Would you recommend this? DD is planning to travel around Europe in the summer of 2016 as our graduation present to her. I’ve been reading/hearing that the US dollar is the strongest its been in Europe but that it could be short lived.
If we did exchange some dollars for euros now, what’s the best/cheapest way? Last year, I exchanged USD for Guatemalan currency at a money exchange place. I now it wasn’t the best deal but it was a last minute trip. The last time we went to Europe, we just used the ATMs and our Chase cc. This time, it would be great if we could take advantage of this favorable exchange rate.
A lot of financial experts are predicting that the current close to parity USD/Euro rates will stay that way for awhile.
Most currency cash exchanges charge about 10%, way worse than taking your chances by waiting for next year.
Here are two ideas - my BIL has both US and Euro-based accounts. He can transfer funds between the two and pays about 0.5% fee. Alternatively, as a hedge you can buy UDN shares on Nasdaq.
If you are a Bank of America customer you can purchase Euro online and pick them up at the bank. Their rates are very good. There’s also Travelex, they will send your cash by overnight express though the rates are comparable to airport exchange services. Also, use a debit card when purchasing Euro online as your credit card may charge cash advance and foreign exchange fees. Some credit cards do not charge foreign exchange, Chase Sapphire for example (which has annual fee after the first year). Personally I wouldn’t worry about purchasing cash as a hedge on currency exchange, the risk of storing and traveling with a large wad of cash is probably greater than risk of a poor exchange rate. Even so, it’s nice to have a least some pocket money upon arrival:
Whenever DH needed the money in advance, he also used the bank, which is also BoA. Despite the current strength, rates sometimes drop in summer. For a moderate amount of money, I might go ahead and exchange some now.
The thought of D traveling with a lot of cash is worrisome. We do have a B of A account and can go through them if need be. Thanks for your input!
Bank of America was very helpful for us when we need to get overseas currency before a trip.
I found out through the hardway that it is best to use your ATM card to withdraw euros.
We paid 1.25 with a Chase ATM card (3 cents) while it was costing us 1.35 minimum when using the currency exchange.
Yeah, I’d recommend getting a small amount from your bank, but the rest when you get to europe. The extra fees at the exchange are insane. Just make sure your Debit card will work in the country you are visiting.
If you think about it, the price the currency is currently trading at should already reflect what is expected to happen in the near future (including summer 2016). Otherwise, currency traders would be buying the currency like crazy which would lead to an increase in the current price almost immediately. I’m not naive enough to believe in a perfectly efficient market, but if there really were some sort of market anomaly that caused the prices to be abnormally low compared to the expected price a year in the future, that would be quickly corrected by the market. It might be fun to buy Euros now on the hopes that they will be worth more a year from now, but it is just a bet like any other. The person selling to you may well expect prices to be down next year.
Unless you want to play the currency market by buying and stashing (and I agree with you its best for your daughter not to be carrying a large amount of cash), an ATM card or debit/credit card with ATM access is the best way to go. I’m not sure what BofA’s fees are like for foreign currency transactions but Charles Schwab has a zero fee card and the fees on Fidelity Investment’s card are VERY low. We’ve never worried about picking up currency before departing the USA because you can always find ATMs in the arrival airport. A backup debit/credit ATM card can be a good idea just in case. Once, one of the kids’ cards went missing and it was very expensive to wire money.
I recently discovered this while in France last month, and I have a daughter studying abroad right now. Using ATMs, or using the debit card for purchases now incurs a 3% ‘transaction fee’. This is every bank, even Bank of America. This fee used to be waived by Bank of America, but it has been enforced since last fall. The only advantage for Bank of America debit card is that they have an alliance with major banks in Europe. If you use the Bank of America debit card in one of their sister bank ATMs you can avoid the $5 ATM fee.
However, there are several credit cards available now (Capital Venture) that do not charge Foreign Transaction Fees or Currency Exchange Fees. Bank of America has a Travel Rewards card that does not have the foreign transaction fees. If you can pay for as much stuff as possible with the credit card - there will be no additional fees.
Most important at this point is to make sure that your daughter gets a credit card with no foreign transaction fees AND both the bank debit card and credit card have chip technology. American standard credit cards cannot be used in Europe. She needs to go into the bank now and ask for a new debit card and credit card that have chips and her PIN for ATM and other usage on the debit card can only be a 4 digit number (not longer, not shorter).
My D lives in Europe and uses a Schwab account. No ATM fee(they rebate any fee incurred) and no 3% transaction fee. I think they are unique in this. (I will be taking mine to Europe in a couple of weeks to test it out)
Yes, my D2 is in Germany for the year and also uses a Schwab account. The foreign banks charge a transaction fee, but Schwab doesn’t pass it on to their customers. D2 has also found that Visa/Mastercard acceptance is not as widespread as it is in the States - often she has to pay cash. And to top it off, American banks are phasing in chip credit cards that do not have a PIN, unlike syatems in Europe and Canada. They warn that the cards may not work with foreign machines, and travelers should carry cash, just in case. One step forward, two steps back!
I called Visa about my Chip only new CC, and what to do if I have to use a PIN. They told me just to type in four zeros and it will work. Now, I have no idea if that is true or not. No way to tell unless some does it and let’s us know.
Why tie up that cash for more than a year?