Convert money now... or when we get there?

Hey Paula

I think the major concensus would be to use your ATM or credit card n Europe for the best exchange rate.

Clark Howard highly recommends this as well.

Have fun in the "Old Country", Paula!

B~

so your friend seriously thinks that a bank in the US will give you more Euro's for a given amount of dollars than they will in Europe? Because we "value the dollar more" here? Obviously she doesn't understand the concept of arbitrage. If her theory was true, then wily traders could make fortunes with a few phone calls a day. Start with Euros in europe, convert them to dollars in europe and electronically transfer them to an American bank account. Call the American bank (that "values" dollars more) and have them converted back to Euros. Move the money back to the european bank. You have more Euros than you started with! Repeat anytime you feel like making free money.

Look, don't try to change her mind, people are pretty stubborn when they have beliefs like this. But the exchange rate used by financial institutions is exactly the same worldwide, and is published daily in the papers (and available online). You can't get that exact rate due to fees, but you can get pretty close to it by withdrawing money from ATMs in Europe. Some US banks charge more for using ATMs abroad than others, it pays to check around. There is no charge imposed by the ATM (unlike here in the US).

Im in Pescara,Italy which is not on the usual tourist route. I come every year and while I have not been able to use my debit card here in the past, the banks have always exchanged my US dollars for Euros. This trip I have been unable to get Euros at all in Abruzzo. Fortunately, I did bring some Euros with me from the US. Im returning to Rome Saturday and hope I can exchange my dollars there or I am on the next plane I can get home.

I misspoke when I posted my earlier reply. The hotel staff told me to try another automated teller and while it would not accept my debit card, it did give me cash using my Visa. Id still take some Euros with me.

Your friend has the wrong end of the stick. Exchange rates are set in international markets.

To the extent that "they" do not value the American dollar "over there"--to the exact extent--we don't value it over here either.

So the issues is things like commissions and fees that are tacked on to the exchange rate. People here who are touting ATMs (for cash) and credit cards (for purchases) for the most part have no- or low-fee cards; European banks do not charge fees to use their ATMs but some U.S. banks do charge for out-of-network transactions. Check with yours.

These discussions can get confusing because we don't all use the same terms in the same way.

Paula, your friend is wrong if by "exchange" you mean taking dollars and find somewhere to "buy" Euro in Europe. It will not make much difference if you do it here or there. In either situation you will pay fees as high as 6 - 10%. Often the fees will be buried in the exchange rate so you will have no real idea what you are paying. That is probably the less convenient and most expensive way to do it. If a merchant takes your dollars it will be even worse. And there were reports early this year that banks and others did not want to exchange dollars because the rate was falling so rapidly. That has probably changed.

As prior posters have said, the most convenient and least expensive way to "obtain" Euro in Europe is the debit card at an ATM. Depending on card issuer, the debit card fees could run from 1 to 3%. Using a credit card at a ATM for cash can be expensive and should be used as an extreme emergency. And it is not a bad idea to obtain 100 Euro locally before going just to have some cash in your pocket. Obviously your friend has not traveled much.

Don't know about Italy, but this worked for me last year in Schipol. I had a 14 hour layover and I needed about 50 Euro to get me through a day of sightseeing in The Hague. I bought a couple of small things that I wanted anyway (snacks, bottled drinks) at different shops in the airport, paying with large US bills (50's) and getting the change in Euros. It was the best rate going and no fees. The shops make their profit on the sales, not the exchanges. The big ones in the dutyfree area would have taken $100 bills too. BTW as soon as I left the airport, my dollars were useless. Of course you aren't going to do that to change hundreds of dollars, but it would be enough to get you to your first destination. . .

Chani:
You say, "It was the best rate going and no fees." How did you determine this? I would be astonished if that were actually the case since at some point a bank is going to have to deal with those $50 bills and I can't imagine that they will do it for free.

The exchange rate you get from McDonalds and other stores at the airport is the absolute worst! If I was getting .65€ for my 1 dollar at the bank, those stores were giving .50€. So, yeah, in an emergency I would do that, but then only a really small amount. They do post the rates at the airport stores. Money exchanges give bad rates too. If you must exchange cash, at least go to a bank in the country you are in. In Germany, this will usually run you about 5 €. Exchanges charge a %, so the more you change, the more it costs. ATM in Europe is the best way. I was kinda amused at the statement "they don't value the American dollar over there". Spoken by someone who probably knows nothing about international news and the world around them, yet wants to help you out with your travels to "over there".

Jo, in all fairest to that statement, there were a number of news report that some merchants, money exchanges, and even banks were refusing to exchange US currency. That was maybe six months ago when the dollar value was taking a big hit and the value was unstable. And at that point, they didn't value dollar.

The exchange rate I was getting was pretty much an average of the buy/sell rates, and no commission. The bank in the airport offered a less favorable rate and took a flat fee also - for a small amount the fee was a big percentage. In fact, the reason I went to the stores was because the bank's terms were so bad.

I have no idea what the rate would have been to take Euros from an ATM, but my bank takes a $5 fee as well. It is possible that there were better rates in banks and currency exchanges outside the airport, but since I only needed a day's worth of cash, and time was premium, there was no reason to look further.

That was Schipol, could be an anomaly. If I remember, I will check at the Tel Aviv and Milano airports and report after I return on 10/15. There's not much to do in the airport once you're through security anyway :-)

Well, I guess that is one of the perks of living overseas, I get to watch what that pesky euro does to my dollars every darn day of the week and don't have to read about it in the papers. I go downtown several times a week and see the signs in McDonald's and the larger department stores and what they are offering for the dollar. Then there is AFN radio that announces what my dollar is worth about a hundred times a day. sigh. But, this is all stuff I know about and still choose to live with, so I don't want to give the impression I am whining too loud. With the instability of the dollar going up and down, if I owned a store or restaurant, I wouldn't take dollars either. If I accepted a $100 dollars today for a 65€ item, it might only be worth 61€ by the time I get it to the bank and deposit it. For small merchants, this is risky stuff. For big stores and chains at the airport, they can absorb the loss in exchange for good will from the traveling customer.

This is one of the most often-asked questions, and the easiest to answer. Use an ATM/Debit card with the VISA or MC brands to obtain local cash from ATMs upon arrival. Use similar branded credit cards to pay for hotels, meals, trains, gift shops, tourist attractions and anywhere else credit cards are accepted. Make sure to first inform said banks and CC companies of your adventure at the same time finding out what the foreign transaction fees would be.

Neither exchanging US dollars for currency prior to the trip, nor bringing US dollars to exchange in Europe are advised. The rates are way too high for me. And don't even think of bringing travelers checks. You'll be very sorry!

I would never bring travelers checks with the intent to use them, however I do bring some american express travelers checks in case of emergency. My bank doesnt charge me for them so its free insurance.

Sidney's right on the money. I lost my wallet in New Orleans. Luckily I had some Amex TCs in it. I called them first.

In that one phone call (long) they not only arranged for me to pick up cash in place of the TCs (all my ID was in the wallet) a block from my hotel but also called all my credit cards too, including ensuring that my hotel bill would be honored by the CC, even though cancelled.

TCs only offer protection against lost or theft as Chani describes. But equally worthless as backup. Think about -- you need cash for an emergency. Out of cash, ATM or debit card not working, banks are closed, it is a Sunday, etc., and you need it now. Who is going to cash or take the TC? No one. Your best back up is a couple of US $50 in your sock!!!

Here's the definitive answer....why must it be one or the other?

Here's what I do: I get about $100 worth of the currency of my first stop (sometimes I have this left over from a previous trip.) This gets me started and out of the airport and to a bank where I will not be charged an ATM usage fee. (My bank in the U.S. has partnered with a few banks in Europe so that no ATM fee is charged if I use those banks.) The amount difference in exchange rates on $100 gotten here over waiting to get it there usually isn't much

Then, I use the ATM to get the local currency.

I also keep about $200 in U.S. Dollars in my moneybelt just in case I have problems with my ATM card, lose it, whatever.

(This is one of those subjects we love to argue.)

I was in Italy this summer and ATM's were readily available and the easiest way to obtain local currency. There were even ATMS at the airports. The fees were minimal - less than $2 USD - and were independent of the amount you withdrew. The exchange rate is also the best at an ATM/Bank. Just be aware that the ATM's in Europe do not allow withdrawal from a savings accounts ....only checking accounts. And, yes, call your bank ahead of time to let them know of your travel plans or they will place a fraud alert on your card and possibly freeze your funds.

I looked in to buying some euros at our credit union before our trip since we are going to Portugal where there have been some issues with the machines and US debit cards. However the amount quoted for buying 500euros was over $730 US dollars. The exchange rate yesterday indicated it should have only been ~$680...a whopping $50 extra. Read Rick's hidden fees section about money...the credit union charges $7 mailing and a flat $15 fee but then they use the "American Express" exchange rate which was much higher than the offical xe.com rate. We stop in Madrid and we'll use the ATM there.

Frank, any bank in europe will cash an american express travelars check. True, sunday may be an issue but to say that they are useless as a backup. is ridiculous

There really is no right or wrong, just shades of worse options. ATM best (~1-2% conversion cost); Credit Cards Good (~3-4% depending on your card); Cash Advance on a Credit Card (If you have the right card and do it right, about the same as a credit card transaction); Exchanging US Dollars for Local over there (in the range of 5-7% depending on agency?) Using something like a Visa travel card (probably 7-8%) Exchanging Dollars here or Travelers Checks there (up to 10%?) Each of course has it's own Pros and Cons regarding availability, risk of theft, and withdrawal limits that may tip the balance. Also your own situation may drive the decision, lets face it, if you need the cash, you need the cash; even 15% may not be too much.