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It's insane, borderline criminal. I knew someone who wanted to convert ~1m AUD -> USD -- and the banks were still trying to offer to do at 2-3% ! At that amount
by consz 9y ago
It's insane, borderline criminal. I knew someone who wanted to convert ~1m AUD -> USD -- and the banks were still trying to offer to do at 2-3% ! At that amount, you can open a brokerage account and trade through EBS or CNX directly and pay basis points.
- charlesdm 9y agoOf course they would. Most people don't understand how the fee structure works, so will comply. You can open up a brokerage account at Interactive Brokers with a few thousand and use it to exchange FX. It's pretty accessible.
- consz 9y agoI agree, most people are just not aware. I like the machines I've seen in airports and train stations that offer currency conversions. They have 'No Fees! No commission!' posted all over them -- ignoring the fact that the bid-ask spread they're charging is 15-20%. Again, criminal.
- charlesdm 9y agoSad but true. :( That said, people do pay for convenience, which I assume is the main function of those cash machines. If I end up in a foreign country that I haven't visited before, I'll likely withdraw some cash (not much) from one of those machines just to be safe. You never know when your credit cards might stop working.. (I've had my main card blocked randomly while travelling and it frankly was a pain)
- mseebach 9y agoJust withdraw cash on a credit card from a regular ATM. Most "normal" credit cards charge on the order of 3% over spot on the FX, some cards further charge a flat fee, but this is still better than those markups. It's even possible to get cards that doesn't charge a fee and gives you spot FX, even for cash withdrawal (Halifax Clarity in the UK is one). That leaves any fee the ATM might charge you, but if you can find one that doesn't, this is a supremely efficient way of getting cash abroad.
- ihattendorf 9y agoCharles Schwab checking/debit: no foreign transaction fee, uses the exchange rate, and refunds all ATM fees internationally.
- pishpash 9y agoCredit card ATM withdrawal incurs punitive cash advance interest rates. I guess you can pay it off within the day though if you can calculate how much it is.
- pishpash 9y agoIs this relevant? http://news.forexlive.com/!/interactive-brokers-to-cut-off-us-forex-clients-sept-1-20160812 http://news.forexlive.com/!/interactive-brokers-to-cut-off-u...
- charlesdm 9y agoMight be. I'm actually not based in the US (but I did exchange FX recently). Perhaps someone in the US using IB could check?
- pishpash 9y agoI don't think it's just lack of information. There are probably structural differences having to do with who is taking the fraud risk that account for the different rates.
- TorKlingberg 9y agoWith a brokerage account, how easy is it to get your foreign currency sent to a bank account in that country?
- charlesdm 9y agoVery easy. Check out Interactive Brokers (horrible interface, but great rates)
- tacostakohashi 9y agoOften surprisingly hard. The other country is a big factor - Ireland is easier than Iran, the Netherlands is easier than North Korea.