Currency and International Transfers

I have been able to travel a bunch and that means going places where the US dollar is not used.  Currently, the dollar is very strong and that allows us to purchase more when buying in other currencies.  This is been a boon for me to pay for my tuition which is denominated in Euros.  The price of €36,000 is $38,500.  Just two years ago that would have cost me over $45,000.  So now that I am living in Europe I need Euros to spend because not everywhere accepts credit cards.  So how did I do it?

Cash

So if I think my expenses for the year will be around $10,000 I could carry that amount in cash and exchange it here.  The problems are several with this method.  If you bring in more money make sure to declare it so it is not confiscated.  Next, carry a large amount of cash is dangerous.  Lastly, you’ll need to exchange it somewhere for a below market rate.  I lost my wallet last weekend and urgently needed cash so I exchanged some US dollars I brought.  The rate I got from the place I exchanged was .895 € per dollar.  Not too great when the rate on Google shows .94 €/$.

Schwab debit card

My Schwab Checking account gives a pretty good exchange rate and will refund any ATM fees.  This is great and easy.  I exchanged a week ago and got a rate of .93 €/$, much better.

Transferwise

Since I lost my wallet I didn’t have my debit card so I needed to transfer money from the US to my account in Europe.  I used Transferwise to get money into my account at a rate of .93105 €/$ with 1% fee.  This is an effective rate of .9218 €/$.  I can not compare this rate to the one I got with the debit card because the exchange rate has changed in the past week.

I set up the transfer last night and the process was so easy.  I selected how much I wanted to transfer, put in my IBAN, and then was able to log into my online banking through Transferwise.  This made it to my account in less than 24 hours!  This is much easier than previously when I paid an installment of my tuition.  I had to go to my online bank and fill out the details, wire money (incurred fee from my bank), and wait a few days.  But now it looks like their process went from smooth to supremely easy!  In addition, it was an ACH transfer and therefore I didn’t need to pay my bank’s $25 fee.

The reason to use Transferwise over a direct international wire is because the fees are less and the exchange rate is much better.  The bank bakes in profit with the exchange rate.  They estimate you will save around 4% of the amount, which means saving $1,500 for my tuition bill.

Conclusion

I found Transferwise to be the easiest to use when I need to get money into another account whether mine or I am paying a bill.  Schwab debit card is good if you are traveling and do not have an account in the country.  Make sure you are shopping around so you are not paying any more in fees than you would need to.