Taking advantage of foreign exchange rates for trips?

Let me preface this by saying I'm not very knowledgeable when it comes to currency and exchange rates, so I apologize if some of these questions seem very basic.

I'll be traveling across Europe for about 25 days in the month of June, right before I start working full time. Earlier today, I read on WSJ.com that the euro fell to a 12-month low against the dollar, and it made me think about buying some euros through my bank (BOA) to take advantage of the low exchange rate.

BOA gives me the following exchange rates if I were to order through their website:

GBP - 1.6178 USD
EUR - 1.4073 USD

WSJ lists rates of 1.5264 and 1.3199, respectively. Are 9-point spreads typical? I'm guessing this includes a small fee for the bank + an additional fee since the rates WSJ lists are rates banks use with other banks (and since millions of dollars worth of currency are exchanged, the per-unit transaction costs are lower)?

Since most of the trip expenses have already been paid for (airfare, hotel costs, transportation between countries, about a third of the meals), would it be worth buying $1500-2000 worth of euros? Would I save much money?

Just trying to do what I can to keep my trip costs at a reasonable level. I'd hate to use up all of my bonus money, since I'll need some of that to pay 2-3 months of rent, buy furniture, etc.

Thanks in advance for the feedback!

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Comments (6)

Apr 27, 2010 - 11:39pm

Don't 'buy' anything. Open up an account that has branches in Europe and use your ATM card. It's possible that BOA does this already & it would work in European banks' ATMs, but I'm not their customer, so I don't know their fee structure. Anyhow, the exchange rate is probably better than what you'll pay over the counter and you'll probably not have a fee when you take money out -- if you do have a fee, it should be quite small. I have an account with a European bank and it's been relatively smooth...

I don't understand why people exchange money these days before going on trips. It's all about the plastic cards man.

And yes, they still gauge your eyes out anyway with rates, but slightly less so this way.

Apr 28, 2010 - 12:03am
FITrader:
Don't 'buy' anything. Open up an account that has branches in Europe and use your ATM card. It's possible that BOA does this already & it would work in European banks' ATMs, but I'm not their customer, so I don't know their fee structure. Anyhow, the exchange rate is probably better than what you'll pay over the counter and you'll probably not have a fee when you take money out -- if you do have a fee, it should be quite small. I have an account with a European bank and it's been relatively smooth...

I don't understand why people exchange money these days before going on trips. It's all about the plastic cards man.

And yes, they still gauge your eyes out anyway with rates, but slightly less so this way.

Thanks for the response. I actually thought that by buying euros through BOA's website, BOA would just convert my cash into euros so that whenever I needed euros, I'd be able to go to an ATM and withdraw euros from my account without being charged forex fees - basically locking in today's exchange rate. The reason I've been thinking about this is because I racked up several hundred dollars worth of ATM/exchange rate fees when I studied abroad in Hong Kong several.... cost me $5 US + 3% of the withdrawn amount per withdrawal. Clearly, it was due to poor planning (did not open up a bank account in HK), but I'd like to avoid this at all costs this time around.

I think credit cards are the way to go since they're so convenient, but I'll need to pay in euros for some of the tours.

FITrader:
Oh, also... did you mean to exchange that cash to take a 'view' on the Euro or just to spend it? I hope it's not the view.

Not exactly sure what you mean? If I were to buy euros in advance, I'd definitely spend it (as opposed to trying to play the currency market, which is what I think you were getting at).

Apr 27, 2010 - 11:58pm

I mean I'm going to be moving to UK so I've been exchanging dollars for pounds now because the rate is attractive and I see the GBP rising in the future. I think my bank quoted me about 1.6 also if I'm not mistaken. Sucks but there aren't many other options. Might be worth it to call up some currency exchange shops like Travelex or something just to see their rate. That's what I will do next time.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

Apr 28, 2010 - 7:57pm

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

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