When/How should we exchange funds?
 

Please try to give me tips that are applicable to our situation.

We have Wells Fargo checking account. They charge 3% on purchases and on ATM a $5 withdrawl fee without a 3% charge.

Should we:
1) Exchange money now for euros so we have them in hand while there. The Wells Fargo Currency Exchange Rate as of today is 1.4543 and there are no charges or fees associated with that.

OR:
2) ATM withdrawls. Does anyone know what rate that actually exchange at? Is it lower than the exchange rate mentioned above?

(We have a credit card that does not charge an international transaction fee; we plan to use this but our two week vacation is a lot more than its limit or a limit that we have. SO - thats why we want to know about exchanging money and/or using ATM)

Are you sure there is no 3% fee on your ATM card? When I last checked with Wells Fargo, there was both an ATM charge of $5 per withdrawal plus a 3% foreign exchange fee.

At an ATM, you typically get the bank rate of exchange, which is better than you can get on your own at exchange windows. To find today's bank rate of exchange, take a look at www.xe.com Getting foreign currency before you go is typically the most expensive way to exchange money.

A couple of suggestions:

get a higher limit on your credit card that does not charge a foreign exchange fee and put as much as possible on this card.

open a checking account at a small bank or credit union, as many of these do not charge for use of foreign ATMs or have a smaller charge.

Do you have a brokerage account? I have a checking account at my brokerage and they do not charge for use of foreign ATMs and in fact reimburse me for any charges by the foreign bank. The are charge only a 1% foreign exchange fee.

Here's a currency exchange site.

http://www.xe.com/

Have you asked the CC company that doesn't charge an international transaction fee if they will increase your credit limit for one month to whatever amount you think you'd need? If you have an excellent history with this company and a good credit score, they might accommodate you.

Definitely check with your bank about fees, but very rare to get a better exchange rate in the States than you will at the ATM in the airport.

We arrived in Rome with no euros. Went straight to ATM after leaving the plane. Do larger/fewer withdrawals & horde the 1 euro coins (seems like you always need them for a snack/pay toilet!)

<<Does anyone know what rate that actually exchange at?>>

Yes, the official rate. That's known as the Interbank rate.

The current Wells Fargo rate is about 8 cents higher than the Interbank rate. That's effectively a 6% fee. Thus, withdraw higher amounts in Europe to amortize the fee and you'll end up ahead (withdraw 300E, that's $411 plus 12.30 plus 5 = about 430 against 435 for the cash exchange at WF).

Or, if you have time, sign up for a credit union or Cap One account and get low-cost forex transactions without withdrawal charges.

From time immemorial, the money changers have engaged in terminology games. Is "no charges or fees" a good deal? Unlikely when it is uttered by financial institutions. They prey on those who believe things at face value.

The EXTRA cost of foreign transactions to YOU = "fees" + rate.

The favorite game they play is to say no fee while they are quickly stuffing more to the "rate". Look at what they offered

$1.4543 = €1.00. You DON'T have to take their word to see if is a fair rate. Do you own fact checking. Just look up www.xe.com, for example on your own, it says:
$1.3795 = €1.00. The "rate" quoted come with 5.4% "fee" even though they CHOSE not call it a fee.

The way they compute foreign exchange rate needs to be disclosed in your term sheet. It is usually expressed in convoluted way and adding to the variation in account types, it can be quite obscure. Even if you call the customer support, it is very difficult to get a straight answer. What you want is how much more above the interbank rate they are charging. They love to throw you all sorts of terminology mambo jambos so that you don't realize what a bad deal they are giving you.

It is difficult to get decent deal from big U.S. banks unless you are a high asset customer. For plebeians, the credit unions offer the least confusing or predatory bank options without high, if not zero, fees. For 0%, you can go to some brokerage accounts, but that adds to your financial management complexities.

Short answer = do not exchange anywhere, just withdraw local currency from ATM at your destination. To minimize cost (per transaction fees) make fewer large withdrawals rather than multiple smaller ones.

Also suggest requesting temporary increase in CC limit.

>>get a higher limit on your credit card that does not charge a foreign exchange fee<<

>>Also suggest requesting temporary increase in CC limit.<<

Most folks have a set credit card limit (This has nothing at all to do w/ ATM/daily limits)

Most credit cards have a total credit limit $1,000, $1,500, $10,000 - what ever. If someone's credit limit is low they most likely cannot get a 'temporary' increase. They qualify for a certain credit limit . . .

Wells Fargo is the worst for fees. We get a much better rate with our credit union. ATM's are the easiest way to get money, but I would only use my Wells Fargo account in an emergency

Not all credit unions have low fees. My US university credit union has higher fees than many banks. However, it's a convenient account for me, and I don't see the point of opening new checking accounts to avoid a few piddling $5 fees, if the bank is convenient for you and has otherwise reasonable services.

If you'll be in Europe for two weeks, and if you charge as much as possible to your credit card, you'll really just need to withdraw cash for occasional spending money. Let's say you make five withdrawals of €250 each. That's €25 in fees. Even if you take such a trip twice a year, $50 in fees wouldn't justify the nuisance of opening a different account, and keeping track of two accounts instead of one. If you travel a lot, or need a second account for some other reason, that's a good reason for looking for an account that doesn't charge foreign withdrawal fees. But I'll bet they overcharge you for something else. No bank is into depositor philanthropy.

As of today the euro is worth $1.37 - so the bank is charging you 8 cents extra for each euro you buy. Do you want to pay that much - and then have the risk of carrying around all of the cash?

Not something I would do.

Wells Fargo is awful when it comes to international transactions. Their tellers don't know a single thing about using/exchanging money overseas. Even the managers don't. You are getting charged plenty for those transactions - just check them against the bank rate every day.

Move to a credit union with no transaction or exchange fees. Why would you just hand your bank a bunch of extra money?

Pretty sure you can overpay on your credit card before you go and therefore not go over your limit but I'd check with the bank first. However, I've had credit limits increased on a few cards and all it took was a quick call to the bank.

Overpay might not be an option depending on the bank. Some come with a term prohibiting building credit. The bank can decide to write a check and refund you the money at any time to reset the balance to $0.

You can pay your credit card account throughout your trip before it is due, before it hits your credit limit.

You can also prepay your hotel. (not recommended, but helps your cc credit limit issue.)

I think Greg's suggestion is good - just go online every few days and pay your cc balance. Easy peasy.

Thanks for all the advice - here is an update on where we stand.

We tried increasing credit limit but we are at the max limit for our current credit. We can go online and pay every day or every few days so we can continue using the card, BUT here is the problem. The Chase United card has zero foreign transaction fees, but charges $10 or 5%, whatever is greater, on cash advances.

So- should we always try and use the credit card when possible, since there is no transaction fees and just pay off daily; then utilize the ATM card from Wells Fargo so we do not have to pay the 5% but only the $5 ATM fee?

You do not want to use your credit card for cash advances. Use it only as a credit card.

Better to have an account for ATM withdrawal that doesn't charge a currency conversion fee. You also might contact your bank and get an increase on your withdrawal limit so you can make fewer withdrawals and fewer $5 fees.

Judy is right - never use your credit card to withdraw money from an ATM. It is considered a loan and you will have a service charge plus a high interest rate. If you do not want to open a bank account for travel that has low ATM fees, just plan to make as few withdrawals as possible.

Yes, that is reasonable given your situation.