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Good time to buy Euro's if we plan on visiting next year?

fwdmotion 11 10 September 17, 2015 at 01:37 PM in Finance (6)
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I know it is uncertain what the value will hold up or down.

We plan on doing a 10 day trip through Italy in March wondering if it would be smart to buy Euro's now to lock in the rate they are at. What do banks normally charge for this?

Thanks!

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#2
https://www.bankofamerica.com/for...nverter.go

BoA for example is offering to sell Euros at $1.1928 each.... the current "real" rate if you could get it, and likely what an ATM would charge you if actually in europe, is 1.142044... so they're marking you up roughly 5%

If you think the euro will rise less than 5% between now and the trip, just use an ATM when there (or even better a rewards credit card with no forex fees).

if you think it'll rise more than 5% between now and then, buy now.
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#3
I would agree with Knightshade. It all depends on your personal risk factor and what the money you are going to use for Euros is doing for you now. If it is invested and has a good chance of increasing in value more than 5%, then wait until you are ready to go.

I do like to bring enough Euros to get me out of the airport and to my hotel. Then I use my credit card with no forex fees for most purchases and my ATM card to get money there. Do check ahead with your bank to make sure that the ATM card you use is no or low fees.
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#4
I third Kinghtshade and thumper1s recommendation - ATM withdrawal in the travel country has always gotten me the best rate with 1 time flat fee. I use credit card for everything else, again for good exchange rate and reward points.


1) Hit the ATM 1-2 times for large withdrawals vs. many small withdrawals to minimize fees. FYI, last 2 trips I have pulled out more than the daily US$500 limit at a foreign ATM and had no problem - would no have been allowed to do that domestically. My bank charges a flat $6 fee per foreign withdrawal, so on $500 withdrawal, that is a 1.2% fee but I usually get 4-5% better exchange than any money changer, hotel or US bank


2) Try to get a Debit card that charges no fee at all (Barclays). One thing to do is check with your bank first as some banks charge a sliding % for ATM withdrawals and it is not well disclosed. For instance, if your bank charges a 3% sliding scale, that same US $500 withdrawal would be $15!


3) As for getting Euros now, if post 2007 has taught us anything, it's that the old models just can't predict all the macro-economic changes (or lack of changes - see Fed meeting today) that have happened since. It is impossible to know how things will look next year, especially with EU central bank not being able to exert any monetary policy control.


I guess it comes down to: how much in USD do you expect to spend in Euros? (non credit-card)? If it is less <$500, then I say don't worry about it now - even if USD drops against Euro, will still be much better than the stagnant $1.3-$1.4 it was for 6-7 years.


If it's more than that, perhaps worth it to "lock in." But unless you are traveling in parts of Italy that are not well penetrated by merchant card services, I would ask why you would spend it in cash instead of on a credit card?
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#5
Quote from megakimcheelove View Post :
I third Kinghtshade and thumper1s recommendation - ATM withdrawal in the travel country has always gotten me the best rate with 1 time flat fee. I use credit card for everything else, again for good exchange rate and reward points.


1) Hit the ATM 1-2 times for large withdrawals vs. many small withdrawals to minimize fees. FYI, last 2 trips I have pulled out more than the daily US$500 limit at a foreign ATM and had no problem - would no have been allowed to do that domestically. My bank charges a flat $6 fee per foreign withdrawal, so on $500 withdrawal, that is a 1.2% fee but I usually get 4-5% better exchange than any money changer, hotel or US bank


2) Try to get a Debit card that charges no fee at all (Barclays). One thing to do is check with your bank first as some banks charge a sliding % for ATM withdrawals and it is not well disclosed. For instance, if your bank charges a 3% sliding scale, that same US $500 withdrawal would be $15!


3) As for getting Euros now, if post 2007 has taught us anything, it's that the old models just can't predict all the macro-economic changes (or lack of changes - see Fed meeting today) that have happened since. It is impossible to know how things will look next year, especially with EU central bank not being able to exert any monetary policy control.


I guess it comes down to: how much in USD do you expect to spend in Euros? (non credit-card)? If it is less
Even in light of the above comments on the general public's inability to predict macro level events, I'm going to offer my 2 cents.

1) The US Fed will raise rates either December or early 2016. the bet on Wall Street is December...
The effect of higher (albeit marginally) rates is a strengthening of the dollar.

2) The Euro zone is not likely to ease on their QE anytime soon - so you shouldn't expect a rebound of the Euro anytime soon regardless.

Having said all this, the effects on the exchange rates are going to be marginal at best. Will you cry if you exchanged at 1:1.08 vs 1:1.12? Probably not. For most people, exchanging at the rates during your trip will be just fine, via expenditure on CC or ATM withdrawal.
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#6
I will be visiting italy for the month of november and i have been researching this topic for a couple weeks. I am probably going to purchase ~$500 worth of euros for my first week or two out there (I will be staying with my sister so cost should be low). Then I was going to probably use my chase atm card to withdraw in a couple large amounts when needed.
I dont know where you will be, but be aware that in italy cash is king. Most places that arent super touristy will only take euros. You will probably have a lot more fun and a better overall experience going to the holes in the wall rather than the non-authentic big restaurants you see that accept all forms of payment.
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