiday.
As stated, you will see many currency exchange bureaux (and bank I guess) saying "no fees" so you think, great, it's not going to cost me anything. But since these are businesses and not the Sisters of Holy Charity to Travelers...they make money, and the only way is to underpay when they buy and overcharge when they sell...using the exchange rate. The exchange rate can be anything they want, they set it (for their business, not the international rate)!
The other thing to consider is...where is it cheaper to get euros..where they are in ciruclation, or in another country which needs to make special
arrangements to get them for you.
As stated, you will see many currency exchange bureaux (and bank I guess) saying "no fees" so you think, great, it's not going to cost me anything. But since these are businesses and not the Sisters of Holy Charity to Travelers...they make money, and the only way is to underpay when they buy and overcharge when they sell...using the exchange rate. The exchange rate can be anything they want, they set it (for their business, not the international rate)!
The other thing to consider is...where is it cheaper to get euros..where they are in ciruclation, or in another country which needs to make special
arrangements to get them for you.
Feb 2nd, 2009, 03:20 PM
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I too have been contemplating this same issue. I am trying to find the best way to address the issue of having euro’s to pay for my entire stay when we arrive in Rome. I also reside in Florida and bank at a “trust”.
I went there today and got a quote for euro’s, they only charge $10. I thought GREAT. Then as we proceeded I realized they quoted me a rate of 8 cents higher than xe.com. I then decided not to proceed. It kills me to pay more AND to haul all that around would be nerve racking.
So next step is going to be to see if the bank I use for travel (I do not use the “trust” for ATM withdraw internationally as they charge a fee. I use another local branch) will allow me to raise the maximum amount I can withdraw which is currently $200. So that will be next on my “to do” list!
I went there today and got a quote for euro’s, they only charge $10. I thought GREAT. Then as we proceeded I realized they quoted me a rate of 8 cents higher than xe.com. I then decided not to proceed. It kills me to pay more AND to haul all that around would be nerve racking.
So next step is going to be to see if the bank I use for travel (I do not use the “trust” for ATM withdraw internationally as they charge a fee. I use another local branch) will allow me to raise the maximum amount I can withdraw which is currently $200. So that will be next on my “to do” list!
Feb 2nd, 2009, 04:33 PM
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I think the (likely - or potential, however you look at it) loss is not the major issue. Carrying all that cash around with you is what doesn't make sense.
When we travel we do as much as possible with credit cards (and you can do most everything that way) and pull $200 or so cash when we need it. We never carry much more than that in cash - just too risky.
And the chance of a benefit seems not very high to me.
When we travel we do as much as possible with credit cards (and you can do most everything that way) and pull $200 or so cash when we need it. We never carry much more than that in cash - just too risky.
And the chance of a benefit seems not very high to me.
