You know when you get money out at an ATM overseas and you’re asked if you’d prefer the local exchange rate or the bank exchange rate? Otherwise worded as without conversion (local exchange rate) or with conversion (bank exchange rate)? Notice how they use words like ‘guaranteed’ for the bank exchange rate? That’s because they want you to pick that option. They want you to feel like if you don’t, it will end up costing you more. They being the banks of course. Well in our experience it is quite the opposite. Choose the local exchange rate option to avoid extra bank charges on holiday. Here’s why:
August 2017 – In Greece with our UK bank cards, we requested €150 cash out at an ATM. The bank exchange rate was going to cost us around £151 and the local exchange rate was around £135. That’s an extra £16! No thanks. Local exchange rate please.
Another example during the same seven day trip was a £147 bank exchange rate for a €150 cash withdrawal. Notice in the picture they don’t tell you how much the local exchange rate (without conversion) will be? Sneaky buggers.
July 2017 – In Italy with our same UK bank cards, we requested €200 cash out at an ATM. The bank exchange rate was going to cost us around £195 and the local exchange rate was closer to £170. Can you believe it? You can avoid extra bank charges of up to £25 in just one transaction! And that doesn’t even include the other fees associated with getting cash out overseas!
The best way to check before hitting the big green money please button is to download a currency conversion app on your smartphone and do the sums yourself. Otherwise your laziness could get expensive!
Other tips to avoid extra bank charges on holiday are:
- if paying by bank card in shops and restaurants, select the local exchange rate / without conversion if you are given the option
- watch out for different ways the banks ask the same question e.g. would you like to pay in Pounds or Euros? For which if you were in Europe, you would want to pay in Euros
- avoid getting cash out from ATMs at the airport, particularly those owned by currency exchange companies with fixed exchange rates and fees
- look into the terms of travel money cards that you can get from the airport or post office before your trip because their exchange rates and fees may not actually save you anything in the end, especially if you don’t use all the pre-loaded currency
Moral of the story? Do your research, don’t let the banks scare you and you can save yourself some serious cash.