Converting $ to Euros

[OldPro]

Good example of my last point Gone4Good. Most banks 'fudge' the transaction date I believe.

I spent around 15 years living in various places and accessing my money via my Debit and credit cards. When someone lives in that way (as you do), you tend to educate yourself in how it all works. Or at least you do if you have half a brain.

The average traveller on the other hand doesn't tend to take the time to find out that much about it all. And to be fair, they don't really need to. Someone who converts a few thousand once a year on a vacation doesn't necessarily need or want to put in the effort to save a few hundred dollars. It is the person who travels internationally for extended periods of time or very frequently and thus is exchanging 10s of thousands of dollars plus, over time that it will really matter to.

A quick and simple calculation can show why. If I used my debit and credit cards to withdraw/spend $20k per year for 15 years, that would total $300k. If using the right cards saved me 3% on exchange, that would total $9k. Saving only $600 per year would not make or break me but $9k is a useful amount of money.

As you are someone who moves 'perpetually' according to your signature line, I would also mention although you probably realize, that the best cards today are not necessarily the best tomorrow. We have to keep checking what is new in the market at least annually.

I used to have a card with Nationwide who I mentioned above and who even ate the 1% that Visa charges. Now that was the card to have if you travelled/lived internationally and accessed your money using a card. Unfortunately, people who 'used' them screwed that up for everyone else.

My question to you Gone4Good is how you are finding it if you are using a card that is not a true 'chip and pin' card. I've had true chip and pin cards for probably 20 years now and so I have never had any issues but I do read about people from the USA who do not have true chip and pin cards running into issues. The USA is now the only country that is not on chip and pin.

 

[audreyh1]

I'm afraid that too can be slightly misleading audreyh1.

Here is what BofA have to say on their own website.https://www.bankofamerica.com/foreign-exchange/foreign-exchange-rates-faq.go

You need to read several parts of that to get a clear picture. First, they refer to the Interbank Rate, the Visa Rate, the wholesale rate and government mandated rates.

"Exchange rates shown in the newspaper and on some currency conversion sites are generally interbank rates available only to banks for transactions of $1 million U.S. dollars or more. These rates aren’t generally available to consumers obtaining foreign currency for international travel."

In other words, you aren't getting that rate.

Then continuing on, "Foreign exchange rates are constantly changing. We update our rates at least once every business day, based on current market conditions. Exchange rates are subject to change at any time without notice."

Followed by, "The exchange rate for international purchases and foreign ATM transactions is set by Visa® or MasterCard®, depending on your card's logo. This exchange rate is either the wholesale market rate or a government-mandated rate on the day before the date the transaction is processed. The processing date may differ from the date of the transaction."

Those 2 quotes tell you 2 things. One, the usually use a 24 hour window and choose the highest rate the exchange reaches during that 24 hour period. They are not using an actual 'live' rate at any given point in time. They're looking back for the highest point over 24 hours.

Second, the rate on the day you made the purchase may not be the rate on the day the transaction is recorded in your card's account. That used to make sense in the days when credit card transactions were on paper. It no longer makes sense when everything is done instantly by computer. But if a bank wants to, it can delay processing a transaction to a more favourable to them, day.

The Visa rate is the rate that Visa charges to your bank, which is 1% over the Interbank rate. This is normal for all banks to use these days although there was one UK institution that I know of(Nationwide Building Society) which used to eat the 1% for their customers. They no longer do after finding that a significant % of people were getting a card for this singular benefit alone and not doing any other banking with them. In other words, these people were 'using' the bank in a win/lose fashion rather than in a win/win fashion by also doing their normal banking with them, taking loans, mortgages, etc.

Bottom line is that recording what you bought on what day for what price along with recording the Visa rate on that day, will not always work out if you back calculate the amount that ended up on your card statement.

This Visa site does a good job of explaining it also and in a concise manner.
https://usa.visa.com/support/consumer/travel-support/exchange-rate-calculator.html/

But note it says, "an indication of the rate you may receive" and "Rates apply to the date the transaction was processed by Visa; this may differ from the actual date of the transaction."

So while recording and checking might result in getting the number you expect on 9 out of 10 occasions, it might not. So your statement could be 'slightly' misleading but I will happily admit to nit-picking. I'm just trying to use it as a means to show even more information on just what really happens.

Basically, yes, your particular cards do not add a % fee for foreign exchange above what Visa charges them and that is what matters. They may 'fudge' when they record the transaction to what favours them.

Yes, I have read all of that in the past.

I made it clear in my post above that for credit card transactions I was comparing the rate for the transaction post date as that is what ultimately applies. As long as the transaction is pending, they show the rate for the transaction date, but that changes when it is posted. The rate may go up a bit or go down.

VISA chooses the highest rate within a 24 hour period - and uses that rate for the next business day. Yes I understand that. And that it is not the interbank rate you might see changing during the day. They make money on the spread. That is the base exchange rate for everybody using a VISA credit card or ATM card - so at least it's consistent across customers.

To do better I'd have to go through a FOREX site like xe.com to transfer funds to some European bank account - which I do not have. Some people here use this option.

Yes, for credit card transactions the VISA exchange rate applies on the date the transaction posts, not the date the card was used. Sometimes a foreign transaction takes up to 3 days to post, I've noticed, not including weekends. Hard to say whether the bank is playing games here - it seems rather random but definitely could be. I've had transactions post from the same transaction date on several different days.

For ATM withdrawals using a bank debit card with a VISA logo - the VISA exchange rate applies on the day of the withdrawal. Remember it was determined by the previous business day's rates - the highest one.

All I care is that my bank or credit card companies are not adding anything on top of what VISA publishes for 0% foreign transaction fee credit or ATM card. Can't really do anything about when the transaction posts. In most cases day-to-day rate fluctuations are small. But not always.

And although VISA charges my banks 1% for foreign exchange, all the 0% transaction fee cards are eating that rate on my behalf so that I don't get charged that 1% fee. Any US card that advertises 0% foreign transaction fee is rebating their customer this 1% fee. And there are quite a few US-issued "travel" type credit cards that offer this feature, but very few ATM/debit card issuers that offer it.

I'm sure the nitpicking and links are educational for most readers on this thread.

 

[audreyh1]

Yup, all the time. If you're card is a Visa (like the Fidelity ATM card) you can check the rate here . . . https://usa.visa.com/support/consumer/travel-support/exchange-rate-calculator.html/

Now that rate applies to the date the transaction is processed, not the transaction date. When FX is super volatile, like it has been recently, you do see banks playing games with when they actually processes the transaction. I've noticed the higher the volatility in FX the longer Chase takes to process my credit card transactions. I assume that's so they can cherry pick a day that gives them the best deal. I'm currently amassing a backlog of Mexican Peso transactions for what I can only assume is that reason.

My experience with the Schwab Bank debit VISA is that the date of the ATM withdrawal determines the VISA rate I get. Of course VISA sets this based on the prior day's higher interbank exchange rate.

But there is no delay to post the transaction like there is for my credit cards.

It shows up immediately in my account, and does not change.

 

[OldPro]

Audreyh1, I agree with everything you have added except the comment about eating the 1% Visa adds. With all due respect I would like to see a link to something in writing which supports your comment that your bank eats the 1% Visa charges them.

"And although VISA charges my banks 1% for foreign exchange, all the 0% transaction fee cards are eating that rate on my behalf so that I don't get charged that 1% fee. Any US card that advertises 0% foreign transaction fee is rebating their customer this 1% fee. And there are quite a few US-issued "travel" type credit cards that offer this feature, but very few ATM/debit card issuers that offer it."

My belief is that they all charge the 1% Visa adds as the BofA quote I gave above, indicates. "The exchange rate for international purchases and foreign ATM transactions is set by Visa® or MasterCard®, depending on your card's logo. This exchange rate is either the wholesale market rate or a government-mandated rate on the day before the date the transaction is processed. The processing date may differ from the date of the transaction."

That seems to be pretty clear to me that BofA at least is giving their customers the Visa rate which of course includes Visa's 1% add on to the Interbank rate. I would be happy to have my belief changed.

 

[Helen]

It looks like Schwab and Capital One 360 debit cards are the only good choices for international ATM fees.

I had an online savings account with Capital One. After reading threads on this board I decided to open a checking account with Capital One to get the ATM card. I'm happy to report it was a quick process to set up the account, receive the ATM cards and activate them. I also linked them to our Vanguard and Fido accounts.

Plus, the debit cards from Capital One are chipped.

Debit Card Foreign Transaction and ATM Fees - NerdWallet

 

[OldPro]

By the way audreyh1, you wouldn't necessarily do better transferring funds using a forex company. I have transferred 6 figure amounts using forex and they generally charge 1% over the interbank rate as well.

The % they charge is somewhat negotiable depending on the amount you transfer and whether it is a 'spot' buy/sell or a 'future' buy/sell but they do have to make money somehow and don't just rely on beating the spread.

The real advantage to using a forex company is that you can 'lock in' an exchange rate. So for someone for example who is looking at making a major purchase such as a house in another country, you can't get a surprise when it comes to closing the sale and transferring the funds.

A lot of Brits for example buy a retirement home in Spain. They go for a look, find a place, put down a deposit and return home to pack up. Three months later when they actually move and close on the house, they discover that what was going to cost them 100k in pounds when they put down their deposit is now going to cost them 110k GBP on closing. Oops. If they 'bought' their Euros from a forex company at the time they signed the deal and put down their deposit, that would not happen.

The other good use of a forex company is for regular transfers of funds such as a monthly pension. It is often cheaper to set up the transfer of funds from one bank to another bank in another country by forex than it is to do an interbank transfer. Many banks charge hefty fees/percentages for transfers, just as much as a bad credit card charges on exchange.

My wife happens to have 2 pensions that we transfer funds from one country to another from. One does a direct bank to bank transfer while the other uses a third party forex company. It's their decision, my wife has no control over it. The pension transferred through the forex company provides a better rate than the bank to bank transfer. Irritating to see that.

 

[audreyh1]

Audreyh1, I agree with everything you have added except the comment about eating the 1% Visa adds. With all due respect I would like to see a link to something in writing which supports your comment that your bank eats the 1% Visa charges them.

I believe the foreign transaction fee published by US issued cards includes the 1% VISA foreign exchange fee. And so for a typical card that states a 3% foreign transaction fee, 1% is paid to VISA and 2% goes to the bank.

Breaking down the fees
But the norm remains the same for most standard cards. Visa and MasterCard, which handle the transactions between the merchant and the bank that issued your card, each charge a 1 percent foreign transaction fee. However, most card issuers that use the Visa and MasterCard payment system add their own fees on top of that. If you have a Bank of America MasterCard, for example, you'll pay the 1 percent MasterCard charges plus an additional 2 percent levied by Bank of America, for a total of 3 percent.

Read more: Credit card foreign transaction fees going up - but a few issuers drop them

The root of the costs
For overseas purchases, Visa and MasterCard, which handle transactions between the foreign merchant or bank and the bank that issued your card, typically charge a 1 percent foreign transaction fee. Then, card-issuing banks may tack on their own charges. For example, Wells Fargo card users pay a 1 percent fee that goes to either Visa or MasterCard, along with a 2 percent fee charged by Wells Fargo, bringing the total fee to 3 percent. American Express doesn't use the Visa or MasterCard payment system, but on its fee-charging cards, the company tacks on its own foreign transaction fee, typically 2.7 percent.

Read more: Cards with no foreign transaction fees surge

So my understanding is that a stated foreign transaction fee includes the VISA fee.

If a card passed through the VISA exchange fee but added no fees, it would be a 1% transaction fee card, and some do just that like the ones issued through Fidelity Investments.

Here is an example of a 0% foreign transaction fee credit card that rebates the 1% VISA fee:

Capital One
Issuer fee: none.
MasterCard/Visa fee: 1%; absorbed by Capital One
Total: 0%

Read more: Credit Card Foreign Transaction Fee Chart | Bankrate.com
Follow us: @Bankrate on Twitter | Bankrate on Facebook

Credit Card Foreign Transaction Fee Chart | Bankrate.com

 

[OldPro]

Helen, chipped is a plus for travel but is not all the story. The question is whether a card is 'chip and PIN' or 'chip and signature'. Unfortunately for USA residents, US banks are going down the 'chip and signature' road rather than a true 'chip and PIN' road.

You can do lot's of reading on the reasons why (basically it comes down to who would be liable for any fraudulent use, the bank or the merchant) but I love one quote I read a while ago trying to justify using chip and signature cards. "We don’t really think we can teach Americans to do two things at once."

Those two things are put the chipped card in a slot and enter a PIN number on a keypad. Nice to hear what they think you aren't capable of doing. LOL

You can read lots here: https://www.google.ca/search?q=wholesale+exchange+rate&ie=&oe=#q=chip+and+pin+vs+signature

Regardless of what anyone thinks of the relative merits of either, there is one thing a traveller can be sure of. With chip and PIN, you will have no problems anywhere in the world. With chip and signature you MIGHT have problems sometimes. That to me tells me which a traveller should want to have.

 

[rodi]

I agree with Audrey.

OldPro - I understand you are trying to be helpful and are passionate about it all. But seeing the wall of text you put up for every post makes my eyes blur. Can you try to distill the basics into shorter posts. I suspect you have a lot to offer, but I'm having a very hard time getting through your very long posts.

 

[rodi]

Helen - OldPro is right about the chip/pin vs chip/signature. PenFed Visa is a true chip/pin credit card. My capital one venture visa was chip and signature, and didn't work at kiosks.

 

[audreyh1]

Helen, chipped is a plus for travel but is not all the story. The question is whether a card is 'chip and PIN' or 'chip and signature'. Unfortunately for USA residents, US banks are going down the 'chip and signature' road rather than a true 'chip and PIN' road.

If it's a ATM/debit card, as Helen was describing, it has a PIN whether it's chipped or not. ATM and debit cards issued in the US have had PINs for decades.

There are a few chip and PIN credit cards issued in the US. A few credit unions and Barclays, I think, offer them. I have a VISA issued by PenFed, and yes, I have used the PIN at an automated kiosk even though it defaults to signature at any attended point-of-sale terminal.

 

[OldPro]

Audreyh1, it still seems to be subject to interpretation to me.

I did find this quote on a the valuepenquin site: "The foreign transaction fee is composed of two parts. The first is charged by the credit card network (Visa, MasterCard, etc.) while the other part is imposed by the issuer (Citibank, Chase, etc.). Visa and MasterCard both charge a fee of 1%. Regardless of the type of credit card, this fee is applied to all transactions. Depending on the credit card you use, some issuers will choose to add a charge on top of this fee - usually between 2% and 3% - while others will not add anything and even go as far as absorbing the network’s fee, so that you don’t have to pay anything." Foreign Transaction Fee: What is it? How does it work?

That certainly appears to support your belief as it specifically mentions 'absorbing the network's fee', but it does not list or mention any specific cards that eat the 1% Visa fee. Nor does it tell us how you can know which do or do not eat the 1% Visa fee.

I have no problem accepting that if a bank says they charge 3% they may be including the 1% Visa charges but I don't trust banks who say they charge no exchange, that it means they are eating the 1% Visa fee. It could only mean they are not ADDING to the Visa Fee.

One comment in the linked article is, "Chances are, unless a credit card has no foreign transaction fee, this isn't something issuers advertise upfront to consumers." That makes sense obviously. They don't say 'use our card, we charge you extra'. But by the same token, they aren't likely to say, 'use our card we only pass on the Visa fee' when they can instead get away with saying, 'use our card, we charge no foreign transaction fee'.

If they did eat the Visa 1% fee, why would they not advertise, 'use our card, we even eat the Visa exchange fee for you'. I find it hard to believe that a bank would not advertise this advantage to you over what another bank offers.

I cannot imagine there is a law that says a bank must say they charge a fee that is in fact charged by Visa, not by the bank. Such a law/regulation would indeed mean they could not advertise, no foreign transaction fees if they passed it on. But such a law/regulation would make no sense legally. I remain sceptical.

 

[Meadbh]

I agree with Audrey.

OldPro - I understand you are trying to be helpful and are passionate about it all. But seeing the wall of text you put up for every post makes my eyes blur. Can you try to distill the basics into shorter posts. I suspect you have a lot to offer, but I'm having a very hard time getting through your very long posts.

Rodi, I am surprised that you are having a very hard time getting through OldPro's "very long" posts. I find them clear, informative and well written. We have many forum members whose posts are frequently very long, including Nords and imoldernu.

 

[OldPro]

Rodi, I am a touch typist. I type, I do not 'key'. I type at around 75 words per minute. I type about as fast as the thoughts enter my mind and therefore it is not difficult for me to put down a lot of words in a few minutes.

On a lighter note, in grade 10 at the high school I attended, we had a choice of 2 optional subjects. Instrumental music or typing. Now for some obscure or unknown reason, if a guy took instrumental music he was considered effeminate. Even though typing was most definitely a girl's subject, compared to instrumental music, it was considered the lesser of two evils by the male students. So, I took typing thinking it was a total waste of time. Who was to know that years later, everyone would be using keyboards everyday.

So I have a decided advantage on a keyboard over those who can only 'key' with the 2 finger method.

 

[OldPro]

Does it say something about our society when we all look for (including myself) the 'sound bite' to tell us the story? If it doesn't fit in a 'tweet' or a 15 second TV news segment, it's too long.

 

[OldPro]

I tried to find a similar thread, as I am sure someone has asked this before, but could not find and answer. Where will we find the best exchange rate when we travel to Spain and Italy? I will be checking with our bank for advice and on-line conversations say ATMs are ok; however, I am sure our seasoned travelers here will have tried and true experiences that will help us.

We will have to spend at least $1,000 in cash at the different venues we plan on attending.

Thanks in advance for your help.

So jpjr, have you got it figured out yet?

 

[audreyh1]

I cannot imagine there is a law that says a bank must say they charge a fee that is in fact charged by Visa, not by the bank. Such a law/regulation would indeed mean they could not advertise, no foreign transaction fees if they passed it on. But such a law/regulation would make no sense legally. I remain sceptical.

They advertise it by touting their no foreign transaction fee.

I believe that US issued cards are quite uniform in their reporting of foreign transaction fees. There were some class action lawsuits a couple of decades ago that cleaned up the reporting and language on foreign conversion fees.

I really don't think a site such as Bankrate.com is going to say that

Credit card foreign transaction fees
Capital One
Issuer fee: none.
MasterCard/Visa fee: 1%; absorbed by Capital One
Total: 0%

unless it's accurate.

So a US card that says 3% foreign transaction fee includes the VISA charge, as does one that advertises 1% foreign transaction fee. But one that touts 0% must really be charging 1%

I would think it bizarre for BofA to specify 3% for their Cash Rewards VISA and 0% foreign transaction fee for their Travel Rewards VISA and the later actually have a 1% transaction fee while in the former it is included in the 3%.

And on the VISA conversion site you can put in 0% to 5% for the bank fee, but if you put in 3% you're really getting the number for 3%, but if you put in 0% you really get the number for 1%?

And your valuepenguin link itself says:

Foreign Transaction Fees by Issuer: Credit card FX fees vary greatly between issuers, and generally average 3%. Some, like Capital One, absorb the charge so their cardholders don't ever have to worry about them

And they list Bank Americard Travel Rewards VISA and United Mileage Plus VISA are listed as no FX fee - just like the Capital One card 0% FX fee. For example Bank Americard Travel Rewards VISA is listed as no FX fee, while the other typical BofA cards FX fee is listed as 1% to 3%. I think it's pretty clear in their table that no FX fee = 0% FX fee as shown in the Capital One row.

Most issuers will have at least 1 or 2 credit cards to offer, where these fees are covered by the issuer.

The foreign transaction fee is composed of two parts. The first is charged by the credit card network (Visa, MasterCard, etc.) while the other part is imposed by the issuer (Citibank, Chase, etc.). Visa and MasterCard both charge a fee of 1%. Regardless of the type of credit card, this fee is applied to all transactions. Depending on the credit card you use, some issuers will choose to add a charge on top of this fee - usually between 2% and 3% - while others will not add anything and even go as far as absorbing the network’s fee, so that you don’t have to pay anything.

 

[Meadbh]

Might it be relevant that OldPro lives in Canada, while audreyh1 lives in the US? I am too lazy to research this, but they may be comparing apples and oranges.

 

[audreyh1]

We are specifically talking about US issued credit cards.

 

[Meadbh]

We are specifically talking about US issued credit cards.

I'm sorry, but that was not clear to me. The $ in the thread title could also refer to Canadian or Australian dollars.

 

[Bestwifeever]

The OP is in South Carolina--probably wants info re converting US$

 

[Sunset]

I have found this discussion valuable, even the nitpicking parts as it has revealed to me how stupid I was when I was 20 in Greece.

I hope to visit much more of Europe so this is of interest to me.

 

[Meadbh]

If the intention was to discuss US$ only, perhaps the moderators can change the name of the thread to

Converting US $ to Euros

Otherwise, all dollars are fair game.

 

[audreyh1]

I'm sorry, but that was not clear to me. The $ in the thread title could also refer to Canadian or Australian dollars.

If the intention was to discuss US$ only, perhaps the moderators can change the name of the thread to

Converting US $ to Euros

Otherwise, all dollars are fair game.

The title of the thread may have a more general discussion of converting $ to Euros. The detour about credit cards which do or do not really have 0% foreign transaction fees was specifically talking about US issued credit cards.

 

[Alan]

If the intention was to discuss US$ only, perhaps the moderators can change the name of the thread to

Converting US $ to Euros

Otherwise, all dollars are fair game.

The OP is clearly in the US so it is fair to assume that it was USD he asked about.