2014 Currency Exchange Study

CardHub-Currency-Exchange-StudyAs we all know, exchanging currency is necessary for most trips outside the United States, and there are a variety of ways to convert U.S. dollars into the currency used in your destination. Banks, credit card companies, credit unions and the currency-exchange companies that typically operate out of airports and train stations all offer currency conversion services at varying rates and with different fees. But which one offers the best deal? It’s commonly said that credit cards are the best way to save on currency conversion, but is that true? And if it is, how much can consumers expect to save using a no foreign transaction fee card?

In order to find out, CardHub conducted a study whereby we analyzed online rates and anonymously called the nation’s largest consumer banks as well as Visa, MasterCard and one of the Travelex locations in the John F. Kennedy Airport (Visa and MasterCard are the most widely accepted card networks around the world, and Travelex is the world’s largest currency exchange operator). Both for uniformity’s sake and because the Euro is the most prevalent foreign currency, we gathered information about the U.S. Dollar-to-Euro exchange rate as of May 8, 2014. In other words, we determined the dollar amount needed to buy one Euro from each of the companies polled. Please find the results of this study, as well as our findings from previous years, below:

Main Findings

 

$300 Converted to Euros by Conversion Method (2014)

Note: All of the above numbers are averages and the credit / debit card metric assumes a no foreign fee card.

  • On average, the cheapest way to convert currency is to do so automatically with a no foreign transaction fee credit card or a no foreign fee debit card on the Visa or MasterCard network. The average bank and Travelex location charge 6.73% and 10.17% more, respectively.
  • While the cost differential between major card networks and the financial institutions that provide hard currency conversion services remains substantial, it has declined 17% for banks and 37% for Travelex since 2012.
  • The two major banks with the worst currency conversion deals are SunTrust and U.S. Bank. SunTrust charges $1.4813 for 1 Euro and has a $10 conversion fee. U.S. Bank charges a 1.4936 exchange rate and a $9.95 fee.
  • CardHub surveyed 35 of the 50 largest credit unions, and only four offer currency conversion services: State Employees Credit Union, First Tech Federal Credit Union, Citizens Equity First Credit Union, and ESL Federal Credit Union.
  • On average, the cost of currency conversion varies little between banks and credit unions, with the latter being 1.65% less expensive.

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Detailed Findings

 

2014 Exchange Rate for 1 Euro 2014 Fee % Higher Than Best Option
Debit Card $1.3894 1.91% N/A
Credit Card  $1.3894 2.21% 0.31%
Bank Avg. $1.4698 $3.99 4.91%
Credit Union Avg. $1.4406 $5.00 3.32%
Travelex $1.4954 $9.95 8.42%
Note: The Visa exchange rate is 1.3940 and the MasterCard exchange rate is 1.3848. The average card exchange rate is therefore 1.3894. The credit card and debit card exchange rates reflect this average, as Visa and MasterCard are the most widely accepted card networks internationally.

 

2014 Exchange Rate for 1 Euro 2014 Fee % Higher Than Credit Card / Debit Card*
Capital One $1.4341 $0 3.12%
Northern Trust $1.4494 $0 5.42%
Bank of America $1.4692 $0 5.43%
Key Bank $1.4751 $0 5.81%
TD Bank $1.4286 $0 5.99%
Chase $1.4791 $0 6.07%
BB&T $1.4819 $10 6.24%
PNC $1.4869 $0 6.56%
Wells Fargo $1.4647 $7 7.36%
HSBC $1.4628 $8 7.55%
Fifth Third Bank $1.5029 $10 7.55%
BMO Harris Bank $1.4553 $0 7.71%
Citi $1.4819 $5 7.81%
Suntrust $1.4813 $10 9.33%
U.S. Bank $1.4936 $9.95 10.06%
State Employees Credit Union $1.4201 $0 2.16%
ESL Federal Credit Union $1.4612 $0 4.92%
First Tech Federal Credit Union $1.4376 $10 6.58%
Citizens Equity First Credit Union $1.4435 $10 6.96%
*Assuming a no foreign fee card
% Higher Than Credit Card (Bank Avg. & Travelex)

Note: 2014 was the first year that Credit Union data was collected.
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Tips for International Travelers

 

    1. Use a no foreign transaction fee credit card for the majority of international spending (this includes purchases made through foreign-based companies while still in the United States)

    It’s common for international travelers, especially first-timers, not to feel ready to leave until they’ve got some of the hard currency used in their destination country. It’s just one of those things that’s traditionally been recommended.

    But with the banking system becoming increasingly digital, it makes sense for the easiest way to buy things in a foreign currency to be with plastic. Why waste the time exchanging physical currency and risk carrying it around when a credit card handles the process automatically and gives the best possible exchange rates in the process? You’re going to save relative to a bank or airport kiosk exchange no matter what card you use, but getting a credit card with no foreign fees is an easy way to reduce costs even more. Just remember to get such a card before booking anything through a foreign-based company because if the transaction gets processed outside of the U.S., it will trigger a foreign surcharge.

    2. Bring a debit card with low international ATM withdrawal fees as well

    You’re going to need cash at some point in your trip – whether it’s for a cab, tipping a bellboy, or something else entirely. The best way to accommodate that need is to bring a Visa or MasterCard debit card, as long as it doesn’t charge too much for international ATM withdrawals. This will enable you to not only get the same low exchange rate as with your credit card, but you’ll also be able to take out cash as needed and reduce the damage a pickpocket could do.

    3. Notify your bank of your travel plans

    Banks will suspend your credit and debit cards due to suspicions of fraud if you do not alert them to the fact that you’re traveling out of the country. This might actually be a good idea even if you’re traveling domestically because banks have been known to suspend accounts that display transactions outside one’s normal geographic area.

    4. Get the phone number to call your bank collect

    If your card gets lost or stolen, being able to contact your bank will not only help nip any potential fraud in the bud, but most banks will also overnight you a new card. The bank will pay for the call too, so you needn’t worry about international charges.

    5. Steer clear of dynamic currency conversion

    If a merchant offers to convert your purchase total from the native currency to U.S. dollars, they might be trying to help you out. Or they could be looking for an excuse to apply a high exchange rate and squeeze a bit more money out of you. It’s best not to find out, especially when you can use your phone or a small pocket calculator to make quick conversions and better understand how much things cost.

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