Euros - WHY is getting in US bad idea?

You will not receive an exchange rate on Euros bought in the U.S. that is as good as you will get from an ATM on the ground in Europe. You will always pay more in the U.S. (at least that was our experience versus using a Schwab debit account here). If your bank can meet the rate I get at an Italian ATM, I would be shocked. There is no need to take the risk of losing a large amount of cash as ATMs are easy to find. You can hide it in your socks, but then you are acting like you are 5. :-)

Thanks for the reply Laurel! Ok, so when I google the Dollar/Euro Exchange rate, it says that 1 dollar is worth .79 Euros. So you're saying my bank will not give me .79 Euros for each dollar I give them? Or, conversely, that the Italy ATM will give me more than .79 Euros for each dollar?

I'm not trying to be obtuse, really. :) Just trying to figure it out. The only bank I have a debit card with charges me a 1% transaction fee, so I'm leaning to getting Euros before I leave, but clearly don't want to pay an exorbitant rate. Thank you much for your help!

strata,

In my experience over many years, I've learned that there's ALWAYS a fee when changing currency, even if it's not readily apparent (it may be built into the exchange rate you're charged). The Banks ALWAYS get their cut, and the consumer usually gets nicked.

ATM withdrawals are usually processed at the "interbank exchange rate", which is about the lowest rate you'll get. One other point to consider is that if you change a large sum of U.S. dollars to Euro prior to your trip, you'll get nicked again if you have any left and convert it back to U.S. dollars at the end of your trip.

All I can think is -- if you were going to New York City (or Los Angeles or Chicago or any other big city) for several weeks, would you carry thousands of dollars in cash ?? If that's comfortable for you, then your plan will work. Personally, I couldn't do it.
And yes, the rate your bank will use to exchange your dollars into euros will be different than the rate you see quoted on the internet.

Ok, here is why. Your bank first has to buy the physical euros and store them in a bank vault and wait for someone like you to happen by and want to buy them. In the meantime, they take up space in a secure location and earn no return. Furthermore, they need to enter into contracts, (that are not free), to hedge against the possibility that the euros could lose value while sitting in their vault. Banks are in business to make money, not loose it. Just check out the ATM fees they charge if you don't believe me.

On the other hand, the euros in Italy are coin of the realm. They sit in the ATM machine for only a matter of days before the armored car has to stop by and fill it up again. When you take euros out of the ATM in Italy, the ATM's bank electronically queries your bank to see if you have money in your account, makes an exchange at an automated currency exchange where hundreds of millions of euros and dollars are constantly changing hands, the trade is made, a small (less than 1%) commission is peeled off for the middle men, and out pop euro notes for you to spend. That whole process takes about 15 seconds and most of that is time you spend figuring out what buttons to push.

That is why currency change places are expensive. They have to lease expensive real estate (imagine what they pay in airports) and pay expensive employees with European benefit packages. And all that inventory of foreign cash they have to hold.

Stratashop, the rate is more like .785114, and I am watching it change constantly by tiny amounts on Yahoo Finance as I type. As an experiment, I suggest you walk into the bank and hand them a $100 bill and see how much you get back in euros. It'll come in handy as starter money when you land in Italy and will carry you to the first ATM you get to.

Sam, great explanation! Do I detect a fellow banker ??

Try.
A. Go to your bank in the US the day before leaving and buy €500 and see how much it costs you in US$.
B. Then on the day you get to Europe withdraw €500 from the ATM machine there and see how much your account is debited for that transaction.

If A is less than B, then in your future trips get cash before leaving.
If A is more than B (which I believe is the case), then in future trips you'll know that the better deal is to use the ATM in Europe.

Oh my goodness, finally it makes sense! Thank you for to all for some really great responses.

I am accustomed to carrying pretty large sums of cash with me in large cities, so I would be comfortable from that aspect. I do however have a better grasp of why it would be cheaper to do this as an ATM in Europe. I'll just have to see if the 1% transaction fee is offset.

Thank you to a great group!

Sam, your two responses were very insightful and helpful. Thanks!

stratashop, please do report back if you can remember to do so. I'd love to find out which route you went and what kind of exchange rates you were charged, and whether the method you chose worked well or not.

Money math minds, please correct me if I'm wrong.

Doesn't this mean that if I get $1000 worth of Euros using a cash machine in Europe, it costs me $10? Or getting $100 worth costs a buck?

Using ATMs in Europe is what I always do and that .01 cost my CU gets seems cheap to me, especially when compared to the total cost of the trip.

strata,

"I am accustomed to carrying pretty large sums of cash with me in large cities, so I would be comfortable from that aspect."

That's probably not a good idea in most large European cities, as the pickpockets are VERY proficient. Although this was in France, this post provides a good example.....

https://community.ricksteves.com/travel-forum/france/hard-lessons-learned-in-the-paris-metro

(the pickpockets in Italy are equally proficient).

My crappy bank charges for transactions plus non-network ATM withdrawals. It's a significant amount of monry, but other banks based in Ohio are no better. I used to carry large amounts of money to Europe, but now I use the ATMs there with a debit card. Security of not potentially losing a lot of money is more important to me than saving a few dollars to withdraw money. I learned this from my Swiss friends, who withdraw cash just about every other day when traveling.

Actually, the "fee", which I call friction, for our withdrawals from foreign ATMs have been more like .6% the last two years, rather than a full 1%. This is through machines on the Cirrus/Plus networks. Please keep in mind that you need to be using ATMs that are owned and operated by banks, as opposed to the European equivalent of, say, 7-11. It's the bank-owned machines that do not charge a fee for use.

Also watch for DCC - dynamic currency conversion. If the machine tells you that it is ding this at 'X" dollars and should ti continue, select "No". That" convenience" of doing it at the exchange rate they offer will be several % higher than the real rate. Make them do it in the local currency so that the network does the proper conversion. And don't believe them when you select "no" and the next message is something like "Are you sure? We cannot guarantee any exchange rate if you do this." Just compelte the transaction.

To continue to beat a dead horse - For the five year old ------

Euros - WHY is getting in US bad idea? -- BECAUSE it will always, always !! be more expensive - generally between 5% (if you are lucky) to 12% more expensive.

My bank doesn't charge a fee, - Mostly true because the fee is buried in the exchange rate.

...... will convert at the current exchange rate. What is the current exchange rate? Who knows ?? The only exchange rate that counts is the Interbank Rate. Yesterday, walked by an Exchange Bureau in our local mall with a big sign - NO FEEs. The posted exchange rate for Euro was $1.44. I ask if that was a little high since I thought the Euro was around $1.25. No, No, that is the fake internet rate that no one gets. Said the $1.44 is set by the Federal government and they have to charge that. I just smiled and walked on. At the moment the interbank exchange rate is $1.27 so the Bureau was making a profit of just under 13%. Not a bad return. Will take that any day. Don't need to charge fees with that return.

When you use a credit card or debit card in Europe the exchange rate will be within 1% of the interbank rate sometime during that day. After that your card issuer and only the card issuer will determine the additional fees that are added. (Assumes the usage of a bank owned ATM and not a private ATM.)

A couple of other comments to your original question. We tend to use cash about 95% of the time especially since you can often get a discount for cash at the hotel. We just find cash easier and more convenient. On average we will have about 300 Euro, plus or minus a hundred or so on us at all time. If the hotel will not give a discount for cash, then I will use a credit card. And the last day or two we will use a credit card to manage cash flow as we like to come home with a couple hundred Euro for the next trip. In nearly a year of total travel in Europe, including the pickpocket hot spots, have never had a problem with theft and very rarely seen anything that is suspicious.

While Goggle may be trying to control the world, at the moment they do not set exchange rates. It maybe the exchange rate you found on Goggle but you need to know the source for that rate. ATMs in Europe operate nearly the same as US ATMs. The big difference is that they rarely give you the choice of "Savings or Checking" accounts to withdraw from. The default is always checking. Now some ATMs are allowing you to input the dollar amount you want to withdraw instead of the amount of Euro. DECLINE THAT OPTION. Stay with local currency always.

I would also discourage the use of any stand-alone ATMs. These ATMs can be targeted by the card skimmers. I always use an ATM attached to the bank during open hours. Theory being - if my cards is eaten by the ATM, I can step into the bank and the resolve the problems. In 15 years or so of being totally dependent on ATMs, the theory has never been tested. But I still do it.

Stratashop,
Believe me & most of the others who have replied to your post.

You will get a better exchange rate when you use the ATM's in Italy

.
I just returned from Italy a few weeks ago, and before my trip I went to my bank (Wells Fargo) to
purchase Euros. I purchased 200 Euros & paid $272 (without added "fees"), so I paid $1.36 for 1 Euro.

Upon my return, I checked my bank account & the rate in Italy was
as low as $1.25 per Euro.

Just make sure you *notify your banks regarding travel plans (dates) & adjust your daily withdrawal limit.

BTW I asked the bank teller how much they would buy my Euros if I wanted to sell them back the same day that I purchased & her reply was" Today I will give you $1.19 per Euro". What does that tell you? Banks are in business to make money!

It's interesting that folks get so emotional about this topic. I find Rick Steve's advice sound: http://www.ricksteves.com/travel-tips/money/cash-tips

If folks want to enrich the domestic banks why argue.

It doesn't look like you really need anymore advice on this . . . but I just wanted to let you know what we did last year.

We wanted to take around 300Euros with us because the B&B we were staying at wanted cash & we wanted to have Euros when we landed. The Airports are NOT the place to get Euros (unless it's at a ATM . . . do NOT go to the exchange booths in the airports).

We found AAA had the best deal at the time for us to order our Euros. Just FYI . . . whether you order thru your bank or AAA - it may take 2-3 days to get the Euros if it's more than they keep on hand. We ordered on Monday & they arrived Wednesday.

Once there, we ended up taking money out of ATMs - just be aware that there may be a daily limit - ours was $300, which at the time, was around 235Euros.

We found withdrawing from an ATM very easy. When we could, we used our MasterCard/Visa with the chip since ours had no fees associated/transaction fees/etc.

Wow, I am overwhelmed with generosity of the posters willing to share their knowledge with the perspective of a teacher. Truly. I get it now!! :)

FRANK, in particular, your post really crystallized it. (To be fair, it's a bit like the person who finally opens up the pickle jar after the other person has been trying forever - well, the other person loosened it up. ha ha ha). Nonetheless, what you wrote in detail is exactly true. The "current exchange rate" at my bank is a completely different concept from - and is indeed higher than - the "current exchange rate" found on sites such as Bloomberg, etc. That was exactly the missing piece of the puzzle for me. Just under 5 cents more, so they are making about 5 percent. Thank you for helping me to figure that out!!

That being said, I decided to go ahead and purchase from my bank. I can now see why most people do not. A few reasons why I was willing to pay the 4% surcharge: 1) I don't really use an ATM card in general, and the one account which it is with had a daily withdrawal limit that seemed like a huge pain to get them to alter. 2) I don't have a MasterCard/Visa other than my debit card, and I didn't want to be in a position of not being able to purchase what I needed. 3) My walking ability is a bit limited and the thought of trying to wander around even 10 extra minutes finding an ATM rather than 10 minutes finding a new painting to look at or fresco to photograph just isn't a tradeoff I want to make.

Thanks to the generosity of the folks on this forum I was able to make a fully informed decision and understand exactly what I was paying for those tradeoffs.

Ciao! :)

Another point that should be made - there are local credit unions and online banks that charge no foreign transaction fees at all. None. So using an ATM abroad can't be beat.

I have leftover euros to use on my next trip, but when I didn't, I found that ordering online with Wells Fargo was the cheapest option (local banks don't order foreign currencies unless you are a customer, and my credit union doesn't do it at all, and AAA was a terrible rate).

Before I left town I asked my Credit Union to increase my daily withdrawal limit, they were able to allow $700 a day instead of $300, which was quite handy. It's worth a try.

Right, Kathi. I do the same with my credit union, and my husband does the same with our bank. I've no idea why it would have been difficult at all for your bank to increase your withdrawal amount for the duration of your trip: all we do is ask ours to. But some ATMS will only dispense certain amounts so just because our daily limit is, say 500, doesn't mean all machines will cooperate!

We also do as Frank suggested and always use ATMS attached to banks, in case of a problem.

Leftover euros are never a problem: they go in to the safe at home, along with our passports, for the the next trip. That way we have some ready cash for shuttle buses, airport express trains or whatever we may need it for. Bits of it has also made nice little bon voyage gifts for younger family members or friends making their first trips abroad.

Finally comment (from me) which you probably don't need. I never look for ATMs. They always find me. ATMs are very frequent everywhere. Remember the ATMs are there to service the local population and not tourist. We just take advantage of their convenience. On the day that I decide I need more cash, the debit card by itself goes into a secured pocket. Sometime during that day I will walk by an ATM. And I will have my cash with less than a five minute delay in activity. You really should consider using a debit card as it provides a very good level of security and convenience. We could not travel in Europe without a debit card.

As Kathy said, some ATMs do have limits on the amount you can withdraw at one time. If you have not reached your bank's daily limit, though, all you have to do is perform another transaction to get more.

Just a note about increasing your withdrawal limit - don't panic if and when an ATM refuses to give you the amount you've asked for. Just try again with a lower amount. The machine may not be able to give you the amount you want for whatever reason, but you can usually perform two withdrawals in a row (better if you're not being charged $5 per withdrawal, but it is what it is sometimes).

Does anyone know if there are any of the above-mentioned bank-owned ATMs in Rome's Fiumicino airport? I'm considering leaving the U.S. for Rome without taking ANY Euros with me, and then just using the ATM as soon as I get there to get my first bit of cash. But only if there's an ATM that doesn't charge extra fees, etc. (And my flight is scheduled to arrive at 9pm--plus who knows how long customs will take--so it'd need to be a 24-hour ATM in case I don't get to it until 10 or 11 at night..)

I know this is confusing, but as far as I can tell, no European ATM has ever charged me a fee for using it. I use ATMs attached to a European bank 99.99% of the time. This trip my favorites have been Alpha Bank and Euro Bank.

It's the home bank that might charge a percentage of the transaction or a per transaction fee. Both my credit unions charge 1% or less. Neither charges a fixed fee each time I get money, like some banks do.

So, if I get 500€, my CU takes 5€ for the service. That's not much more than a latte -- in the US. They charge nothing for me to use an ATM that is not affiliated with them.

From every thing I see here about this issue, in most cases it seems to be a lot of worry over a small amount of money compared to the the total cost of any trip, unless your home bank is charging a truly outrageous percentage and tacking on per transaction fees, too.

Agree with Lo. I have seen people waste a lot of precious holiday time, looking for just the right ATM to save a few bucks.

https://www.bankofamerica.com/deposits/manage/how-to-pay-when-traveling-abroad.go

If you are a Bank of America BoA client, the banks below will not charge a transaction fee ($5) as they are partnered w/BoA. You will be charged roughly 3% ($3 per $100) of each transaction, though.

"Be prepared before using an International ATM.
Before you use your card to get cash from an international ATM it pays to do a little research. When you use a foreign ATM, you could be charged a variety of fees, including non-bank ATM usage fees, ATM operator access fees, and international transaction fees for conversion to U.S. dollars. One way to limit such fees is to use your Bank of America ATM or debit card at one of our international partner ATMs. This enables you to avoid the Non-Bank of America ATM $5 usage fee for each withdrawal, transfer or balance inquiryFootnote2 as well as the ATM operator access fee.

Keep in mind that when you use your debit card to withdraw money from an international ATM, Bank of America will assess an international transaction fee of 3% of the converted U.S. dollar amountFootnote3. Foreign ATM operators may offer to do your currency conversion for you, but they may charge a higher fee for conversion. You can refuse the foreign ATM conversion and be assessed the 3% Bank of America international transaction fee instead.

Here is a list of Bank of America international partner ATMs:

Barclays (United Kingdom)
BNL D’Italia (Italy) <-----------Look for this one in Rome's Airport if they have an ATM there.
BNP Paribas (France)
China Construction Bank (Mainland China)
Deutsche Bank (Germany)
Santander (Mexico)
Scotiabank (Canada, Peru, Chile and the Caribbean)
UkrSibbank (Ukraine)
Westpac Bank (Australia and New Zealand)"

A couple more points: Whether or not they've gotten the best possible exchange rate when obtaining foreign money at home, it's worth it for some people to have at least some foreign cash in-hand when they land in Europe - for getting something to eat or to take a taxi before finding an ATM, or for personal comfort. The "best" method isn't always the cheapest method. Still, compared with getting cash (or, in the past, traveler's checks) at home, ATM's have been the way to go for us for some time.

Also, if there's any chance that someone might use an ATM away from home, they should contact their bank ahead of time to alert them that they will be traveling to whatever country (or distant state or province), so the bank knows it's not a crook or identity thief withdrawing the funds.

Further, depending on the existing dollar-versus-euro exchange rate on the day you get your money, you might get a better deal from one day to the next, so in hindsight you could argue for getting more money earlier or later, but it's all a guess as to what would give you a better deal. You might wind out coming out a little (or a lot) ahead depending on the choices you make, but as long as you don't eventually lose your money to a robber, you're not getting totally ripped off.

It's a great idea when you want Euro on you when you land. Ask your bank about the fee they attach to the current conversion rate for each dollar shown on the internet search engine of your choice.

It's not a bad idea, unless you're exchanging thousands and thousands of dollars.

My experience is based on our trip to Italy and France in 2012.
Before we departed, about 6 weeks, I followed the exchange rate and when I thought the rate was stable enough in favor of US$ I went to the Chase bank (no endorsement intended but my Credit Union doesn't deal in foreign money) which is located in our local supermarket.
They allowed me to order Euros at the market rate on that day. It took less than a week for the Euros to arrive at the bank. There was no extra fee and I'm not even a Chase customer.

This allowed us to have about 300.00 euros in our pockets when we landed. This helped for dealing with ground transportation and not having to stand in line at ATM's or exchange windows. The rest of our trip was paid for using our credit card. I think we did use an ATM near the Pantheon in Rome.

Have a great trip!

I have been buying euro from my bank in New York. Have not tried using ATM's in places I've visited such as Spain & Italy. Whenever I can I use my credit card without foreign transaction fee and always paid in euros not USD.
I know that the buy rate is not the exchange or guiding rate of the day. Banks are making a spread. So far the buy rate is about the same between euro I bought in New York and credit card used in Europe.

I like to get somewhere around 300 Euros when I leave, and my husband and I each carry half of it. Then I use in country ATMs after that 300 is gone. I use cash for most everything except big-ticket items like hotels, long distance trains, etc. I like to have that 300 Euros when I arrive in case of any weirdness. For example, on my last flight to Madrid, we landed before 6AM and most of the airport service areas were closed - restaurants, etc. It was basically a ghost town. While I could probably have found an ATM somewhere, all the ones I saw were in closed areas. Without cash, I would have either had to hunt down an ATM, if possible, or wait until the main sections opened. Instead, I had my cash for the express bus to the train station and was on my way. Wouldn't have been a disaster - just wait for awhile or scour the airport - but easier to have a bit of cash on hand upon arrival rather than searching out an ATM under jet lag.

The reason getting a solid chunk out is problematic is simply that carrying tons of cash is risky due to theft, or just loss. And it takes up room. Are all your bags carry on? If you have to gate check your bag, will it have $500 in it (Not a good idea to gate check cash!!)?

Do the math between the exchange rate for cash vs the ATM fees…I'm not great at that. To me, it's close enough if your bank doesn't charge crazy fees. I get 300 - 500 Euros out at a time, because there are ATM fees and you don't want to pay them for a $20 withdrawal or whatever.

ATMs in Italy or anywhere else I've been are just like their US counterparts. They offer English on the home screen (push the British flag), usually let you choose between 20s or larger bills, and really are quite easy.

Getting Euros Before You Go
At the bank . . .
$1.25 Exchange Rate Now<-->1€
.09 Estimated Bank Fee
$1.34 cost of 1€ x 100 = $134.00 (9% fee) bank
USA TTL for 100€ = $134.00
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ATM in Europe w/no flat transaction fee
Chgs 3% conversion fee

.80 € Exchange rate now<-->$1
.80 x $125 = 100€ (+ $4.75 conversion fee)
Europe TTL for 100€ = $129.75 (3% fee) + (BoA $5 transaction fee) = $134.75
**100€ = $126.25 (cu 1% fee)

Thank you for allowing me to see the difference. This is my last post for this thread.