Did you know that withdrawing money abroad can cost you a lot of money: sometimes for 100 Euros you can pay 10 Euros fees. The same can happens while paying in a shop with your credit card. It probably also already happened to you. You just didn’t notice.We tell you some tricks how avoid this and how to pay the best.
Yesterday I met a German guy on the petrol station in Poznan (Poland) who asked my: »Where is the closest place to exchange money?« – »Why you don’t you use your credit card and the ATM?«, I asked him. –»Because the exchange rate on the cash machine is so bad«, he answered. That was the moment when I understood I really have to write this blog post. He was simply tricked by the cash machine and also while paying for his petrol again.
Some years ago, when I started to travel to Poland more often I had the same reflex: I better change mymoney on the train station at thecurrency exchange office (“Kantor” in Polish). The lady thereoffered an exchange rate of:1 Euro = 4,25 Polish Zloty (PLN). At the same time the cashmachine next to her office offered me anexchange rate of 1 Euro = 3.85 Polish Zloty.
That’s a difference of nearly 10 percent. »Crazy!«, I thought.So I started to research, how this can happen.
If you don’t feel like understanding everything, there is summary at the end of this post.
Howthe exchange office earnsmoney?
If you askGoogle for an exchange rate you will get themid market rates (which is a value between the selling thebuying prices on the global currency market). This gives you a slight feeling of what you might expect, when exchanging money abroad.
A local exchange office usually has an service fee(e.g. 5%). To find out the best options I called today some exchange office and banks and Berlin and asked: »How manyEuros do you give me for 10.000 Polish Zlotys (PLN)?«
In Berlin downtownEuro Changeoffices you get2,173 Euros (1 € = 4,60 PLN). At TraxelEx at the Berlin Tegel Airport the rate was – like usually on airports –worse: 2,033 Euros (1 € = 4,92 PLN). But if you change your money in Warsaw (for example atKantor Apollo) you would get2,347 Euros. Finally I still called thehotline of my bank (HVB UniCredit). Thelady told my: »Why do you ask me an not Google?« –»Google told me to expect2,354 Euro. But I guess that’s not what you will give me.« After 10 Minutes she found out, that it’s not so easy and I actually just get2,145 Euro (1€ = 4,66) – which is 209 Euros (or 9 percent less than Google told me). What did I learn?
If you have cash and want to use an exchange office you should:
- compare exchangeratesbetween you country and your abroad destination before you start. At theBerlin Airport you loose13 percent compared to the Warsaw office. That’s a difference of 314 Euros!
- Don’t change everything at the airports. In most of the cases you find better rates indowntown offices.
- Check Google before to get an approximate feeling for the exchange rate you can expect.
But usually I prefer not to have too much cash in my pockets. So how about debit/credit cards and ATMs?
How to avoid badexchange rates at the ATMs and in shops?
Let’s come back to the guy on thepetrol station.If you travel to a foreign country with another currencythe cash machine willtoask if you want to withdrawal with currency conversion or without currency conversion. Here you should always use the without conversion option.
Without conversion means, that your local bank will exchange the money. This will give you a good exchange rate. If you choose instead thewithconversionoption (=dynamic currency conversion), you will get a guaranteed exchange rate, but the ATM/bank can add an up to 10 percentservice fee.This is where you loose money. But you can avoid this by using the without conversion option.
I noticed that EuroNet ATMs are usuallyreally expensive. If you use the without conversionsome ATMseven show sometimes Warning – Do you really want to do that? In my opinion this is a fraud and it should be forbidden! However – you know what to do!
How to avoid credit card service fees at the ATM?
– With Credit Cards –
There are several way to withdrawal money in other countries without any fee. Some banks offer credit cards thatallow you to get money for free.
The best you can do in Germany is getting a Visa Card of the DKB bank.Since many years I have such a card I never pay any fees. If you are from Germany, you should definitely use the free DKB Bank Visa Card. To get the card takes some days, so better do it now.
There are also other bank that offer such a credit card, but they either cost a lot of money every year (e.g at Deutsche Bank) or they are hard to get (e.g. Santander Bank). So in Germany theDKB Visa Card is the best option.
If you do not have such a card you pay with a credit card usually 1,75%fee.
– With Maestro-/ EC-Cards / vPay –
At home you usually can withdrawal money for free with a EC-Card/Meastro when you go to an ATM of youbank or some partner bank. This does not necessarily work in other countries, but it is worth to check carefully the website of your bank.
With my Maestro Card of the GermanHVB Unicredit and get money at allUnicreditbanks/partner banks in all over Europe. Check the website of your bank to check where you can get money without any charge. Deutsche Bank also has partner banks in many Countries. So before you go on a trip, check the website of your bank!
If your bank does not have a partner bank you will pay between 3 and 10 Euros. That’s a lot.
How to pay the in a shop without fees?
Within the Euro zone you usually also do not pay fees with the Maestro / EC Card / vPay when you pay in a shop or restaurant.
But if you pay in a country with another currency (like Germans in Poland, Czech Republic or Switzerland – or the other way round) you will have a fee of 1% (at least at Unicredit). So every payment in the shop coasts me between 1.50 Euro (min) and 5.50 Euros (max). With a credit card(Visa, Master Card) I would pay 1.75 percent of the price.So cash isthe only optionwithout fees in non Euro countries.
But also in the shop they play the excange rate fraud:When payingat this Polish petrol, the lady also asked me:»Do you want to pay in Euro or Polish Zloty«? Thats’s the same thing like on the cash machine – “With conversion or without?”. Here the right answer is»In Zloty«. Always use the local currency!The payment terminal companiesto do the same trick as the cash machine – if you convert fromyour home currencythey add the same service charge(at the petrol station the difference 9 percent).
Summary – what is the best way to pay?
So –what is the best way to get money and to pay in a foreign country?
- If you are from and you pay within the Eurozone:
- No ATM fee: Check the website of your bank about and find ou in which foreign (partner) bankyou can withdrawl for free with youEC / Maestro / vPay card
- No shop fee: Just pay in the shop with you EC / Maestro / vPay card and you will have no fees (But: this does not apply for Credit Cards like Master Card or Visa Card)
- If the country you visit has a different currency than your home country …..
- No ATM fee: Check the website of your bank about and find out in which foreign (partner) bankyou can withdrawl for free with youEC / Maestro / vPay card
- No ATM fee:Check if there’s a bank which offers a credit card for travelling without fees on ATMs. In Germany you can for examplestart a free account at DKB bank and withdrawl worldwide for free
- No exchange fee: If you withdrawal, always us the option: no currency conversion.
- No shopfree: Only if you pay with cash you will not have any fees in the shop.Get your money at the ATM.
- Good exchange rates: If you have to exchange money, check first online to get an idea about averagecourse. Don’t change all you money at the airports – the have usually worse rates. Check if it’s better to change at home or in the country of your destination.
All those little details I learned and checked on my own, during our little and big family travels. Right now I don’t even want to think how much money we have lost in those games;), but since I know now more about it – I wanted to share it with all of you. If you have also some tips – just give us a comment!
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This post is also available in: German
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