Navigating currency exchange can be a concern for US travelers heading to Europe. Understanding the landscape of ATM fees and exchange rates is crucial to ensure you get the most euros for your dollars. While the idea of securing euros before you leave the US might seem appealing, it’s often more cost-effective and convenient to obtain them upon arrival in Europe. Let’s break down the best strategies for US travelers to manage their euros in Europe.
One common method for accessing euros in Europe is using ATMs. When you use your ATM card at a European ATM, you’ll encounter what’s known as a “Network” charge. This is typically around 1% and is levied to process the transaction and handle the currency conversion. The crucial point is how your bank in the US deals with this 1% network fee and any additional charges they might impose.
Some financial institutions are more traveler-friendly than others when it comes to international ATM withdrawals. For instance, certain cards, like those from Capital One and Schwab, are known to absorb this 1% network charge. This means you essentially get the interbank exchange rate, without any added fees from their end on top of the network fee. In these cases, the exchange is quite favorable.
Many credit unions and some local banks adopt a straightforward approach: they simply pass on the 1% Network charge to you. While you are paying the network fee, this is still a relatively low cost compared to other options. You’re essentially getting 99% of the converted amount in euros at the ATM.
However, most major banks, such as Chase, Citi, and USBank, operate with a higher fee structure. They not only pay the 1% Network charge but also add their own profit margin, typically around 2%. This results in a total charge of approximately 3% for each euro withdrawal using these cards. This is a significantly higher cost compared to credit unions or banks that absorb or only pass on the network fee.
Then there are options like Wells Fargo and Bank of America (BofA), which offer to sell euros to you in the US before your trip. While this might sound convenient, their exchange rates often include a markup. Historically, Wells Fargo and BofA have been known to sell euros at around 5% above the prevailing conversion rate early in the morning. Even when considering the 3% ATM charge from major banks, buying euros upfront from these institutions can still be slightly more expensive. If you were to buy euros from Wells Fargo or BofA before your trip, you’d effectively be paying about 2% (5% – 3%) more compared to using a major bank ATM in Europe, and considerably more than using a card that absorbs the network fees.
Getting Euros ahead of time is expensive and unnecessary. Get them from an ATM when you land
While getting euros in advance might seem like a safeguard, relying solely on this method can be costly and isn’t always necessary. The sentiment “Getting Euros ahead of time is expensive and unnecessary. Get them from an ATM when you land” generally holds true for cost-effectiveness. However, completely dismissing the idea of having some euros before you arrive might be imprudent, especially for first-time visitors to Europe.
The counter-argument is not about saving pennies on exchange rates, but about preparedness and peace of mind. As the original article aptly points out, paying a small amount extra for some euros before you go can be seen as “cheap insurance against a much bigger disaster.” Imagine arriving in a new country after a long flight, and your ATM card doesn’t work.
“If you have never been to Europe and used your ATM cards there, you really don’t know that they will work.” This statement highlights a critical point. Card acceptance can vary, and unforeseen issues can arise. For seasoned travelers, carrying a small amount of leftover euros “to make sure you have cash when you land the next time” is a practical strategy born from experience.
The anecdote shared is a compelling example: “In 2004, I arrived at FRA with three ATM cards… My first two cards were declined – “call your bank” it said… Fortunately my last card, the Wells Fargo one, worked.” This real-life scenario underscores the potential vulnerability of relying solely on ATM cards working flawlessly upon arrival, especially if you are unfamiliar with using your cards abroad.
The core message is clear: “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.” While ATMs are generally the most cost-effective way to obtain euros, carrying a small buffer of euros purchased in the US, particularly from a bank with less favorable exchange rates, can provide a safety net. This is not about maximizing exchange rates for every euro, but about ensuring you have immediate access to funds upon arrival for transportation, initial expenses, and unexpected situations. For seasoned travelers with reliable cards, airport ATMs are likely sufficient. But for those new to international travel or uncertain about their card’s functionality in Europe, a small pre-trip euro purchase offers valuable security and reduces potential stress upon arrival.
