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Currency exchange opinions

My wife is a VP with Bank of America corporate here in Charlotte, NC (as a risk analyst - not much into the financial stuff) and just received an email that she is eligible a for discount on foreign currency. Currently the BoA rate for 1000 CZK is $47.69 USD BEFORE her discount. Current live exchange rate is $44.75 so I would imagine we would be able to exchange currency somewhere in between that.

What do you all think - should we do it before our trip in September? We plan on mostly using our credit cards but have a tour that only accepts cash and would prefer to have some cash for incidentals - as a risk analyst, she is always concerned about using ATM's in general and using one in a foreign country is giving her fits, lol.

Posted by
1915 posts

If instead of dealing with BofA, which does no favors for its depositors, you should be opening and funding an account with CapOne, Schwab, or one of several credit unions recommended here. using the current rate, 1000 CZK withdrawn from an ATM would show a withdrawal of no more than $45.19.

There is no more risk using an ATM abroad than in the US, probably less as we have so much more skimming issues here. So BofA will give her a break for being corporate and not charge that full 6.5% mark-up? They still won't give it to her for less than it costs them, and they still will insist on some profit -especially since if you want the CZK before you leave the US there are the costs of getting the money into the US and then to you.

Posted by
441 posts

It’s definitely necessary to have cash in the Czech Republic. There are many places that don’t take cards. If the rate she gets is about the same, I don’t see any reason not to have it before you go. We have never arrived in a country with the local currency. I’ve (so far) not had any issues using ATMs with my Schwab account but if it makes her feel better, I say why not, sounds reasonable to me.

Posted by
5658 posts

she is always concerned about using ATM's in general and using one in
a foreign country is giving her fits

Why? Millions of people do it every day. ATMs are ingrained in everyday life abroad too. I wouldn't use a Bank of America debit ATM card to do it though unless they can refund you all their high fees. Really, this is not difficult. Get a credit union debit card with a minimal fee (1% is what I have). Use the ATM as you need it abroad. Which is better - the going exchange rate plus 1% OR the going exchange rate plus a 3-7% markup? In other words, your "discount" isn't your best option, it's merely not the worst option (which would be B of A's current rate, which is a 6.57% markup. Whew, what a deal!). Exchanging currency in advance (using human labor) is never going to be the best option, no matter what the discount is (unless they discount it to only a 1% markup which is not going to happen).

Posted by
1915 posts

And let us not forget that "exchanging currency" is a complete misnomer. It is not an exchange -it is a purchase of currency which is sold to you at a profit, as opposed to withdrawing money from your bank account issued int he local currency by the international exchange systems.

Posted by
4572 posts

All the above is true, but sometimes peace of mind is worth paying for, especially that of your travel partner.

Posted by
15212 posts

While she's analyzing risks, have her analyze the risks of walking around foreign countries with large amounts of cash in your pocket.

Posted by
238 posts

My question has nothing to do with how BoA treats its depositers - my wife works in the corporate office so that point is moot

My wife also won't be paying the current 6.5% bank currency exchange rate but it will be at a discount which is less than 3%. Yes, the bank needs to make a profit but they also gives certain..... "perks" to corporate employees.

And we're not talking about walking around with huge amounts of cash - looking at exchanging (or for Larry, buying) $100 USD worth of Korunas

As for why my wife has fits using ATM's overseas - as a global risk analyst, its her job to look at corporate as well as consumer banking and how to minimize customer loss. She's had to look at what's been done as well as come up with scenarios that can affect day to day issues from natural catastrophes to terrorist acts to hackers and simple bank fraud. She's been doing this for going on 17 years and she has helped develop many of the safeguards that we use today in banking. After doing that day in and day out for so long, she just can't get out of that mindset .

Posted by
4416 posts

Hefnerd, is this your first trip to Europe? That six cent spread on 1000 CZK suggests to me that this is hardly worth sweating over. Indeed, the chance of losing or pickpocketing of the cash is a much more serious threat than failing to "make a killing" on the "foreign exchange market!"

While the danger of "skimming" devices on ATMs does exist, it is much smaller at real "bank" ATMs, all over the world. (That's why BofA has such funny-shaped snouts over the card input slot.) Your description of your wife's aversion to using a foreign ATM suggests that she has little foreign travel experience. I've used ATMs in Europe hundreds of times, and my only problem has been Bank of America freezing my account even though I did a travel notification. Since the risk to the account owner really isn't very high for a brief episode of identity theft (which doesn't have to happen if you are careful), why is she so uncomfortable?

Larry's piece is accurate and well-written. But it is misleading to the naive user. That's because using an ATM has become a "cover" for banks to transform "withdrawals" of your own money into that "purchase transaction" he mentioned, that exacts (in the case of Bank of America) 3% fees, plus a fixed fee, for the occasion. Of course, we were warned when Congress cracked down on predatory banking fees that the banks would find some other way to make money. And they did!

https://www.ricksteves.com/travel-tips/money

Posted by
1676 posts

sometimes it's good to push your boundaries and get out of your comfort zone - live a little, take a few risks, use overseas ATMs.

Posted by
5658 posts

She's been doing this for going on 17 years and she has helped develop
many of the safeguards that we use today in banking.

Ok, I'm following you because you volunteered this information. But it's the conclusion that doesn't compute. So after putting in all the safety guardrails into debit card card products, if the inference is "don't use an ATM card at all abroad", what good is all that work? It's basically like throwing up your hands and saying "I don't trust the (global banking) system for simple everyday withdrawal transactions so I'm opting out". Like others, I have to ask....how much overseas travel experience do you both have?

If it makes you feel better, go for it. Order the money. If it's a small amount, then who cares...you'll pay some small premium for your worries. But you asked what others would do, and my answer is to get a competitive ATM debit card and use it as you need abroad, and charge what you can.

Posted by
2347 posts

so you are looking to save about $3. hardly worth the effort, just use a ATM like the majority of people do they are as safe as any other method,or just bring $100 with you an exchange them at a office that has a decent rate you are happy with.
me ,i travel a lot and use ATM's everywhere and never had a problem.

Posted by
158 posts

Sure, why not get $100 worth of foreign currency here, so that you already have it when you land for peace of mind?

Posted by
238 posts

Agnes - not saying she won't use an overseas ATM, just that she hesitates to (very much so). The biggest issue she has with debit cards is they don't offer the same level of protection as credit cards. That plus the fact that she is more aware of what happens behind the scenes than most people are - most issues that happen in the banking industry are not made publicly aware in order to not allow certain people to know that they have been discovered and issues being resolved. Her way of thinking is what makes her so......cautious?

And as to international travel - I have traveled extensively in my life, probably more than most. My wife, however, has only been to Europe/traveled internationally once about 10-years ago (Caribbean cruises notwithstanding). When we do travel, we use credit cards. But.....the phrase "Happy wife, happy life" does apply here - since we got married, she has taken over the household finances. I guess working in the banking industry, she feels its her responsibility

Posted by
4416 posts

Herfnerd, I completely agree with your wife. For years, I refused to trade in my B of A "ATM Card" for a debit card. But finally, they told me that the ATM Card would no longer be accepted at foreign ATMs, only in the U.S. So I knuckled under and accepted a Debit Card. I NEVER use it at home as a debit card, because it has access to my bank accounts. I use credit cards at home and abroad.

I will say that I ONCE used my B of A Debit Card abroad when my credit card did not work in an unattended gas station. For some reason, the Debit Card worked. (This can be a problem when returning a car before business hours at the rental station.)

Posted by
1915 posts

Yes, there is a network fee at ATMs abroad, no matter what. but it is not 3%. My Schwab withdrawals overseas cost me about POINT 3%, My CapOne no more than 1/2%. Credit Unions from what others report seem to be 1%. No foreign transaction fees, no fees for using the ATM.

if you want piece of mind, then you can feel you are paying for that rather than making more profits for the large banks (although in this case these profits are being returned to the OP in terms of salary). And surely you don't need the blessings nor contradictions from anyone here as you have made up your mind already. CapOne, Schwab, the credit unions have shown that this business model is not necessary. Our family and friends choose not to support business models based on excess greed.

Posted by
2817 posts

I worked for Banks and Card networks for nearly 30 years in multiple jobs from filling and balancing ATMs all the way through writing software for them. I know a lot about how things work including the dark regions no one wants to go related to fraud, fake ATMs and more than I ever thought existed. And I still have no worries using my card in bank owned and operated ATMs. Yes, I know there are risks and possible card issues when using your ATM/Debit card anywhere, not just in foreign countries. So what? How else is the modern traveler supposed to get cash in a low cost, relatively safe, manner. Having an ATM card of yours used fraudulently, while not a fun situation, is not the end of the world. You do get your money back. I do refuse to ever use my debit card to make purchases because of the reduced coverage. That is what credit cards are for -- let the bank fight to get their money back when an issue occurs.

One bank I worked for, long before ATMs were on every corner of every city town and village of the world, offered employees a reduced rate when purchasing foreign currency. They took their buy and sell rate and picked a number in the middle of those figures. It did save some money when buying as well as when you sold back. Usually was a better rate than traveler checks also. Since there was no other way to get cash in those days except at currency exchange booths, it worked.

As far as getting currency before your trip, sure why not. A hundred or so in the local currency could come in handy. I have faith that my cards will work so I don't do that.

You do have foreign transaction fee free credit cards, I hope? BofA offers some nice ones. How about your BofA ATM card, what fees does it charge when used out of the US? Looking at the fee schedule for BofA it appears they charge $5 + 3% for all foreign ATM transactions even on the high dollar accounts. Seems high, especially when you can have a Capital One 360 account where the cost to use a foreign ATM is exactly ZERO. They even absorb the network fees of up to 1%.

Posted by
20 posts

Well Herfnerd, aren’t you glad you asked 😜. Here’s my two-cents worth. You couched this as a financial question, but it is really a question about feelings and, while the replies have been informative, they are not relevant to the real question. None of us (or you) are going to change how your wife feels about this issue with our logic, experiences, or other stories. She doesn’t feel comfortable using ATMs, so buy some koruna before you go, use cards whenever possible, hit an ATM only if you run out of and need a bit more “walking around money”, and go enjoy your holiday!

Posted by
238 posts

Yeah - big mistake, lol

But we’ve figured what to do. Just planning on getting a couple hundred USD’s worth of CZK’s ahead of time at what we’ve discovered to be at the current exchange rate - come to find out she isn’t charged any fees at all! We’ll just continue with our plan of using CC’s for most things

Thanks All!

Posted by
4416 posts

I don't think you'll have any trouble with hotel or car rental. But note that Czech Republic is a little like Germany, in that credit card usage isn't as universal as it is in the U.S. and some foreign countries. Be sure to look on the door of the restaurant for stickers before you assume you'll be able to pay with a credit card. An extreme example would be Rick's recommended car service for trips like Cesky Krumlov as a day trip. I think we paid him with cash, but it was many years ago.

Presumably you have one of the B of A credit cards with no (or maybe 1%) foreign transaction fees. I think they have a wide range of credit card products, each with a different fee structure.

In fairness to everyone who posted, the OP DID ASK, "should we do it before our trip." Nobody offered unsolicited, snooty advice. We described what we learned on our trips and in our bank selection. The words "too big to fail" did not appear in replies.

Posted by
238 posts

I took everything posted in stride - my skin is not that thin and in no way did I get defensive but do appreciate everyone's input.

As for my wife's reluctance to use ATM's overseas - that is just her feeling and based on what she perceives to be valid reasons from what she's discovered working over the years. I don't have the same reluctance but again - Happy wife.......

Posted by
11983 posts

I'll give you my experience with using ATMs in the Czech Rep...both good, no problems in 2016 and 2017. This was not in Prague but in a province capital, Brno. Paying for museums etc, I used cash.