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I'm traveling from the US to Europe in a few weeks. What's the best method of exchanging dollars for Euros?

I imagine there's options like:

  • at the airport when you arrive in Europe
  • at a bank in the US before you leave
  • at a bank in Europe upon arriving
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8  
Whatever you do, don't do it at the airport. They always have the worst rates. –  victoriah Jun 21 '11 at 22:48
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...unless you're in Singapore, where the best exchange rates are at the airport. –  Ankur Banerjee Jun 30 '11 at 16:16
    
Maybe it's best to go to your home bank to deposit the cash. For me, I can get selected foreign currencies at no cost from my own bank. This works for big international currencies and nearby currencies. So I would ask your bank. –  gerrit Nov 7 '12 at 10:20

8 Answers 8

up vote 39 down vote accepted

I use five strategies to pay for things when I travel:

  1. The best rates are often the rates you get with your American credit card or debit card. Try to charge as much as you can. The fees are very low and the exchange rates are fair. However, many American banks charge several dollars for every foreign currency transaction, so if you plan to spend a lot of time in Europe, you may want to apply for a credit card with low or free foreign currency transactions. Right now, Capital One has a reputation for being the best deal on foreign currency.

  2. My second favorite strategy is to get cash out of foreign ATMs using my own bank's debit card attached to my checking account. I've never had a problem with this, but I have heard that if your PIN is more than 4 digits, it may not work internationally. There are a few countries where most ATMs don't like American bank cards, notoriously Japan. In Japan, if you can find a post office, they have ATMs that are happy to accept American bank cards.

  3. Any kind of transaction that involves a human being standing behind a counter changing money for you is going to be bloody expensive. Like, 15% expensive... or more. You have to pay for the person and the counter. I very rarely do this.

  4. Very rarely, in Europe, you will find yourself dealing with an automatic machine that ONLY accepts credit cards and which keeps asking you for a PIN or refusing to read your American credit card. The most common places I've had this happen:

    • Automatic ticket machines at railroad stations
    • Bicycle rental machines
    • Unattended gas stations
    • Toll booths in France

    Essentially what's happening here is that European credit cards have an embedded chip and require a PIN, while American credit cards use a magnetic stripe. In some situations in Europe you must pay with a Chip and PIN credit card. See this question for information about getting a chip and pin card as an American. I have a Travelex Cash Passport loaded with British pounds for these situations, although the fee for this was about 15% it's worth it because you don't have to wait in line for a human at the train stations.

  5. In a pinch, you'll discover that the better hotels are often happy to convert money for you. The rates are not very good, but if you keep a few hundred dollars in US cash hidden away somewhere safe, it'll get you out of just about any kind of situation.

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There is a fairly standard 3% fee for foreign transactions on US credit cards (2% for AmEx and Discover, even less for some government credit unions and some Capital One cards). There is also a "Dynamic Currency Conversion" (DCC) fee that some credit cards charge on top of the 3% fee. The DCC can cost up to an additional 7%, so some cards can have up to a 10% fee. I think the DCC may be set by the vendor, not the purchaser's credit card, so it can vary by transaction. AmEx apparently does not allow DCC fees; they have a flat 2% fee. –  ESultanik Jun 22 '11 at 16:51
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For #2 When i was in Japan, had to take the subway into downtown Yokohama(30mins) to the nearest ATM that had the ability to withdraw directly from my account(Citibank) in the US. It was worth the trip as I received my money without a surcharge, at the exact daily exchange rate. –  russjman Jun 22 '11 at 17:01
    
Capital One credit cards do not charge a foreign transaction fee. They are the only major credit card company that does not charge foreign transaction fees. Credit union debit cards and some smaller credit card companies charge 1% foreign transaction fees. –  YequalsX Sep 23 '11 at 16:12
    
Note that the CHIP+PIN thing is primarily for debit cards; if you have a credit card, the old sign-and-swipe thing will work (but is highly insecure). Keep an eye out on your statements. –  Burhan Khalid yesterday

I asked this question earlier and it would seem that the consensus is exchange some money before you go and take it with you, and then get the rest from ATM's while in the country.

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There will be huge conversion rates for this. Local exchange is cheaper. –  VMAtm Jun 22 '11 at 9:22
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I'm with VMAtm on this. This question appears to be asking purely for the cheapest method. If that's the case then this is not a good answer. –  Matthew Read Jun 22 '11 at 15:12
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Conversion rate is always the same, most you will see is an fee on it, but it's a lot safer and easier to pull out of ATM then carrying hundreds and hundreds of euro's in cash. –  Darren Kopp Jun 22 '11 at 15:33
    
Be aware that some countries ban import of ANY of their currency. eg as at January 2014 an Indian national may import up to 150 Rupee (pocket change) and other people may not import ANY Indian currency at all. –  Russell McMahon Jan 23 at 20:32

The cheapest way to exchange money is to use a dedicate currency trading house. Your bank / credit card company will almost certainly charge you 2.5% on top of the exchange rate. I use XE Trade and pay half that.

I've never had a single problem with XE regardless of the method I used to move money — Draft, Wire, ACH, bill payment through online banking, etc.

It was free and pretty simple to sign up, all online — and besides the standard info all they required was for me to upload a scan of a bank statement.

The one problem is that it's easiest to have the converted money deposited in a bank account. If you don't have one in Euros then you'll need to get a bank draft (money order) and get it turned into cash when you're in Europe. You could also get it wired to something like Western Union but that has its own problems. There's a separate fee for both of these options, so it won't be worth it if you're only trading a small amount of money.

In short, I would recommend Joel's answer unless you have a bank account in Euros, in which case you should use XE or another service via ACH or EFT (no fee, delay of a couple days before your money is deposited). You could probably get an account on your first visit, depending on the particular country's laws or bank's rules about foreign account holders.

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Converting from a common currency (call it COM) to an obscure one (OBS) is typically more favourable in the OBS country -- if the demand for OBS is low in the COM country, then the exchange rates would be typically higher. As to how much higher -- as a typical example, I've been charged around 15-20% premium on top of official exchange rate for e.g. SEK in my country, while exchanging my COM currency in Sweden yielded much better rate.

For currencies as common as EUR and USD, I don't think you'd find much difference between Europe and USA, and whatever difference there is would be eliminated by day-to-day fluctuations and exchange bureaus' policies. Such price differences are precluded by market forces -- if there exists a sufficiently favourable exchange rate between currencies in one country, bulk buyers and sellers would be quick to exploit the difference, bringing the rate back to balance.

Still, it's probably better to exchange in Germany. UK is probably the worst choice, as most places would probably exchange to and between GBP and the double conversion is going to cost you extra.

Also of note is that large amounts of cash (equivalent to 10000 EUR or more) need to be declared to the customs when entering the EU. I'm sure similar legislation exists for USA (AFAIK the limit is 10000 USD, but don't quote me) and UK, consult local import and export legislation.

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In some countries (Sweden and UK, for example), you can get out cash from certain retail store chains, like ICA.

For example, you'd buy some groceries worth say 250 SEK. When you are at the cash register, you can ask the attendant to charge your card 500 SEK, and give you the rest in cash. You are not going to be charged extra for this from the retailer. In essence, this works as an ATM with no transaction fees.

Note, however, that you can only do this for smallish amounts -- a few hundred SEK at the most (1 USD is around 7 SEK), but could be a life-saver if you only need a small amount in cash and it's not worth it to go to an ATM.

Then again, in Sweden you'd be hard pressed to find places that do not accept cards and operate only with cash.

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This is true for UK too. Superstores or other convenience stores will ask you whether you want "cashback" when paying at the checkout counter. –  Ankur Banerjee Sep 23 '11 at 11:25
    
You can do this in Australia too but it does not work with both ATM cards and credit cards. It only works with one and I can never remember which! –  hippietrail Sep 23 '11 at 13:44
    
In the UK and Ireland, at least, it only works with ATM/Debit cards, not credit cards. –  scottishwildcat Jan 25 '13 at 16:04

If you are in the Europe and the UK for a while, you could also look at Transferwise.com which has a peer-to-peer exchange model that gives very good rates and very low commissions. Index Ventures, an investor in SE is also an investor.

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This looks like a really neat idea! –  Ankur Banerjee Jan 25 '13 at 17:05

I believe it depends from country to country, although using credit/debit cards from your bank is usually always the best method and most secure, overall.

I can give a tip for Prague, Czech Republic, don't go to street exchange office, never, it is a ripoff. And I mean, never! You will see dozens of rates on the board in the front just to confuse you, and you will get the worst rate which is usually 25-30% lower than the rate you might expected as seen on xe.com or somewhere.

However, in my country and capital (Belgrade, Serbia) exchnage offices are the best places to change the currency. There are only two columns (for buying and selling) and WYSIWYG so you can easily calculate how much money you will get, and for larger amounts you can even get better rate. You will get less money in the domestic banks.

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You should check the conditions at your home bank for depositing foreign money. I know that banks often have favourable conditions. On two occasions I have checked out foreign currencies at my home bank — one of the services for their customers is that they can do this at zero cost. I have not checked whether the same applies for depositing money, but it is worth checking. Even if it's not for free, it's almost certainly better than exchanging at an airport.

So, my recommendation is to ask your own bank about the costs of depositing USD directly into your account.

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