How do you get currency?

We've kept a log on this. Using our Capital One Hi-Yield Money market account and ATM card, we have paid from 2009 through this spring for cash at ATMs in Netherlands, Hungary, Czech Republic, Poland, Russia, Turkey, and Canada a mark-up of ~.08 of 1 percent (+/- .01 of 1 %). With no additional ATM fees (except the Canadian ATM that charged its own fee). We have always checked these calculations directly on all the withdrawals. Now if we wanted to use our Cap One Mastercard for purchases we could do even better, as it has no fee for international usage, no interbank mark-up - the charge goes through at the exact conversion rate, and a 1% cashback on all purchases. But almost everywhere we go cash is preferred, and this way we don't worry about the card being scammed. The trick is that in all cases, only bank owned ATMs that connect via PLUS and CIRRUS systems are used for withdrawals.
We have NEVER been unable to get cash at the point of entry into the new country (with the exception of London, where if you come in via Heathrow Terminal 5 you cannot get to a bank ATM, Travelex was allowed a monopoly on the ATMs in T-5, and their ATMs function the same as their currency exchange counters. Our son will be landing there in a couple days on his way back from semester abroad in St. Petersburg, and he has been thoroughly explained to get his cash after he gets to his friend and they can get to a real ATM.

My credit union charges me 1% on an ATM transaction and doesn't limit the number of transactions I can make. That's how I know it's the right choice for me - it's very predictable and never exceeds 1% of total amount withdrawn. I've never gotten cash before arriving at whatever country, and I stay away from Travelex and other rip off artists - I just use regular ATMs.

Without question!!! The cheapest and most convenient way (at least for US citizens) is at a bank owned ATM with a debit card. Just back from last week in Italy and all of my debit card exchange rates were within 1% of the Interbank rate - the rate most commonly used by credit and debit card networks. Looking at your data, I have not idea what you mean by ATM rate or official rate since there are a bunch of "official rates" that vary by the minute.

I do always use bank-owned ATMs (Cirrus or PLUS), though I sometimes find I have a PLUS card and the airport has a Cirrus ATM. I have to pay $2-$5 for foreign withdrawals at my bank. And to be clear, I am not exchanging cash at a currency exchange booth, but at my bank. By ATM rate, I mean the rate I actually got. By official rate, I mean the rate for that day when I look it up on an FX website. I'm just finding that they don't vary in cost. I suppose it depends more on what bank account you have then ... Also, when I begin planning my trip I start watching the currency rates and set a buy level, which often saves me on the conversion, since I can buy when it's low. In Europe, I have to take the rate at the time. (Though I obviously did this poorly on my last trip).

Again, I don't what is in your ATM rate in Canada. In the US, 15, 20 years ago it was common for the US banks to bury fees in the ATM exchange rate. A class action suit around the subject of full disclosure forced US card issues to use the actual rate that they are charged by the networks and list all fees added. Therefore the exchange rate shown on the credit/debit card statement is the rate present from the networks and is always within one percent of the interbank rate. Lots of card issuers, especially credit union in the US, rarely charge more than 1% over the exchange rate. Now there are banks charging 3% percent and a $5 transaction. My third back up debit card does that, so it always sits in third place as back up. The other Canadians on this site can address the difference in banking practices between the US and Canada.

There seem to be several things going on here. The main issue is to determine what the actual interbank exchange rate is. That's not perfectly simple since it changes constantly throughout the day. So typically the rate you get should be within about 1% of the interbank rate for that day, accounting for the variations between when you withdraw cash and when the bank posts the exchange. I did a quick check on the market EURO to USD rates online and found the following: The market rate was at about 1.2851 but had a range of 1.29980 - 1.28336 Rounding would show a range of 1.30 - 1.28, a difference of .02 and it's not hard to image on some days that rounded difference being in the .04-.05 range. So that can account for your rate difference. It seems that your bank does not pad it's rate when selling you euros. That's great but rare, at least in the US. Most banks/institutions charge at least 5% over the interbank rate and can go up to 10%. We've found here that ATM rates, even those with fees, range from 3-5% over the interbank. There is nothing wrong with buying some cash ahead of time to have for piece of mind or an emergency. Most of us strongly recommend against playing the currency futures markets unless you are a currency expert. Otherwise, it's just luck and gambling whether it goes up or down on you. Many unforessen conditions can affect markets at the drop of a hat. And since no one can purchase their euro at direct market costs, you have to be able to absorb your costs of buying the cash ahead of time.

Question: Even though the Interbank rate fluctuates throughout the day for those who are trading currency, don't the banks use a set rate for ATM transactions that would likely be the closing rate from the previous business (trading) day? Are ATMs really plugged in in real time to the constantly minute-by-minute fluctuating currency exchange (trading) rates?

Let's see, you and your significant other have spent $3,000.00 on airfare to Budapest and another $1,000.00 for four nights of accommodations, then there is the $200.00 a day spending budget creating a grand total of $5,000.00. The $200 a day (5 days) you got ripped off on the exchange rate and lost 5% which is $50.00 or one percent of the total cost of the trip. Oh, did I mention you could have rented an apartment for about $600 less than the hotel and that you ate dinner twice Vaci street where that $100 dinner was about twice what it would have cost two blocks off the beaten path (and probably been better); and you purchased two Budapest Cards which each cost about $25 more than what they were worth in transportation and discounts? There are many other decisions on your trip that will have a lot greater impact on the total cost than the exchange rate. Me? I use an ATM for cash except in Hungary where I use my local bank account. In all cases I use my credit card when convenient to do so because I pay no exchange fees and it ensures I that cash is reserved for a bad situation. I agree that trying to play the exchange rate game is not worth the effort but I still try and time my transfers to Hungary but it's always a crap shoot. Go have fun. Do what makes you the most comfortable.

Carolyn, the advice to use ATM's does not make as much sense for Canadians. Canadian banks offer foreign currency at much better rates than US banks do, and Canadian bank cards do not offer rates as low as some US banks do. The decision to use plastic is much easier for me. My debit and credit card have no markup on the interbank rate. The cheapest rate for purchasing foreign currency in the US is 5%. I use plastic.

1. For some odd reason, the banks here offer euro withdrawals at mid-market rates with no fees. So when the rate is very favorable to the dollar I'll take a lot, just because I know I'll be in Europe at least once a year. 2. Aside from that, and left-over cash from previous trips, I never get cash before arrival in a foreign country. I have never had a problem getting cash from an ATM at an airport or in a port on any cruise stop. I will have some U.S. dollars or euros with me, so that in the event that there is a problem, I can easily go to an exchange counter and get local currency. 3. I have found that I consistently get a rate that is within 1% of the mid-market rate (I note the time I make the withdrawal, and then look it up on xe.com). Sometimes I even get a little more than the spot rate. 4. Since I have a no-fee ATM card, I make small withdrawals every few days as needed so that I am not carrying large amounts of cash. I once had a problem with an ATM at the Hong Kong airport, but I was jetlagged and it just took me awhile to figure out that I should choose the checking, not the savings, account option. At London's Heathrow airport, the trick is to use the ATM's correctly. At some point in the process they offer you an exchange rate to convert your transaction into dollars (at an outrageous rate), or to continue without conversion. Choose to continue in dollars, without conversion, and then your bank does the conversion at their (reasonable) rate. The same thing happens with credit cards sometimes. The merchant will ask you if you want the transaction in local currency or in dollars - always choose dollars, or you'll get hit with a lousy rate and probably fees too.

Question: Even though the Interbank rate fluctuates throughout the day for those who are trading currency, don't the banks use a set rate for ATM transactions that would likely be the closing rate from the previous business (trading) day? I'm not sure if they use the closing rate, an average daily rate or the rate at the moment they post the transaction with the other bank. But that's why we normally say the ATM rate is about 1% of the interbank rate, it does vary some.

As has been mentioned before, bank-owned ATMs will not charge you fees. All fees will be charged by your own bank. I carry debit cards from two separate financial institutions. My main card charges absolutely nothing for foreign withdrawals, and I have no limit on how many withdrawals I can make. My other card charges 1%. I would never use a card with a per-use charge for withdrawals.

At some point in the process they offer you an exchange rate to convert your transaction into dollars (at an outrageous rate), or to continue without conversion. Choose to continue in dollars, without conversion, and then your bank does the conversion at their (reasonable) rate. The same thing happens with credit cards sometimes. The merchant will ask you if you want the transaction in local currency or in dollars - always choose dollars, or you'll get hit with a lousy rate and probably fees too. ' The avoiding conversion option at an ATM is correct, but the terminology in the explanation got convoluted, because DCC (dynamic currency conversion) is pretending that by giving you the currency name used at home (for US the dollar) versus the local currency (wherever the ATM is) is better. It's not! When in the UK, insist the merchant run the transaction in pounds sterling. In the Euro zone, you want that, etc. You let your credit card do the transaction. And the story then becomes seeking a card with no foreign transaction fee, ex: Cap One.

Carolyn, As a fellow Canadain I can tell you what I do and why.
I use the ATM. I pay NO foreign ATM transaction fees. I have a Savings Chequeing account at the TD Bank. Suggest you look into it, I used to use bothRoyal Bank and the TD, but finally dumped the Royal about 5 years ago. Their travel CC sucks. Their fees suck. I get a free safety deposit box, I get free unlimited local transactions , and I get free foreign Atm use with my TD account, why would I ever change. Plus the TD CC travel point system is great, the points translate into cash that can be used for travel anytime, anyplace, hotel in Rome, airfare to France, train ticket to Barcelona, its great.

As Carolyn's research indicates, low-net-worth customers are very unlikely get the inter-bank or wholesale exchange rates at Canadian banks, and certainly not at TD Canada Trust. This morning the bank was selling cash euros at 1.3775 $Cdn, and buying at $1.2961. The spread indicates how the bank makes its profit. Its stated policy for card transactions is to use the rate of exchange set by Visa, plus 2.5%. Exchanging for $US is somewhat different since TD conducts extensive retail operations in that country. TDs only account with chequing privileges and no fees is restricted to seniors who maintain a $5,000 balance. http://www.tdcanadatrust.com/document/PDF/accounts/513796-20120724.pdf
Although the big banks are competitive and may offer incentives here and there, Carolyn has identified the general pattern. I also agree that the customer has to face up to these charges as the cost of doing business.

NO , Southam, now how can I trust anything you just printed when I know for a fact that the TD Select Account is NOT just available to Seniors, ,I got it when I was 40-41 dear, so hardly a "senior". Yes it does require a 5,000 min balance. I just checked , in case they have changed the rules but no, the no fee TD Select Service account is free to anyone who keeps a balance minimum over 5,000 dollars. Age is not a factor unless you will to have the account with less then 5,000 dollars in it and then as a senior you get a 25 % discount on the monthly fee.

I thought part of the "use ATM" mantra was to limit how much cash you carried on your person at any one time thereby (moneybelt not withstanding) minimizing how much cash you could lose at any one time.

But you're supposed to take large ATM withdrawals to minimize fees ... I'm comfortable carrying about 500 in my money belt, so that's how much I usually get in cash before I go ...

Its stated policy for card transactions is to use the rate of exchange set by Visa, plus 2.5%. This may also show another reason why the ATM interbank rate is not the rate Carolyn are getting. My US bank charges me the interbank rate, but does add a foreign transaction fee. Many US banks do that, with a fee of 2-3% added on plus the out-of-network fee. What seems to be happening in Carolyn's example is that her Canadian bank is charging the foreign transaction fee of about 3-4% but not breaking it out on the receipt. But either way, it's all still based on the interbank rate. So the key for many people is to use a bank with little or no foreign transaction fees, especially if you are a frequent traveler.