Question
I am going to Paris at the end of this month and wondering what is the best way to minimize currency exchange fees.
I am going to bring AMEX (Platinum Cash Rebate Card), VISA (Chase Platinum Shell Card), and Diners. All issued in US.
From the posts I have read, I will try to minimize the use of AMEX overseas (due to the exchange rate and fees).
My question is what is the among followings:
1) Exchange USD to Euro in US
2) Exchange USD to Euro in Paris
3) Bring T/C to Paris
4) Use VISA or DC
5) Use ATM in Paris
Any thoughts or comments are appreciated.
Answer
Originally posted by KC747:
1) Exchange USD to Euro in US
2) Exchange USD to Euro in Paris
3) Bring T/C to Paris
4) Use VISA or DC
5) Use ATM in Paris
Number (5) is a winner, IMO. An alternative is a VISA/MC issued by a bank that does not add anything on top of the standard 1% mandated by both VISA and MC for transactions in foreign currency. My personal recommendation is a card from MBNA (an Amtrak MC is particularly good, because of no annual fee and earning points that can be exchanged 1:1 into UA, CO or YX programs).
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Eugene:
Thank you for information.
If I use ATM in Paris, how does it work?
Do I just use my VISA card at ATM which has Cirrus Network?
BTW, how come the exchange rate at ATM is better?
Thank you again.
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Originally posted by KC747:
If I use ATM in Paris, how does it work?
Same as in the US. Insert your card, select "English," enter your PIN and the amount (in Euros) you want to withdraw.
Even where the alphabet is different (Hong Kong, Thailand), the English selection will bring you to a familiar character set.
The only catch is to ensure that you have a 4-digit PIN. If you memorized your PIN as a sequence of letters, know the numeric equivalent since the keypad probably won't have letters above the numbers.
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Originally posted by KC747:
Do I just use my VISA card at ATM which has Cirrus Network?
Actually, that would not be prudent at all. If you use your VISA credit card at an ATM, you'd be charged cash advance fees. Stick with using your regular ATM/debit card, that would minimize fees. For example, the only fee my bank charges me is a flat fee of $1 for using ATMs abroad. As been reported elswhere, some banks even have up to several free ATM withdrawals a month, even when you do it abroad.
Originally posted by KC747:
BTW, how come the exchange rate at ATM is better?
It's not necessarily the exchange rate that is better (although it's definitely better compared to cash exchange and TC exchange rates), but using an ATM/debit card eliminates most fees and surcharges (e.g., AMEX charges 2% extra fees for transactions in foreign currencies).
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Eugene,
Thank you. I think my questions are all cleared. I will use my ATM card issued by Chase.
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But check to see if Chase charges you a fee for using an international ATM!
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I only use my ATM card to get cash, and I never use US cash or traveller's checks. I have done this in over 25 countries with no problems.
The only time things got dicey was in China, where only Bank of China ATMs would work for me (I don't know if this is still true), and they didn't have english instructions. I tried all of the different options until I got a screen that showed several different numerical choices like 100 200 400 800 1000 etc. I chose 1000 and my money came flowing out!
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Many debit cards have overseas withdrawal fees, often a fixed amount per transaction. So, if you're going to use ATMs, check your bank's fees and be prepared to take big cash advances to minimise fees.
Using credit cards for purchases will almost always be cheaper than obtaining cash from an ATM for purchases.
As the financial institutions keep adding more and more fees, cash is looking more attractive at times. In Paris, there is an enormous range of rates at foreign exchange dealers. Near/on the Champs-Elysées alone, I saw exchange fees ranging from about 2% to over 10%. The 10% end is clearly a rip-off, but the 2% end is pretty similar to what your card will charge. (Hint: The cheap ones are the little ones hidden down in the back of shopping arcades with long lines of people queuing up to exchange money. The expensive ones are the ones right on the main street that nobody's using.)
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Originally posted by Kremmen:
Using credit cards for purchases will almost always be cheaper than obtaining cash from an ATM for purchases.
I disagree. CC fees are 1-3% and ATM fees (charged by your bank) are typically a buck or two per withdrawal. I can generally withdraw $300 or $400 at a time for that $1 fee.
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Originally posted by KC747:
I think my questions are all cleared. I will use my ATM card issued by Chase.
Watch out. With one of my cards I could not get money out of the ATM. It was a Money Market Checking Account and I had to press SAVINGS ACCOUNT at the ATMs in France and GB.
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Originally posted by pdhenry:
I disagree. CC fees are 1-3% and ATM fees (charged by your bank) are typically a buck or two per withdrawal. I can generally withdraw $300 or $400 at a time for that $1 fee.
The 1% foreign exchange fee charged by Visa or MC, Plus or Cirrus, is going to happen no matter what type of card it is, so we can ignore that.
Let's assume your generous bank only charges $1/withdrawal for your $300. That's 0.3%. Your debit card won't give you cash back or frequent flyer or hotel points, which tend to be valued around 1.7%. The interest-free period on the credit card is worth about another 0.5%. (Depends a lot on what interest rates you can get on your money, of course. If your mortgage and bank account are one and money that you put off spending until later means more money off your mortgage, or other loans, that time delay on payment may be worth 1% or more.) That puts the credit card 2.5% ahead overall.
Even if the credit card company charges up around 3% for foreign exchange instead of the 1% minimum, it's still slightly ahead. And common charges of $1.50-$5 per transaction for debit card use at overseas ATMs, make it vastly more expensive that using a credit card.
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Originally posted by Kremmen:
The 1% foreign exchange fee charged by Visa or MC, Plus or Cirrus, is going to happen no matter what type of card it is, so we can ignore that.
That's incorrect. At least for US-issued ATM cards, there is no "1% foreign exchange fee", only a flat fee charged by your own bank for transactions at foreign ATM's (my bank charges $1 for a cash withdrawal at an ATM abroad, and I can withdraw up to $500 at a time).
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Of course, if you're only spending a few hundred dollars, the difference between 1% and 3% is a fairly small amount of money in absolute terms. It's still fun to get the best deal, but no need to stress out about it over $10.
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Originally posted by Kremmen:
Near/on the Champs-Elysées alone, I saw exchange fees ranging from about 2% to over 10%. The 10% end is clearly a rip-off, but the 2% end is pretty similar to what your card will charge. (Hint: The cheap ones are the little ones hidden down in the back of shopping arcades with long lines of people queuing up to exchange money. The expensive ones are the ones right on the main street that nobody's using.)
careful, what happen once to me was I did not get the exchange rate that was promise. I banged on the window to try to get my money back. the guy behind the counter (behind a window) just ignored me and watched his TV.
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Kremmen-
I disagree with the idea that using a credit card that charges 3% to convert currency is a wash if the card gives airline FF miles.
The 2% extra charge (over the washed 1%) is cash out-of-pocket today. Even if you got 2 cents a mile for your FF points down the road, you've actually bought those miles for 2 cents each, plus the float. Not a good deal to me.
While it's really another topic, I also doubt that miles are still worth 2 cents given the program changes of late, at least to me. UA's award to upgrade to business for Europe went from 40,000 to 60,000. That's an award I target so my former valuation of miles at 1.8 cents went down to 1.2 cents.
My ATM card doesn't add overseas fees and on average I get cash for about 1/2-1% over the interbank rate for $1 million transactions. Not bad.
Finally, I think .5% for float on the cc payment is high in today's environment. If you're investing money, that's pretty hard to find, though I imagine if you're saving interest on credit cards, it's obtainable.
Back to the inital question-Eugene gave excellant advice. Just don't forget the 4 digit pin.
Answer
Originally posted by Eugene:
That's incorrect. At least for US-issued ATM cards, there is no "1% foreign exchange fee"
Are you trying to tell us that you can take out money overseas at the interbank rate with no margin to the network running the transaction? That would make the international networks run at a loss, as some mind of public service. You're welcome to your fantasy. It's a very nice fantasy, mind you.
However, given the plethora of evidence to the contrary, I suggest that you are the one that is incorrect. Have a look at http://www.bankrate.com/brm/news/cc/20010625a.asp as a starting point.
To the best of my knowledge, there has never been a banking product of any sort that operates for the consumer at the interbank rate. Whether you use travellers' cheques, plastic, TTs, or whatever, foreign exchange costs you something.
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Originally posted by Kremmen:
Are you trying to tell us that you can take out money overseas at the interbank rate with no margin to the network running the transaction? That would make the international networks run at a loss, as some mind of public service. You're welcome to your fantasy. It's a very nice fantasy, mind you.
However, given the plethora of evidence to the contrary, I suggest that you are the one that is incorrect. Have a look at http://www.bankrate.com/brm/news/cc/20010625a.asp as a starting point.
To the best of my knowledge, there has never been a banking product of any sort that operates for the consumer at the interbank rate. Whether you use travellers' cheques, plastic, TTs, or whatever, foreign exchange costs you something.
I'm not "trying to tell you", I'm telling you. http://www.flyertalk.com/forum/smile.gif
And no, ATM networks don't run at a loss, they make their money on fees, but those fees are flat fees for some, and percentage based for others.
You seem to not have read carefully the article you're referring to in your post. It's very simple. Really.
VISA and MasterCard set up their fees based on the amount of transaction, and charge 1% each as a fee for transactions in foreign currencies. Some banks add extra fees of up to 2% extra on top of what VISA or MasterCard charge, and pocket that money. American Express charges 2% as a fee for transactions in foreign currencies.
If you use your debit card that carries a VISA or MasterCard logo, you'll be subject to the same fee.
But, if you are using a regular ATM card (not a debit VISA/MC card) using CIRRUS or MOST networks, the fee comes as a flat fee (in case of my bank, $1 per each withdrawal, with withdrawals up to $500 at a time). And no, it's not a fantasy but rather a hard fact that the exchange rate used is an interbank one (or extremely close to it, less than a fraction of a % difference IME). I've compared the rates used on my ATM withdrawals in Europe, Australia, and Africa, and on my VISA/MC transactions at the same locations on the same day. The difference is always about 1% in favor of the ATM transactions. That means that if you withdraw more than a $100 equivalent in local currency at a time, you come out ahead.
These things may work differently for Australian-issued cards, but that's how it works for me.
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Eugene:
You, I and others did not read KC747's posting well.
Ho does not have a regular ATM card! So the best way for him is to use his credit cards to charge and/or get cash from an ATM.
Regarding ATM cards, I agree with you. They are mostly cheaper. Next, the credit card companies have a lot of "fine prints" for tricky fees.
American Express charged me a $29 overlimit fee for $230 over the limit; I did not know my limit and did not know about the fee. O.K. it's was my fault. I wrote them an e-mail and got the fee back within 2 days.
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Originally posted by USAFAN:
Eugene:
You, I and others did not read KC747's posting well.
Ho does not have a regular ATM card!
Hmm... I thought he/she said to the contrary:
Originally posted by KC747:
Eugene,
Thank you. I think my questions are all cleared. I will use my ATM card issued by Chase.
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USAFAN,
AS Eugine pointed out, I have normal ATM card.
Thank you.
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Originally posted by Eugene:
But, if you are using a regular ATM card (not a debit VISA/MC card) using CIRRUS...
If you are using Cirrus' network, you're using Mastercard's network. If there are some cards being treated differently to others while using the same network, well, this pretty much takes the cake as far as bank stupidity.
On one of my accounts, I can choose to have a card with a Visa logo on it or not. Would the Visa/PLUS network say "ooh, he's not got a Visa logo on his card, so I won't charge him as much"? While ludicrous, I guess it's not totally impossible, however I'm yet to see anyone other than you report it being this way.
Given that the vast majority of ATM cards used overseas do seem to have Visa or MC logos on them, it strikes me as mostly academic.
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Oh, another disadvantage with debit cards is that, with a set fee per transaction, you want to make the transactions as large as possible to minimise fees, but there may be local limits.
I don't know what the limit is in France, but when I withdrew money in Italy 2 years ago, the maximum the ATM would allow worked out to not than much more than US$100. I had to make 2 transactions to get the cash I needed, and was close to needing a third. Your $2/transaction card is going to end up being at least 2% in such circumstances.
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Originally posted by Kremmen:
If you are using Cirrus' network, you're using Mastercard's network. If there are some cards being treated differently to others while using the same network, well, this pretty much takes the cake as far as bank stupidity.
It's not the network that is important, but how your bank treats the transaction. And it's not "bank stupidity", it's an issue of competition for your money. For example, some banks (again, in the US at least) offer customers rebates of ATM fees (be it domestically or internationally).
Remember, banks are under no obligation to pass extra charges and fees levied by the third parties to the customers, they can absorb them if they choose to do so.
Originally posted by Kremmen:
On one of my accounts, I can choose to have a card with a Visa logo on it or not. Would the Visa/PLUS network say "ooh, he's not got a Visa logo on his card, so I won't charge him as much"?
Actually, I have the same choice on my checking account. I can either have a regular ATM card, or a MasterCard debit card. These cards would be subject to different T&C's though, and have different encoding on their magnetic strip.
Originally posted by Kremmen:
Given that the vast majority of ATM cards used overseas do seem to have Visa or MC logos on them, it strikes me as mostly academic.
What appears to be academic to you, is a very practical issue for others, and could save them from unnecessarily wasting money (even if a few bucks).
Originally posted by Kremmen:
Are you trying to tell us that you can take out money overseas at the interbank rate with no margin to the network running the transaction?
Here's another testimony (see the thread Best way of getting foreign currency? Opinion (http://www.flyertalk.com/travel/fttravel_forum/Forum11/HTML/003550.html)):
Originally posted by Eastbay1K:
Definitely the ATM. My exchange rate has always been within a cent of the official interbank rate, and if (rarely) there's a surcharge, my bank rebates it. I always make sure that I have enough US$ to get me through a couple of days, however, just in case, as networks go down, machines break, and so on.
And for those who want to find out how much the rates used on their transactions or withdrawals differ from the interbank rate on any particular date, here's a great tool:
Historical Currency Exchange Rates (http://www.oanda.com/convert/fxhistory).
Check your past transactions and find out whether your bank gives you as good a deal as you thought it did. http://www.flyertalk.com/forum/wink.gif
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Originally posted by Eugene:
And for those who want to find out how much the rates used on their transactions or withdrawals differ from the interbank rate on any particular date, here's a great tool:
Historical Currency Exchange Rates (http://www.oanda.com/convert/fxhistory).
It's long been a favourite of mine.
One of the problems with many people's reports of such things is that "my bank didn't charge any fee" means "my bank didn't make any fee obvious to me". The vast majority of people will never notice the usual 1% difference (or even a 2% or 3% difference) between their card's rate and the interbank rate. ... Indeed, it's very hard to detect a 1% difference unless you average over quite a number of transactions, since it can be absorbed by currency fluctuations from one day to the next anyhow.
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As folks here do point out, one should consider using ATMs instead of travelers checks or currency exchange bureaus.
IMHO a credit card is an acceptable tool for obtaining cash overseas.
I personally do not fret about whether or not I get the "best" exchange deal as much as I try to get a "fair" exchange deal. This is of course a subjective opinion.
What I have learned from my own travel is that I use my credit cards to pay for purchases as much as possible. The exchange problem is resolved when I get home and pay the credit card bill.
When I arrive at my destination I use my credit card to make a cash withdrawal, usually for at least $300 to $400 with object of minimizing the effect of the service charge. This is my pocket change for in-country spending.
Am I getting the best exchange deal? I doubt it. But if as a result I'm out $10 or $15 after a nice trip abroad, I don't sweat it --I had a good time.
It's just my own approach to life and not meant a critique of other FT opinions here.
There are indeed many ways to look at an issue.
respectfully,
Barry
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When making these decisions, it also helps to ensure that one is comparing like products. While the ATM/debit card might be the lowest cost means of obtaining CASH, that does not mean that it is the best approach to paying for a weeklong stay in a 4-star hotel. As has been noted by others, the same considerations regarding payment vehicles as at home should apply: safety and security, time value of money, transaction costs, and rewards possibilities. I would far rather pay an extra 1-2% for using my credit card (some of which is offset by any mileage earned) than be robbed in a foreign country after making a large withdrawal from an ATM!
When using ATM/debit cards, I have been told that it is actually preferable to carry one with a Visa/MC logo when outside the US. If the PLUS/Cirrus network does not work (quite possible), cash withdrawals with a Visa/MC logo card will be treated as [no fee] "cash advances" on a debit card, whereas those without such a logo are left cashless. I can not confirm this network difference, but it sounds plausible.
When pinching pennies in this field, I have also noticed that calculation dates appear to vary between banks. That is, two transactions on the same date on different cards (debit, credit, whatever) may be converted at different rates, depending on how quickly the issuing bank receives the transaction from the merchant and posts it to one's account. If you really want to get into the intricacies of this business, send your resume to the Forex trading desk of a major bank.
I second Jerseyfinn's approach: make educated choices, have fun, and don't worry excessively about small differences.
My $.02 on the original question:
1) Exchange USD to Euro in US
2) Exchange USD to Euro in Paris
3) Bring T/C to Paris
4) Use VISA or DC
5) Use ATM in Paris
1) Poor idea
2) Discussed in this thread; probably higher cost than other options
3) Likely more costly than 4 or 5; worse exchange rate/commission and may be issuing costs in the US
4) Best choice for large transactions
5) If your bank doesn't charge excessive fees, probably the best option for cash transactions
[This message has been edited by chalf (edited 11-28-2002).]
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dup post
[This message has been edited by meFIRST (edited 12-01-2002).]
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Originally posted by meFIRST:
I bank with Citibank and one of the good things about it is that they have ATM's and Branch offices everywhere. Esp in Europe and Asia.
I know that if you withdraw money from an overseas citibank there is no ATM fees.
Overseas ATM trasactions are processed through the VISA/MC networks since there is no Star/Plus/NYCE network around.
Just make sure your debit/atm card has a Visa/MC logo on it and you should be fine. Used it all the time.
Also note that - >Avaliable funds will come from your CHECKING account. There is no option for you to move money from Savings to checking at a foreign ATM if you don't have enough in checking.
What I had to do once when I was in europe,
was to go to a internet cafe, login to my bank in the US internet banking site and move money. Then walked to the ATM to withdraw, funds were availiable immidiately.
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Please correct me if Im wrong, I always thought that when you use your CC to withdraw from an ATM or whatever that its treated as a Cash advance and therefore the % starts being charged from the day you get it, I NEVER did it nor do I plan to, I thought the 3% or 2%/1% that the CCs charge are for when you buy something other than MONEY.( I do believe besides the % charges that there is also a fee that is charged as well)
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Just thought that I would add... Farm Bureau Bank Visa (that does not provide miles, but provides 1% cash back) does not charge any fee for foreign exchange. Furthermore, they absorb the 1% fee that Visa charges.
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Bob
You only live once -- but if you work it right, once is enough.
Joe E. Lewis