Currency exchange for a Europe trip six months away

March 6, 2005 10:22 PM

USAsian traveling to the Continent this Fall -- should I buy some euros now? How?

I'm a budget traveler making plans. Since the exchange rate seems to be getting worse, should I buy my spending money now? (Also contemplating conversion of some percentage of my nest egg to euro-dollars, and stashing them "in the mattress." What do you think?)

So, what's the cheapest way to buy cash euros in the States? AmEx? Not a member. Thomas Cook, the BofA or maybe my local bank? (Incidentally, comments in a relevant thread from a year ago suggest never changing money in the airport, which is a good, general rule of thumb; but there's a big exception: Japan. Their airport exchange counters give a decent rate, and you get your yen way faster than at a bank.)

posted by Rash to travel & transportation (11 comments total)

If currency rates are cyclical, the Euro and Pound would seem to trend downwards over the next 6-9 months, but probably not by much. You can buy AmEx traveler's checks from AAA at rate, if you're a member (or know someone who is). If you don't buy currency ahead of time, using your credit card for purchases will get you the best daily rate.
posted by AlexReynolds at 10:37 PM on March 6, 2005

Seconding what Alex said. Those airport kiosks never give a rate that I find competitive. If you use your ATM card (and I would note, the idea of the Bank that owns the ATM charging a non-customer a fee for using the ATM has not caught on yet. None of this pesky $1.50 fees), you get your Euros at the bank's purchase rate which is slightly better than you as Joe Consumer will be able to get.

The Euro has been getting stronger for the 2 years. The means that foreign investment in Europe has taken a bit of a tumble. This, coupled with some interesting news on the economic front (France only showed a 2% growth last year compared to the US' 4% and China a rockin' 8% and some dreadful news from Greece concerning fudging of numbers) means that some think the dollor will start making a return.

But basically what you are asking about is currency speculation and let me tell you, if I could answer your question with any degree of certainty, I'd be making the mad money.

So, end advice, by the Euro when you get here, use your check card for purchases whenever possible and avoid walking around with silly amounts of cash on you. It just makes you an easier mark.
posted by Dagobert at 12:18 AM on March 7, 2005

I have a friend who is doing a PhD in finance, and his dissertation is on the global foreign exchange market. He points out that basically I (like you) know about as much about whether the dollar will rise or fall, as whether a particular stock in the stock market will. Which is to say, nothing. Large financial institutions, however, have teams of economists and geniuses working for them who can figure this stuff out and if they had any degree of certainty that the dollar was going to fall, they would sell today, making it fall now rather than later. Today's price is the wager of experts on where it will be later.

Don't get your cash in the states. Ask your bank what their foreign exchange charge is on your ATM card and credit card. If they add onto the 1% that the ATM/credit card network charges, it's useful to find another bank for this purpose. Use these abroad.

If you want to speculate in the foreign exchange market, or to hedge your bets, there are a number of web sites that let you do this, like www.xe.com.
posted by grouse at 1:37 AM on March 7, 2005

While I agree with the posters above regarding currency speculation, it wouldn't be a bad idea to get a small amount of cash in Euros before you leave the States.

If you are using your debit card in cash machines abroad (which is what I'd recommend), you will generally only have access to your chequing account so do make sure that you have enough money in it!
posted by lumiere at 1:56 AM on March 7, 2005

it's nice to have a little bit of cash on you when you arrive as you really never know how easy it will be to find an atm in the airport that is actually working! or at least in my experience, that seems to be the case. i also second dagobert on this one - don't bring a pile of money around with you, just use your cards when you're there. it's safer and much more convenient - just make sure the overseas rates at your bank aren't astronomically high. and no matter what anyone says, traveller's cheques are a huge hassle to change and probably only worthwhile to have one for emergencies.
posted by venus in furs at 3:22 AM on March 7, 2005

I think the advice that credit cards are a good deal may be out of date. Lots of cards have just started adding on 3% surcharges for all foreign purchases, as my mail has been reminding me in recent days. It seems counterproductive, since it will cause more people to use cash and avoid credit cards, but I guess the companies figure they'll make up for it by squeezing more out of the people who aren't paying attention.
posted by Axaxaxas Mlö at 5:40 AM on March 7, 2005

Lots of cards have just started adding on 3% surcharges for all foreign purchases

Yeah I just had some letters from Visa to say that they would in future be imposing a 1% surcharge on *all* my foreign transactions (including ATM withdrawals).
posted by carter at 6:29 AM on March 7, 2005

If you are interested in putting some money in Euro's take a look at EverBank You can open a deposit account in any currency you would like with a $2500 minimum.
posted by tirebouchon at 9:03 AM on March 7, 2005

I just got back from Ireland, and the Euro was actually about the same as when we booked our trip 6 months earlier, despite some big swings upward in the interim.
My recommendations are largely the same as others:
- Take a hundred Euro with you, so you can get from the airport to where you're going, and buy food without having to find an ATM. Jet lag is bad enough, without throwing that uncertainty on top of it.
- The best rate for ATM usage was through our local credit union. If you are not a member of one, join before you go - they often have better deals. Ours only charged a .75 surcharge per use of an ATM, and they just announced they will NOT be passing along to their members the new Visa 1% surcharge for foreign transactions. Btw, Wells Fargo charges 3% per transaction for their debit card transactions in a foreign currency!
- If you plan to use a credit card before you go, check to see if there is any surcharge. Our Bank One Visa had no such surcharge, and we got a good rate to boot.
- Have fun, and try not to do too much conversion of prices into dollars (beyond what is absolutely necessary for your budget); converting every single transaction can take a lot of the fun out of travel.
posted by dbmcd at 9:46 AM on March 7, 2005

The money you might save by buying euros now isn't really worth the hassle (or risk)unless you are talking 5 figures or more. (IMHO)

As other people have pointed out, this is essentially currency speculation (gambling). You can make/lose a lot of money doing it. If you are serious about it, you should look into getting a foreign exchange (forex) account. Some of the big name online brokerages offer forex trading, but there are also some smaller brokerages that specialize in it.

With an online broker, you can get a much better deal on the conversion rate at that moment than compared to a bank. Forex brokers don't charge a commission per se, but it roughly amounts to a few hundredths of a percent. However, setting up such an account takes a little effort and money.
posted by wezelboy at 12:58 PM on March 7, 2005

Not really your question, but make sure you tell your credit card company and bank that you'll be in Europe! A friend of ours found that his credit and ATM cards couldn't work in Europe, since the card company could not reach him to find out if the charges were his (in the name of fraud protection).
posted by jasper411 at 1:50 PM on March 7, 2005