Empirical Analysis of Dollar to Euro Conversions

Looking back at our bank statements, calling a few banks, and doing some web research, I found that Cambridge Trust and Fidelity give the best deals on foreign currency exchange, specifically when you pull money from the ATM. Those two repeatedly charge at the “benchmark” rate, including all fees, and I highly recommend you check-out setting up account with either one to use when traveling abroad.

30 days of charges relative to the benchmark USD/EUR benchmark rate Sources: ECB, personal financial statements, sendmoneyhome.org (Accessed 2010-02-11)

One of the best feelings I have had since we moved to Holland was the day I got my bank account! Not having a bank account means that you carry huge wads of cash around, get rejected when you try to use your silly american credit card, and wait in long lines at the train station to buy a ticket (the machines don't take Visa or American Express.) In general, you feel like an idiot all day.

Getting a bank account is not a simple matter. You have to have a dutch social security number, a job contract, and proof of owning a dutch oven. It took us five weeks to get everything we needed to get the bank account running! That's a lot of awkward situations at the kassa.

Once you have the bank account, you might wonder, “how do you get money in it to pay something like the rent in euros when all you have is dollars?” For me, moving money to the Netherlands boiled down to five options:

	+'s	– 's
Bring Loads of $'s	Easy to pull out of your bank You get to finally carry a briefcase taped hand-cuffed to your wrist	Insecurity Unfavorable exchange rates at Travelex and other Taping it to your person hurts to take off
Bring Loads of €'s Bank of America will sell you currency, usually requires advance notice	Hand-cuffed briefcase-factor	Poor exchange rate, typically a 2% “fee”
Use foreign ATMs Most commonly recommended by travel guidebooks	You get to feel like a dutch-pimp with giant 100 Euro bills	Limit of 300-400 Euros per day Hit or miss fees Insecurity
Bank Exchange + International Wire	No need to profusely sweat as you pass through a train station	Bad exchange rate/fees Fee also charged by receiving bank
Exchange Bank MoneyCorp All these guys do is exchange money so it's a “volume, volume, volume” business	More reasonable rates/fees	Sketchy feeling Still pay the fee to your receiving bank Unregulated bank-entities

After looking at my statements, calling my banks for quotes, and researching online, I found the best way to a lot of money is to use an ATM. This creates a ridiculous, insane ritual: (1) I go to the ATM put in one card and take out 350 euros everyday and (2) put in a different card and put the money right back into the same exact ATM machine!

Fidelity, Cambridge Trust, and CapitolOne (sometimes I wonder how fidelity makes money) all do not charge foreign exchange fees. Fidelity, I have been with them for years, they have low fees on trading and banking. Their web UI is very very bad though and not nearly as clean as ING's. Cambridge trust charges a whole dollar per non-CT ATM, but that is a small price to pay and they have really personal customer service. Last time we called, there was no robo-answerer, a human simply picked up the phone after two rings.

ING Direct and HSBC – usually the go-to banks for the thrifty, definitely loose on international purchases. This is especially frustrating since ING is the national bank of Holland and HSBC is supposedly “The World's Bank.” The straightforward 2% these guys charge accumulates fast. Save these guys for emergencies.

The takeaway – call your bank before you go on your next trip and find out what their foreign withdrawal fees are even if you have done this and think you know the answer. A lot of banks changed their fee schedules over the past 12 months in reaction to the new consumer finance "reforms" in the US. If the fees are around 2%, consider calling Fidelity, CapitolOne, or Cambridge Trust and setting up an account.