converting dollars to cheese!

March 3, 2008 9:13 AM

I'm going to Europe for at least a year in September. When should I convert my dollars to euros?

I know that if I were planning on staying in the US, converting money to different currencies would not be the best course of action. But what about in my specific situation?

I will probably be in France from at least September-June (longer if possible). There, I will only be making ~750 euros/month after taxes so I will want to use money that I have saved for this trip to supplement that. But! I'm worried that something awful will happen in the next six months and my US savings will be worth a more meager sum than they already are. (Am I on the wrong track here? Will the economic stimulus package fix everything?)

Would it be totally foolish to transfer my dollars to euros now? If so, when should I do it instead? (and how?)

posted by mustcatchmooseandsquirrel to work & money (17 comments total)

I know nothing about the economic outlook for the dollar. Except that you should not convert any dollars to Euros right now.

Perhaps another venue would be to bring some american goods to France and sell it there? You would probably have to put some time into research about what's hot-and-not there.

Take care!
posted by Rabarberofficer at 9:36 AM on March 3

You should consider opening a bank account in france if you are going to be there for a year... You can probably do it from here... Then it is a small matter of transferring money from one account to another, when I lived in scotland it was no big deal, I could even write myself a personal check from my bank of america account in the USA if I didnt mind letting it sit for about 3 weeks to clear... The thing I did more often was take the max amount of pounds out of the atm from my bank of america card on a bank of scotland ATM. The exchange rate was good at the atms, and I would only get dinged one time for the transaction fee. I'd take out like 500 pounds, walk inside the bank and deposit it into my account, instant money changing!

There are also some big european banks (I think HSBC?) that will let you open an online account so you can take money out at their ATMS in europe at no fee, Im sure you could deposit euros in these accounts whenever you want.

As for if you SHOULD do it or not, do you think the dollar will be weaker against the euro when you are in europe? if so change the $$ now, if not wait. Its really up to you.
posted by outsider at 9:39 AM on March 3

Rabarberofficer: What is the basis for your advice to not convert dollars to euros now?

outsider: Yeah, I'm definitely going to open a bank account there when I get there. I've heard, though, that HSBC doesn't necessarily let you start an online account from the USA with access from Europe.
posted by mustcatchmooseandsquirrel at 9:50 AM on March 3

It's worth considering that the Euro is currently at a historic high against the dollar, and that the usual investment advice is "buy low, sell high", not "buy high, sell low". But if you have reason to believe the dollar is going to grow even weaker...

Will the economic stimulus package fix everything?

There's no simple relationship between the rate of growth of the US economy and goings-on in the currency markets. It's a bad idea to get into currency trading unless you really know what you're doing.
posted by mr_roboto at 9:53 AM on March 3

I had the same problem, it really depends on how pessimistic you are about the US economy. The Euro exchange rate has been getting steadily worse since...well, since I started actually caring about it. When I came here in '06 it was about 1.33:1, now it's almost 1.52:1. I did my last (hopefully final) conversion a few months ago at 1.48:1 and I thought I was being ripped off, but it's even worse now so who knows. If you need the money soon, do it, there's not much you can do to control exchange rates.

Be careful about the selling thing. If you're bringing goods into the country that have a high VAT on them and claiming them as personal possessions, I'm not sure about the legality of selling them.
posted by Ndwright at 9:55 AM on March 3

You should convert your dollars to euros about six months ago.

There are two questions you could be asking. One is "when's a good time to speculate on the USD/EUR exchange rate?" I've got no idea, and neither does anyone here. The other is "I'd feel better knowing I have X euros right now, and be insulated from the exchange rate for my upcoming trip". That's entirely rational of you, although whether the comfort outweighs the nuisance is something only you could decide.

BTW, I was just fine for 3 months in France keeping my US bank account and doing withdrawals from an ATM. I appreciated having a credit card with no garbage "currency conversion fee"; CapitalOne was the only big issuer to have that when I looked. OTOH, I really wish I had a French credit card with the little smart chip in it; most French machines won't take a US credit card with just a magstripe. I don't know the easiest way to get that.
posted by Nelson at 9:57 AM on March 3

If you can't make a decision as to whether you think dollars will be worth the most now or then, the only other factor will be whether any euros you buy will be sat in an account earning you money or whether they'll be sat on a cupboard waiting for you to leave.
posted by biffa at 10:00 AM on March 3

As someone that's been in France for 6 months going on 9--STAY AWAY.
posted by nonmerci at 10:02 AM on March 3

Okay, snark aside:

A lot of the advice you're being given is terrible.

No, you cannot open an account while you're still in the United States. If you're going to be doing it on your own--as opposed to with the aid of an international program--you will likely need to present proof that you are in the process of receiving your carte de séjour (I just got mine after waiting for 6 months! Very timely).

For money matters, I don't know what to say. I haven't convereted all of my currency and am still working with an American bank account along with a French bank account. I get a 620 euros/month which barely covers my cost of living, so be prepared to spend more like 800 and up, depending on what it is you do, what kind of groceries you buy, how much your rent is. This will also change depending on the city you're in--I'm in a relatively cheap city but I find everything enormously expensive. I've heard France is the worst country in Western Europe as far as consumer goods, and seeing generic shampoo that sells for around $6 I can see how that could be possible.

"OTOH, I really wish I had a French credit card with the little smart chip in it; most French machines won't take a US credit card with just a magstripe. I don't know the easiest way to get that."

I don't know WHAT this person is talking about--this is absolutely and completely false. Every single time I've used either my Visa debit card or my US Bank credit card I have had no trouble, and I've absolutely never encountered a credit card machine that ISN'T equipped to deal with a regular American card. What this person may be talking about is the fact that often I am met with confused looks when I pull out a card that doesn't have the smart chip. They usually then try to work it, remain confused, ask a superior and then manage. Again, I am not in the biggest of towns and I have done traveling in France while I've been here and I have never, ever been told that my card cannot be accepted due to the 'magstrip'.

Honestly, I wouldn't convert all your money. If you're that worried convert a lump sum but don't convert all of it. That just seems...rash, to me. Be prepared to be poor and to have everything cost a lot of money. And if you plan on traveling, expect to spend a LOT of money. Definitely get the 12-25 train card--49 euros--which gives you 25 - 50% off of train tickets.

Feel free to e-mail me, [e-mail], if you have any questions.
posted by nonmerci at 10:12 AM on March 3 [1 favorite]

I really wish I had a French credit card with the little smart chip in it

I'm talking about the little smartcard chip in French credit cards, as seen in this image. The gold contact thing about the numbers 0123. I've never seen an American credit card with one.

I was specific when I said most French machines won't take a US credit card with just a magstripe. I never found a gas pump that would work with just a magstripe. The SNCF ticket machines on the train platforms demand a chip, too. The ordinary POS credit card machines would prefer a chip as well, but if you're dealing with a person you can usually go through some secondary process with just a magstripe. But I never was able to buy or pick up a train ticket without a chip and I'm not alone.

We're a bit off-topic now, so this is my last comment.
posted by Nelson at 10:57 AM on March 3

First, getting a bank account in France isn't easy. Having money isn't the issue, though of course you should have it. You need a -relationship- that suggests to the bank that you will be a customer worth having. I opened an account as part of a real estate transaction, which is why the bank was convinced, but the account wasn't ready to accept deposits even after the first round of automatic payments was to start. The banker said "don't worry, I cover such things" and he did. The bank account went negative right out of the chocks and that is how things work in France.

Second, your US bank will likely have to wire transfer funds into your French bank and this itself can be fraught. Credit unions and a number of regional banks can't or won't do this. I had to hold my nose and open a BofA account in order to make wire transfers.

Third, securing a Carte Bleue is a good idea but as with everything at a French bank you pay a fairly high charge for it. I've never had a single issue paying via a US credit card in a store, even when the things I wanted to buy were pricey.

Lastly, I have to differ with nonmerci about some costs. Liquid fuels are expensive and certain things are wildly more expensive (house paint is 4x what it costs in the US and home fixtures like electrical outlets are costly too) but the local Intermarche in St.-Marcel, near Narbonne, is reasonably price competitive with groceries in the Bay Area.us and a number of things are considerably cheaper - for some reason disposable razors, just for example, are very inexpensive in France. In French open-air markets I very often find the cost of a vegetable item -per kilo- to be about what it costs -per pound- in my local US market. American-style steaks are very expensive and hardly anyone eats such things anyway but other meats, cheeses and seafood seem about equivalent where there are equivalents but part of enjoying France is eating things you can't get in the US. The baked goods are both cheaper and much better than US ones, of course.

On preview: Nelson explains why I could never get tickets from the SNCF kiosks; I didn't know it was because my credit card was missing the chip so yes, I -have- had problems with using US credit cards. I thought it was just bad luck with the SNCF booking process.
posted by jet_silver at 11:07 AM on March 3

I found taking money out of the ATM got me the best exchange rate during an extended stay.

I had brought 5k cash USD expecting to incrementally exchange it at the bank, but even with the transaction fee the rate was much better at the ATM.
posted by Slenny at 11:20 AM on March 3

You're probably in a better position to invest in budgetary smarts than currency speculation, because it's something you have a degree of control over. Work out what's sufficiently portable, that you're likely to need, and costs less in the US, and use your dollars for those things (i.e. consumer goods, esp. electronics); do some reccy; get some practice living on a tight budget.

I'm not going to suggest engaging in activities of questionable legality, but should you find on arriving in France that you no longer need certain shiny things, transatlantic arbitrage may mean you end up making money selling those shiny things on.
posted by holgate at 11:36 AM on March 3

Yeesh, so much tempest in this teapot. You have the money already set aside, right?

Convert half of it.

If the one side gains against the other, you'll gain an amount proportional to the loss.

This, of course, is assuming that you're not looking to play the market for a gain. That's speculation, and you should speculate with money you can't afford to lose.
posted by TheNewWazoo at 1:27 PM on March 3

er, should NOT speculate with money you can't afford to lose.
posted by TheNewWazoo at 1:28 PM on March 3

I would just change it all and get it over with.

I've been living in Europe on the dollar for about 6 years, and it's only been getting steadily worse. Sure it might go up for a bit, but the overall trend is down. Waiting for a good rate is really stressful, and most likely you'll find yourself in a situation that goes like this: 'ok, if it just gets back up to what it was yesterday/last week/last month, then I'll change it'

I find I almost always come out ahead if I change money immediately. The dollar has already passed the 'surely it can't go any lower' mark for me several times and waiting for those brief gains hasn't been profitable in my experience. YMMV

Somethings to consider though- The Fed has cut interest rates at the last 5 consecutive meetings (which lowers the dollar), and last week signaled that a rate cut will be coming at the next meeting at the end of march (which further lowered the dollar). When they cut interest rates at that next meeting, the dollar will.. yep, drop. And I haven't read anything positive about the short-term outlook of the US economy in a long time.

Good luck
posted by sero_venientibus_ossa at 2:33 PM on March 3

Honestly, I'd change the money when you get there.

You're going to need the money you have right now to help get your affairs in order. I don't think the US economy will undergo a complete collapse between now and September.

Perhaps the Euro might strengthen a little bit in the next 7 months, but the difference will be negligible at best.

Hold on to your dollars until you are ready to board your flight or when you are in Europe.
posted by reenum at 2:40 PM on March 3