Traveling to Europe and need euros? Using your ATM card at a local ATM upon arrival seems like the most convenient and cost-effective option. However, understanding the fees involved in converting dollars to euros at these ATMs is crucial to avoid unexpected charges. While the allure of instant cash is strong, the reality is that withdrawing euros often comes with a hidden cost, and sometimes, it can be around 3% of your transaction. Let’s break down what that “3 Euros In Dollars” truly means when you’re using ATMs abroad.
When you use your ATM card in Europe to withdraw euros, you’re essentially engaging in a currency exchange. The ATM networks, like Visa or Mastercard (referred to as “the Network” in some contexts), typically impose a 1% charge for servicing these international ATM transactions and handling the currency conversion. This is a base fee that is often unavoidable.
Some financial institutions absorb this 1% network charge, offering a more customer-friendly service. Notable examples include Capital One and Schwab, which are known for not passing this 1% fee onto their customers for certain ATM cards. This means you get closer to the actual exchange rate, making these cards excellent choices for international travel.
Many credit unions and smaller local banks operate differently. They often choose to simply pass on the 1% network charge directly to you. In these cases, when you withdraw euros from an ATM, you’ll receive approximately 99% of the converted amount, reflecting that 1% network fee. This is still a relatively transparent and reasonable charge.
However, the landscape changes significantly with major mainline banks such as Chase, Citi, and USBank. These banks generally cover the initial 1% network charge, but then add their own profit margin on top. This often translates to an additional 2% fee, resulting in a total charge of around 3% for obtaining euros using your ATM card. This 3% charge is what many people experience and it’s a significant factor to consider when calculating your travel expenses. Essentially, for every 100 euros you withdraw, you might be paying an extra 3 euros in fees, which is what “3 euros in dollars” could represent in terms of extra cost.
Even more expensive alternatives exist. Banks like Wells Fargo and Bank of America (BofA) offer the service of buying euros in advance before your trip. However, this convenience comes at a premium. They often sell euros at a rate that is approximately 5% higher than the prevailing exchange rate early in the morning. While seemingly straightforward, if you were to compare this to the 3% ATM fee from other banks, buying euros upfront from these institutions can be less economical. In fact, as the original article points out, buying euros from Wells Fargo or BofA beforehand might only be about 2% more expensive than using a typical mainline bank ATM in Europe (5% – 3% = 2%).
Getting Euros ahead of time is expensive and unnecessary. Get them from an ATM when you land
While ATMs are generally the preferred method for getting euros due to potentially better exchange rates compared to currency exchange bureaus or buying currency in advance at home, relying solely on them can be risky. The original article rightly emphasizes the importance of having a backup plan:
“No, $2 per hundred is pretty little to pay for insurance against a much bigger disaster.”
For a small cost, having some euros in hand before you arrive in Europe acts as “cheap insurance”. Imagine arriving at your destination only to find that your ATM card doesn’t work. This scenario is not uncommon. Cards can be declined for various reasons, including bank security measures, technical glitches, or simply incompatibility with certain ATMs.
The author’s personal experience in 2004 at Frankfurt Airport (FRA) perfectly illustrates this point. Despite having used Wells Fargo and Chase cards successfully in Europe before, upon arrival, these cards were declined at a Deutsche Bank ATM. Luckily, a third card worked, and the author had some leftover euros, but the situation highlights the vulnerability of relying solely on ATM cards, especially if you’re a first-time traveler to Europe.
“My point: unless you have already been to Europe, and have used the very same cards successfully, don’t assume that they will work when you arrive. It’s cheap insurance to get a few hundred euro from one of those two bank before going over.”
In conclusion, while ATMs in Europe are generally a convenient way to get euros and often offer competitive exchange rates, it’s essential to be aware of the potential fees, which can often be around 3% when considering the charges from mainline banks. Cards from institutions like Capital One and Schwab can minimize or eliminate these fees. However, the crucial takeaway is to not solely rely on ATM cards. Obtaining a small amount of euros before your trip provides a safety net and peace of mind, ensuring you have cash on hand in case of any unforeseen issues with your cards upon arrival. This small upfront cost is a worthwhile “insurance” against potential travel disruptions.
