How can I avoid international wire fees or currency transfer fees?

Question

I'm paid by an American company, but travel to France frequently and need to have a French bank account for various reasons. So far the cheapest procedure I've found to transfer money is

1. withdraw euros from an ATM with my American card,
2. walk to the deposit machine (which is right next to the ATM)
3. deposit the euros with my French card in my French account.

The total fee for this procedure is ~5 euro (or maybe USD, it doesn't really matter) ATM fee. It seems extremely stupid: it's an annoying ritual, and if the deposit machine is acting up for some reason I'm left with a huge amount of cash until it comes back online (yes, I could check the machine with a small deposit beforehand, but that's just more annoying.)

Other options (and the reason I don't use them):

• Wire transfer (costs 15-50 USD, slow)
• Bank checks (may have associated fees, even slower)

This seems to be a common problem for travelers. When I was in college in the U.S., my Brazilian friend would pay his tuition with money he withdrew from an ATM, so he'd regularly be walking from the ATM to the bank teller with several thousand dollars in cash, which seemed absurd. Is there some better way?

Answer 1

I faced something similar for travel or work reasons, and as for me I preferred wire transfer over credit card withdrawals because my bank has huge fees.

My thoughts so far are:

• the fee can vary a lot for credit card. As for me, I can expect 5% fees on foreign withdrawals. But I considered changing bank and I think a Gold (or premium) card might be a good idea as well. The idea is you pay a big subscription (100 euros or so) but have no fee. The total of withdrawal fees could easily (if you stay long abroad) reach this amount. There are also banks like HSBC that offer low fees on withdrawals abroad, you can ask them. The problem is that you cannot really withdraw huge amounts to lower the fee (since you carry this cash in the street).

• for wire transfers the total fee is usually $50 or more (I had a fee from distant bank, a fee for change and a fee in my home bank). But the amount is unlimited (or high enough to be of little matter) and I needed to do this once per year or so. So I guess it could be interesting if you have enough savings to only transfer money every couple of months or so.

• I think Western Union is also involved this profitable business. I never used it because the fees are pretty high, but maybe it is useful for not too big amounts frequently transfered.

Actually, have you considered a loan? It's a very random idea but maybe you can use a loan as a swap and then transfer money when you have enough to reimburse it all.

But the question is very interesting, I think the business is pretty huge due to globalization. It is expensive because some people can make a lot of money out of it.

Answer 2

Be aware that ATM withdrawals often generate hidden fees, which are not obviously declared. Many banks operate e.g. with a currency exchange fee, giving you an exchange rate some 1-2% lower than actually applicable. If you withdraw larger amounts, such a currency exchange fee easily adds up to what you would have paid for a wire transfer, where you would get a better exchange rate.

Although it's probably much hassle for you to change banks, another option may be to find a bank which operates both in France and the US. Banks with different national branches often offer cheap and fast wire transfers between same-bank accounts in different countries. E.g. Citibank used to offer such services, but I am not sure if they still serve private customers in France.

Answer 3

My preferred method of doing this is to get a bank draft from the US in Euros and then pay it into the French bank (my countries are Canada and UK, but the principle is the same). The cost of the bank draft is about $8, so very little more than the ATM method. If you use bigger amounts it can be less overall cost.

The disadvantage is that a bank draft takes a week or so to write and a few days to clear. So you would have to plan ahead. I would keep enough money in the French account for one visit, and top it up with a new bank draft every visit or two.

Answer 4

One way is to wire transfer large amounts. If you transfer $5,000 at one go, that $50 fee works out to 1%, same as the $5 on a $500 ATM withdrawal (and ATM fees, hidden and explicit, tend to be higher than $5).

The downside is exchange rate risk (taking more money at one go exposes you to that day's rate, good or bad, vs taking it in multiple chunks). If you're American, you also have to report large transfers and foreign balances on your taxes.

Shopping around for a good home bank (with low wire & foreign ATM fees), is quite important.

Answer 5

Several possibilities come to mind:

1. Several online currency-exchange brokers (such as xe.com and HiFx) offer very good exchange rates and no wire transfer fees (beyond what your own bank might charge you).

2. Get French and American accounts at banks that are part of the Global ATM alliance: BNP Paribas in France and Bank of America in the USA. This will eliminate the ATM fee.

3. Get an account at a bank that has branches in both countries. I've used HSBC for this purpose.

Answer 6

Depending on your income/savings level and who you work for (if you work for a big company check with an HSBC Premier advisor, they may waive the requirements), you may qualify for an HSBC Premier account, which can allow you to open accounts in different countries and transfer money between them without a fee.

You can also get a Premier account without meeting the requirements if you are willing to pay a monthly fee, but I doubt that will be worth it in the long run for what you need (worth doing the math though if you travel frequently).

NOTE: There may be similar offerings from other banks, but this is just the only one I'm aware of.