NYT article on a way to cut credit card transaction fees and cash exchange rates

Here is that article NOT behind the paywall (from Google search): https://www.nytimes.com/2023/02/09/travel/multicurrency-accounts-exchanging-money.html

Although not sure why this is needed with the availability of good checking accounts like Schwab with free ATM and foreign ATM fee coverage, no FTF, and exchange rate mark-up based on the network, and numerous credit cards with no FTF, exchange rate at network rates, and cash-back advantages.

Am I missing something? Effectively, what is the difference between this and a credit card without fees for foreign transactions and making sure transactions are completed in the local currency? We use a credit card for most transactions in Europe and have found it easy to find bank/credit union ATMs with no/low fees and decent exchange rates when cash is needed.

Believe it or not, I'm sure there are people out there who don't have no-fee foreign transaction credit cards or ATM withdrawals. Maybe their credit score can't take the hit of applying for another credit card. Maybe people who travel two weeks a year are happy with their current banking set up and don't want to bother setting up an account with with Schwab. Maybe they aren't as travel savvy or financially brilliant as some RS readers. I put this out there for them, in hopes of being helpful.

I think for low information travelers™, just getting a card that has no FTF would be a much simpler, much more accessible, less demanding solution. Or if that's too complicated, just pay more and either don't worry about it or simply remain oblivious to the fact that you're paying more for no good reason (the "tax" that low information folks™ usually pay for all sorts of things).

BTW, "Revolut" is not new, it's been The Next Big Thing for years.

I wish all new international currency speculators the very best of luck.

The one advantage that I can think of is the ability to lock in the exchange rate. If I were to have done this last year when the Euro/USD rate was 0.962; I would have saved ~10% with the current rate of 1.07. But then exchange rate keeps fluctuating; so this will make sense if the Euro is projected to keep appreciating in the long term. One issue is its lack of similar protection provided by credit cards.

Ahh, yes, Wanderlust, good point. A loaded card would be a great gift to a young person going to Europe that might not be able to get a credit card on their own. I've been giving euros, but this card would be helpful and appreciated, as well.

I don't believe many will chime in that those that can't get a credit card shouldn't travel. I'm not sure that any would chime with that thought. As the person that questioned what this does beyond the functions of a credit card, I feel the reaction was a little harsh. I think a similar comment in regards to "entitlement" can be made in regards to some comments on the forum in regard to choices people make for hotel and transportation.

AMann: Amen

This sort of thing, similar to what Wise offers, is used by a few people in the expat community, people arriving overseas and setting up a rental, getting phones, electricity. But once people are settled someplace, they usually use local banks.

This is not a good idea for travelers. We should help new travelers or those interested in saving money get interest-free credit cards. A credit card is familiar; it has security features for loss or theft, it doesn’t have limited fee-free ATM access. It's a question of teaching people how to get a credit card with good terms.

Mindfulness was correct that exchange rates can vary, but how much does an occasional traveler exchange, how long should the person hold it, what if the traveler doesn't use everything in their account?

Living in Europe, I regularly exchange money. Once it's exchanged, nobody wins changing leftovers back to the original currency. The occasional traveler could empty the account at duty free shopping, something I see travelers do with leftover Euros. But that saves nothing.

BTW, when the euro dipped to 0.962 I blinked and missed it. It had to have been very quick because I watch it regularly. Just hitting parity with the dollar lasted only a couple of days.

Guessing when you'll hit the exchange rate jackpot and how much to exchange could drive the occasional traveler crazy, worried, regretful. It’s confusing to remember the $1,200 monthly ATM limit before interest kicks in. Wise has a ridiculously low ATM limit before interest begins. It's better to use an interest-free credit card, accept the rate, and forget about it. The traveler can review the bill, not “ scrutinize”, pay it and be done. The first paragraph really exaggerated.

So, I highly suggest sticking to the good old credit card for travelers, but I thank Wanderlust58 for bringing it to my attention. It clarified in my mind that this isn't for travelers.

But, as I said above, I’ve seen American expats using these accounts as they get their foreign bank accounts set up, which can be time consuming due to the US bank reporting laws. Foreign banks avoid opening accounts for Americans, if they can get away with it.

Be sure to read the comments that follow this article. Readers raised a lot of the questions mentioned by other posters here. Personally, I don't see the value for an occasional traveler who already has credit and debit cards with no transaction fees. I like to keep things simple for myself, and this seems an unnecessary complication. Maybe I'm just getting too old to learn new tricks!

I was also going to suggest that people read the comments - not something anyone usually suggests with a news article lol. And the "cons" of these accounts is at the very end of the piece, and they are rather significant, especially the lack of consumer protection. These are not credit cards, they are debit cards. That said, I can see the value for travelers with no favorable credit card access, but this seems to be a pretty complex way to save a few dollars. A secured card through a bank might be the better way to go for some.

I know someone who has a Revolut account with multiple currencies but that's because she lives in London and owns property elsewhere in Europe (with a different currency), so dealing with rent payments translated into pounds at a lowest cost may be of value. Same with paying for work/ers overseas (intra Europe). Brits having to deal with so many things in Euros is probably not a coincidence why this story featured a woman in London.

But this seems way more complicated for an average US tourist (although it may be good for someone having a kid studying abroad or something similar). VISA and Mastercard (due to their immense market power) already do a great job with getting the exchange fee to a really low amount (like 1% or less) and one can deliberately get a zero foreign fee card to avoid the on-the-top fees and avoid using cash as much as possible, while retaining the protections of a US-based credit card.

I've used Wise as well for making payments to an overseas account instead of a wire (fees are quite low in comparison), but I am not jumping for chance to get a Wise debit card, which is heavily advertised as a multi-currency choice. I'll stick to my credit cards and my credit union ATM card.