Money exchange - How do you know ATM rate of exchange?
hfot2
India > India Travel Basics > India Travel > Money Issues and India Travel
#1
| ElderS

Money exchange - How do you know ATM rate of exchange?

I've read with interest many discussions on whether to use Travelers Checks or hard currency or ATMs to get rupees. We've used all 3 sources on several trips but one question remains.

Most folks seem to say that ATM's give the best rate of exchange. How do you know?

Is there a way to learn the EXACT rate you are receiving before you make the transaction? [Do you ask at the bank attached to the ATM (if there is one) for example?] The receipts from ATM's that I've seen just show the amount withdrawn in foreign currency and [sometimes] the amount in dollars.

And only if you've checked with your bank beforehand do you know the foreign currency conversion fee [from 1%-3% is what I've been quoted, depending on which card I use - brokerage, debit, or credit] [I would never think of using a credit since this is treated as a cash advance and interest starts being charged immediately]

Not to mention any other fees that some banks charge for using an ATM not located at the bank where you have your account [anything from 0 to 50 cents per transaction, to USD 1 to USD 5, depending on the type of account]

So, I'm curious when do you do the math? When you get home and see your brokerage/credit/debit card statements? Or is there a way to find the rate before making the transaction and then add in the various fees you know you'll be charged and then do the math on the fly?

Obviously for cash and TCs the rate is posted.

Since ATM users always say that they get the best rate of exchange, they must be comparing some rate to another and I'm curious where this information comes from. The rates posted on internet currency exchanges are not the rates you are getting for your everyday small cash transactions - even though the banks do lump all those exchanges into one pile so your small transaction is added to everyone else's to become one big exchange.

Thanks for sorting out this puzzle for me.
Walt Whitman - Song of Myself

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)

47 Replies

#2
| Guru
The only way you know for sure is if you are getting the best conversion rate is to try all forms of withdrawals, wait for the bills to come in and do that math. I have done so and found that following, in decending order, give the best rates:

1. ATM Card
2. Credit Card
3. Check/TC
4. Cash

Results may vary from user to user depending on the bank fees.

On credit cards, visa/mastercards typically apply 1% conversion fee before your bank applies additional charges (which they must disclose if you ask them). I get a better conversion rate on Amex even after their 1% surcharge, probably becuase of no visa/MC fee. Apparently, CapitonOne is the only US bank that does not charge a fee on top of the visa/MC fee..

Additional ATM fees also will be disclosed by your bank. fees charges by the ATM owner will be disclosed while withdrawing your money.
#3
| Just a big girl with a small dream
There was something on the news in the UK about this recently, that HSBC bank are upping their foreign ATM withdrawal charges. They (the news) said that traveller's cheques still cost more though. The question then is...do you trust the BBC? Where do they get their figures from?
Mosquitos suck.
#4
| Maha Guru Member
Before you use your plastic in an ATM you should check your card issuer's web site. There (under Australian Disclosure Laws certainly - and I believe most countries have similar regulations) the issuer will tell you in plain language what fees they will charge you, including exchange % fees.

If you are using a Mastercard or Visa card (Maestro or Plus networks) then the ATM screen should display a message when you log in telling you if that ATM will charge a fee (most Bank machines do not).

The standard exchange rate that Banks use for trade with one another is called the Interbank Rate. It is the wholesale rate. That's the rate the ATM will give you - for the day on which the transaction is posted (usually a day or two after you've used the ATM). The interbank rate for every day is posted on Oanda. http://www.oanda.com/

It all sounds complicated. In practice it isn't. My experience is exactly the same as crvlvr's.

If you intend to use ATMs in foreign countries - be sure to inform your Bank (or other card issuer) that you will be using the card in India or wherever - and get written confirmation (or a transaction number) of the fact that they have recorded that. Otherwise they may disable your card when they see unexpected foreign transactions.
#5
| Maha Guru Member

Originally posted by: obione980 View Post



The standard exchange rate that Banks use for trade with one another is called the Interbank Rate. It is the wholesale rate. That's the rate the ATM will give you


Not true! The ATM rate is lower than the Interbank Rate but higher than what you get from Travellers Cheques. To get the interbank rate in India you have to convert at least 50 lakh rupees in one transaction. I had the chance to avail of this wholesale rate when I sold some property belonging to my family 3 years ago.
#6
| ElderS
But, when people here at IM say that they are getting the best conversion rate for ATM use, I wonder if they are adding in those extra % fees - or are they just talking conversion? The fees, from my point of view at least, should be added when you are determining where/how you get the best rates.

Yes, here in th US of A, banks are also required to disclose fees. [Indeed, failure to do so led to a large class action suit: I am still waiting for my 1%-3% refund for charges made from 1996-2006 [?] -based on a very long form I had to fill out cataloguing all foreign transactions back in the day when the fees were not disclosed]

I noted recently in Japan, for example, that I did an ATM withdrawal on the same day that I made a credit card charge at a restaurant - same day, different issuing banks, different type of transaction, different rates [not counting the fees - different for ATM and credit card use].

Fortunately, it is often only a matter of a few dollars one way or another and not enough to waste much time worrying over when traveling and wondering and marveling and worrying about so many other things, but I continue to be curious how other people figure out the rates on the fly. I guess the answer is - they don't - or they look on the internet and assume that the interbank rate is what they are getting [?] or close to it by the time the transaction is posted. [I've tracked this rate daily for a while and noticed that it can change either significantly or trivially depending on all those market factors that control the markets]

distaff half
Walt Whitman - Song of Myself

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)
#7
| ElderS

Originally posted by: GoanCanuck View Post

Not true! The ATM rate is lower than the Interbank Rate but higher than what you get from Travellers Cheques. To get the interbank rate in India you have to convert at least 50 lakh rupees in one transaction.....


THAT'S WHAT I THOUGHT! and my above note was cross-posted with this - about the interbank rate - I was being skeptical to say the least.
Walt Whitman - Song of Myself

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)
#8
| Maha Guru Member

Originally posted by: hfot2 View Post

THAT'S WHAT I THOUGHT! and my above note was cross-posted with this - about the interbank rate - I was being skeptical to say the least.


Most people normally withdraw for example Rs 10,000 from the ATM and then check their bank account online the next day to see how many dollars/euros have been debited from their account and then compare it to what the local money changers are charging.

I had to withdraw money at leat 3 times a week from the ATM when I was in Goa earlier this year and I used to make it a point to note down what the local exchange rate was and then compare it to the rate that my bank charged me when the transaction was posted to my account the next day. I made about 17 withdrawals and after cross checking I found that I got a better rate from the ATM on every single transaction.
#9
| ElderS
Thanks, GoanCanuck, that's the kind of specific yet anecdotal information that let's me know how people actually do the math.

distaff
Walt Whitman - Song of Myself

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)
#10
| Maha Guru Member
Where I normally change at an ATM, with incidentally a UK card that does not charge any commission at all, I have found that there is one ATM which gives my UK balance in rupees, walk 50 yards down the street and an newer ATM gives me my balance in Sterling............ simple maths. BTW this is a small town, I also experienced the same in Calcutta.

I checked the rate against that in the Deccan Chronicle and got 50pi less
#11
| She-who-must-be-obeyed!
Exactly as GoanCanuck says - you calculate yourself using your online info. I also factor in the transaction fees - and still I find the best rate is ATM.
Every cloud has a silver lining! :)
#12
| Senior Member
For UK travellers, Nationwide and a couple of others do not charge a % commission for foreign withdrawals. The exchange rate is calculated when they process the transaction, which can be a day or two later. My statement always shows the rate and I've always been happy. A few paise one way or another is probably worth the time saved and the convenience of using an ATM. That said we always carry some TCs just in case - useful when you lose your wallet and cards!!
#13
| Structural Member
For those in the UK, the Moneysavingexpert website has a list of current charges for credit and debit card withdrawals.

They also have a very helpful "Spending Overseas" article.
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#14
| Uru Buru member
For the Dutch: ATM rates are the best, and unlike for instance the USA, you will not find ATM's with hidden charges.

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#15
| Specialist muddler
Don't know if its common (expect it is) my card statements give the rupee amount and ATM location, the exchange rate applied and the A$ amount.

On top, 1% conversion fee and flat charge for each transaction. Message here- don't withdraw small amounts. I find the card gives better rates than TCs or cash.
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