Seeking the Elusive Fee-Free Exchange Rate

Thanks, Laurel. I hate my bank.

I love the Schwab debit card. A great feature is that for a couple with two cards, each card has a separate number and if one is compromised/lost/stolen, the other card remains functional and safe.

Is there a local credit union you can join and move your banking to? Mine charges less than 1% for ATM debit card transactions and exactly 1% for credit card charges. There are no other fees. Period. Perhaps there's a CU in Toledo that will do the same for you, but make sure they have a reasonable ATM withdrawal limit or that they will up it for trips.

Our local CU limits to $400 per card per transaction or per day and absolutely will not raise it, but with two cards, my husband and I can take out a total of $800. Our Seattle one limits withdrawals to $1500 per day or per transaction. We never have needed that much at a time. In either CU case, there are no per transaction fees.

I got stung last year and it was totally my fault. I had traveled the previous year using a debit card from a local bank. Meanwhile, during the year they were acquired by another bank and I failed to check and see what the new bank's rules were regarding foreign transaction fees before I traveled. Previously it had been 1% charge, no extra fee, now it has risen to 3% plus a $5 charge for ~every~ transaction. I was so mad at myself for not checking ahead of time and accruing all the extra charges. I still have money in that bank as they previously have been able to get foreign currency at a fair rate but I will check this year and see if that is still the case. If not, bye bye! My credit union does the 1% charge and there are no charges on my Edward Jones debit card so those will be my go-to cards this time around.

I'm not quite sure where this guy gets his information, but it's not very accurate.

"... you will also often be charged by the foreign bank whose A.T.M. you’re using."

Often? Never or almost never. In 15 years of travel in Europe (mostly Germany), over $15,000 in ATM withdrawals, I have NEVER been charged a fee by the foreign bank whose ATM I was using.

"In New York City, there are several small, trustworthy exchange booths that beat out banks and companies like Travelex every day."

I don't know about NYC, but I checked with the only exchange office (other than Travelex) open today in Denver, and they were selling euro for $1.20, beating out only Travelex @ $1.2047/euro (11.15% over the Interbank rate per Oanda). Wells Fargo, on the other hand, is selling euro at $1.1444 (5.9% over). In my experience, WF averages 5% over for euro (The WF rate is set each weekday morning. Changes in the Interbank rate through the day (weekend) will change how much WF is over.)

Wells Fargo seems to sell common European currencies (euro, Swiss francs, British pounds) for about 5% over. They are higher for less common ones (Czech Koruna). Travelex seems to sell everything at 11% over, but I think they buy blocks of currencies and sell them based on the price they paid, so what the currency has done since they bought it often affects the effectivet exchange rate.

I've never been charged by the local ATM either. It was an interesting article though, so thank you.

Still:

Okay, so you are spending 10 nights in Europe from the US
Air Fare for two $2,000.00
10 nights hotel $2,000.00
All paid in the US in advance = $4,000.00

Food and Booze $1,000.00
Entry Fees and local transportation $1,000.00
Trinkets and such $500.00
5% Fee on transactions in Europe = $2,500.00 x 5% = $125.00 (I've never paid 5% so that's sort of an extreme to begin with)

Fees as a percentage of the entire cost of the trip = 1.9%

Value of time worrying about it = $500.00
Naaaaa, I will be careful, but I won’t let it become too big a distraction.

@ Lee: The author of the article refers to tugriks, which meant to me travel throughout the world. I've been charged significant ATM fees in many countries outside of Europe, and seem to recall some fees from ATMs in Spain. Anyway, all such fees were rebated.

If you have to spend more on one thing, say air fare, cut the expense somewhere else, say accommodations. For example, only as an example, no way would I spend ten nights in a city in a hotel totaling $2,000 in Europe, ie, $200 per night, not even in London, certainly not in the US. Of course, there are cities where I have spent ten consecutive nights in a hotel or Pension since the apt option doesn't appeal to me, still the total did not amount to $2,000. If you have to spend because it's needed and I don't mean the occasional splurge, then do it, but then you also cut/budget where you can even if it affects your accepted level of luxury or convenience. It all depends on what one is willing to cope with and/or do without.

James E - I'm with you on this issue. The amount saved by opening new bank accounts is pretty marginal. I've always assumed that most people use certain banks for a reason and it makes sense to stick with them - slightly less so in an age of constant mergers - but still, people have savings accounts, vault boxes, mortgages and direct deposits/bill payments with their bank. Is it really worth it to people to spend time opening, and then managing new accounts all to save less than $200 for a two week trip to Europe? Maybe if you travel consistently or for business, but the average poster here is looking to take their one trip of a lifetime.

Both my local bank and my credit union (Harborstone) charge foreign transaction fees for debit card transactions or getting cash. One credit card I found which doesn't charge a foreign transaction fee is the Capital One Venture card. I understand that C1 has online banking through Capital One 360, and if you get a debit card it won't have transaction fees applied. I understand that the US State Dept. employees credit union also offers a transaction-free debit card, as do a few other credit unions.

As an aside, I'm looking at a different institution which will issue me a Chip-and-PIN card, not just a chip-and-signature card. CapOne won't be issuing them, so I may have to get a credit card from US Bank, or another source.

In my view I really don't care if it just saves me $1 - I don't like being charged outrageous stupid fees by banks when my local credit union NEVER charges me for a foreign withdrawal. Goodbye "First Tennessee Bank" and hello local credit union! I've never looked back except to waive adios!

I have found my true chip and pin card from Andrews Federal Credit Union extremely user friendly. No foreign transaction fees and very good exchange rate.

I've saved a bundle on avoiding international transactions fees with "good" credit and ATM cards. Thus, I can travel just a little more often.

I for one appreciate all the tips I have seen here, and am investigating Schwab and Andrews right now. I have changed as many accounts as I can to eliminate foreign transactions fees and to reduce ATM fees. Our frugality ( a kinder, gentler euphemism) is often the subject of joking among our (debt ridden) friends. At lunch the other day I was lamenting how I had to pay $28.88 in fees when I made a large purchase in the Caribbean because I hurriedly and stupidly grabbed the wrong credit card out of my wallet. They rolled their eyes and smirked knowingly at one another. The one fellow chided me, "Hey, what's a few bucks when you consider everything you paid for the entire trip?" When the separate checks came after lunch, I handed ours to him, as it was a few dollars less than than $28.88, knowing that he would certainly have no problem coughing up "a few bucks" of his own. I'm guessing anyone reading this can finish the story from here.