The other day I received a shocking text message after paying the deposit for a highly anticipated trip to Croatia next month.
Currency conversion fees to your current HRK [Croatian kuna] The transaction includes an indicative premium of 3.30 percent on the European Central Bank interest rate,” she announced without a “Sorry, dear customer!”
The absolute cheek! That’s higher interest than my mortgage.
Of course, it should come as no surprise that in my case Ulster Bank is doing what all banks do: charge for services.
You’re certainly not alone, but for years the fees have been hidden in the fine print in dense “Terms and Conditions” instead of being openly and transparently stated as they are now, and typically you didn’t stamp it until your statement arrived.
It’s been so long since we’ve been able to travel that currency transactions can be an uncomfortable kick to your well-deserved break.
But whether it’s visiting family in the UK, a business trip to the US or a holiday outside the eurozone, it’s the cost of doing business abroad.
I decided to take a closer look, especially since the Ulster Bank ended their cheerful text with advice to “find out more on our website”. That is, his soon-to-be-gone website.
With foreign currencies there is no “free” money, not even when accessing your own cash.
ForEx fees (currency exchange fees) are a valuable source of income for banks, especially since most customers have no idea how much they are being charged. There’s the exchange rate itself (which changes daily), the fee for actually making the transaction, and on top of that, the normal fees for things like cash withdrawals or chip-and-pin purchases.
The need for cash has disappeared with the advent of Visa, Mastercard and the global reach of cards. But there will always be occasions when you need them: taxi rides, tips or browsing a market, for example. The further away you get from first world countries, the greater the need.
You would think that it wouldn’t cost extra to just pop your card into a local ATM and withdraw your own money, but it does.
You can pay anything from 1 piece (EBS) to 3.5 pieces (AIB, BOI, PTSB) for non-euro cash withdrawals from ATMs, usually with built-in minimum fees. For example, although Ulster Bank charges 2 pieces, the minimum charge is €3 – the maximum is €12 – so you’ll get hit either way.
By the way, if you withdraw cash from the parent bank RBS/NatWest in the UK, you will not be charged any fees. Also in UK branches of Bank of Ireland if you are a customer here so it is worth looking for a branch.
A post office charges 3 cents of the transaction plus an additional 90 cents on their checking account card.
Credit unions are not escaping; You add 3.5 pieces (maximum €12).
According to MoneyGuide (moneyguideireland.com) withdrawing €100 from an ATM in the UK (around £85) using N26 costs €1.75, nothing from Revolut, as long as you’ve withdrawn less than €200 in the previous month and it’s 2nd after that each), €3.50 at EBS, PTSB, KBC, BOI and €4.50 at AIB and Ulster Bank.
The cheerleader of “free” forex trading, Revolut can certainly be free as long as you play by the rules. Withdrawing more than €200 from an ATM in a month will cost you 2 units (minimum €1).
At Germany-based N26, it costs 1.7 percent to withdraw cash abroad with the standard account, while it’s free with premium accounts. But spending in foreign currency with your card is free and unlimited. So if you travel a lot, it’s a good idea to top up your account and just use it.
Wise is a UK based card but you can get one online for €7. It’s free to withdraw up to €200 per month abroad; more than that is charged at 1.75 cents plus 50 cents each time. The foreign exchange conversion fee is small compared to banks for purchases. Currently €1,000 in GBP or USD is charged at €4.65.
The humble post office offers a preloaded currency card from Mastercard for use abroad.
Depending on the country you are in, there is a fixed fee for ATM withdrawals. It is €2.50 for the Eurozone, £1.50 for the UK and $2.50 for the US.
However, you can preload up to €10,000 in the currency you will be spending in (there are 16 available) on your debit card at your post office, so there are no extra charges when making purchases abroad.
The absolute most expensive way to buy foreign currency is from a street kiosk in the city you are visiting. Ignore all those “commission free” signs. Who needs a commission when the exchange rate is three times that of a bank? By the way, who needs cash?
If you’re strapped for any reason, always ask for the calculated rate and then look it up in an app like XE or MyCurrency, which you’ll of course have downloaded in advance. Anything over a few percentage points and you’ll be ripped off.
Travel tips for your finances
Eight of the 27 EU countries are not part of the euro zone: Bulgaria, Denmark, Hungary, Poland, Croatia, the Czech Republic, Romania and Sweden. If you are planning to travel there or to any country outside the Eurozone, there will be fees and charges for your money. This is how you keep your holiday expenses under control.
- Always use your debit card and not your credit card to withdraw cash. This is true at home, but even more so abroad. You’ll be charged a fortune for the privilege, but less if it’s your own money. Credit card interest accrues from the day you withdraw cash or make purchases.
- While Irish banks are not allowed to charge ATM fees, different rules apply elsewhere, even in the Eurozone. It’s not uncommon to get hit for €3 or more per withdrawal, so always check.
- Cashback is the cheapest way to get money where shops offer it. This is because the €100 refund fees are cheaper when buying in store than when withdrawing from an ATM.
- When withdrawing cash abroad, always decline the “currency conversion” option. It will offer a terrible exchange rate as it builds a buffer against currency fluctuations that can be as high as 5 percent. Always opt for direct conversion into local currency and let your own bank do the calculations, which are done at the daily interbank rate.
- Avoid exchange offices on the street abroad. “Commission-free” does not mean fee-free.
https://www.independent.ie/business/personal-finance/cash-at-the-ready-how-to-avoid-a-foreign-exchange-rip-off-41788052.html Have cash ready: How to avoid a foreign exchange rip-off