Traveling to Europe and need Euros? Many savvy travelers rely on ATMs for convenient currency exchange upon arrival. But understanding the fees associated with withdrawing Euros from ATMs using your US bank card is crucial to avoid unexpected costs. Let’s break down exactly how much 100 Euro can cost you when using your ATM card abroad, and how to minimize those expenses.
Understanding the Network and Bank Fees
When you use your ATM card in Europe to withdraw Euros, several layers of fees can come into play. It starts with what’s often called the “Network” fee. This is a charge levied by international payment networks like Visa or Mastercard for processing the transaction and handling the currency conversion. This network fee is typically around 1% of the transaction amount.
Many banks then add their own fees on top of this network charge, creating a tiered system of costs that can vary significantly depending on your bank or credit union.
Banks That Absorb the 1% Network Fee
Fortunately for travelers, some financial institutions are more customer-friendly when it comes to international ATM withdrawals. A few, like Capital One and Schwab, are known for absorbing this initial 1% network fee. This means if you withdraw Euros using an ATM card from these banks, you’re essentially getting the closest possible exchange rate to the interbank rate, only paying the actual converted amount without the initial 1% surcharge. This can make a noticeable difference, especially when withdrawing larger sums.
Credit Unions and Local Banks Passing on the Network Fee
Many credit unions and smaller, local banks take a middle-ground approach. They don’t add extra profit margins on top of the network fee, but they do pass the 1% network charge directly to you. So, when you use an ATM from these institutions, you’ll receive approximately 99% of the converted currency amount in Euros for every dollar amount charged to your account. While not as fee-free as Capital One or Schwab, this is still a relatively cost-effective option.
Major Banks and the Profit Margin
This is where costs can escalate. Most major national banks, such as Chase, Citi, and USBank, typically pay the 1% network fee themselves, but then add an additional profit margin, often around 2%, on top. This means that using ATM cards from these banks can result in a total charge of approximately 3% on top of the interbank exchange rate when you withdraw Euros. While seemingly small percentages, these fees can add up, particularly over the course of a longer trip or with multiple withdrawals.
The Wells Fargo and Bank of America Alternative: Buying Euros Upfront
Wells Fargo and Bank of America (BofA) offer another option: purchasing Euros directly from them before you travel. They typically sell Euros at a rate that is about 5% higher than the prevailing interbank exchange rate, particularly when transactions are made early in the morning.
While a 5% markup might sound steep, it’s important to compare this to the potential ATM costs. If you were to use an ATM card from a major bank charging a 3% fee, buying Euros upfront from Wells Fargo or BofA at a 5% markup effectively means you’re paying only a 2% premium (5% – 3%) more than if you had withdrawn from an ATM using a card with the higher fees.
Alt text: Traveler confidently uses an ATM in a European city to withdraw Euros, highlighting the convenience of accessing local currency upon arrival.
Is Getting Euros Beforehand Really “Expensive and Unnecessary”?
The common advice is often to avoid exchanging currency before you travel and to simply use ATMs upon arrival. The rationale is that ATM exchange rates are generally better, and carrying large sums of foreign currency can be risky.
However, the statement that “Getting Euros ahead of time is expensive and unnecessary” needs a nuanced perspective. While ATM withdrawals are often cost-effective, completely dismissing the idea of having some Euros in hand before you land might be shortsighted.
The original article raises a valid point: “No, $2 per hundred is pretty little to pay for insurance against a much bigger disaster.” This highlights the potential risks of relying solely on ATMs immediately upon arrival, especially if you’ve never used your specific ATM cards in Europe before.
The “Insurance” of Having Euros on Hand: A Personal Anecdote
The author shares a personal experience to illustrate this point: arriving at Frankfurt Airport (FRA) in 2004 with three ATM cards, including cards that had worked on previous European trips. At a Deutsche Bank ATM, the first two cards (from Wells Fargo and Chase) were declined, displaying a “call your bank” message. Fortunately, the third card (also Wells Fargo) worked, but this experience underscores the uncertainty.
The author’s conclusion 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.”
Having a small amount of Euros – perhaps enough for initial transportation, a meal, or unexpected situations – can act as a safety net. Especially when considering the relatively small “cost of insurance” mentioned – $2 per hundred (referencing the potential extra cost of buying Euros upfront, though this example is a bit unclear in its calculation and likely refers to a very favorable upfront exchange rate not typically available).
Conclusion: Smart Euro Acquisition for Your Trip
So, how much does 100 Euro cost in US dollars when you factor in ATM fees? It depends heavily on your bank and withdrawal strategy. Using cards from banks like Capital One or Schwab can minimize fees, making the cost very close to the actual exchange rate. Major banks will add a premium, and even buying Euros upfront from some banks might be comparable in overall cost to ATM withdrawals with higher fees.
The key takeaway is to understand your bank’s foreign transaction fees and ATM policies before you travel. While relying on ATMs in Europe is generally a convenient and cost-effective way to get Euros, having a small amount of cash on hand as a backup, especially if you are a first-time traveler to Europe or unsure about your ATM card’s compatibility, is a prudent step to ensure a smoother and less stressful arrival. This “insurance” can be well worth considering for peace of mind.
