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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?

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  • 2
    There are a few usually online only American banks that have no foreign transaction fees and reimburse ATM fees. Charles Schwab Bank is an example. This will still be annoying but will avoid the fee at least. – rhaskett Sep 17 '15 at 21:31
  • @rhaskett: More than annoying when I am in USA and want to pay the light bill in Spain! I used my Schwab debit several times to get cash to deposit when I was there. But when I wasn't, my rent was late because Schwab refused to do a write transfer! They didn't charge for it, they just wouldn't do it (long story). – WGroleau Jun 19 '17 at 17:46

10 Answers 10

7

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.

  • Santander has branches in Spain and USA, but cannot transfer funds between the two except by wire transfer. – WGroleau Jun 19 '17 at 17:28
6

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.

  • 1
    Western Union is also useful in countries with few bank accounts or very high transfer fees (think Central Asia for example). – tricasse Sep 9 '12 at 9:41
3

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.

  • FWIW: Comparing HiFX rate to the "official" rate at xe.com shows that their "fee" is only 0.34%. xe.com also claims no-fee transfers, but refuses to reveal their rates. Another one I checked earlier today (and then forgot the name of) uses an exchange rate that gives them a 3.1% "fee." PayPal would supposedly let me have two accounts, one on each bank and send myself money for no fee. But when I tried to open the second account, they locked both accounts and said it was to prevent fraud. – WGroleau Jun 19 '17 at 17:43
2

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.

2

I did some empirical research, comparing the exchange rates for wire transfers vs. the exchange rates for ATM withdrawals.

With my bank, wire transfers typically take a 4% float off the exchange rate. ATM withdrawals seem to take just over 2%. And ATM withdrawals don't have a wire transfer fee, as long as I'm withdrawing from a branch of the same bank (overseas). The only problem with ATM withdrawals is the daily limit. As far as I can see, Tor's answer above has it completely backwards, at least with my bank, ATM withdrawals are a much better value.

Do the research yourself...call the bank you're going to transfer from and find out what their current exchange rate is. Compare it to the current spot rate (e.g. XE.com) to determine how much of a cut the bank is taking. Then, if you can, withdraw some cash from the foreign location with your ATM card and see how much of the original currency is deducted from your account. In this way you can empirically discover for yourself the better rate.

1

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.

1

Check global ATM alliance they are banks that use reciprocal benefits on each other in other countries without fees. For example the in the USA Bank of America and In France it is BNP Paribas. Both are banks in this alliance.

I use this option between the United States and the Caribbean my banks of choice are Bank of America in the US and in the Caribbean I use Scotia Bankand since I have accounts in both weekends I can use both ATM cards on any of these two banks without any processing fees!!!!

You should check the global ATM alliance to see if it is an option that you could use.

0

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.

0

I haven't seen this answer, and I do not know the legality of it, as it could raise red flags as to money laundering, but about the only way to get around the exchange rate spreads and fees is to enter into transactions with a private acquaintance who has Euros and needs Dollars.

The problem here is that you are taking on the settlement risk in the sense that you have to trust that they will deposit the euros into your French account when you deposit dollars into their US account. If you work this out with a relative or very close friend, then the risk should be minimal, however a more casual acquaintance may be more apt to walk away from the transaction and disappear with your Euros and your Dollars.

Really the only other option would be to be compensated for services rendered in Euros, but that would have tax implications and the fees of an international tax attorney would probably outstrip any savings from Forex spreads and fees not paid.

0

I think the one single answer is that the answer depends on the two countries involved and their banks' practices.

To find that answer, you need to ask other expats from your country living in France and ask them for their experience. Note that most expats do not know what fees they are paying.

For example, in the Philippines, the lowest fee charged still involves waiting 30 days to get your money. Specifically, I opened a US dollar savings account with the minimum of US $500 required (other rules are involved for opening a bank account), deposited a personal check drawn on my US bank account (no fee charged), and waited 30 calendar days to withdraw USD bills. The Philippines bank did not have a branch in the US, but had financial arrangements with US banks. After getting USD dollars in my hand, I walked to a nearby exchange business store (which usually offered a better daily rate than a bank, but a rate between the banks' buy and sell rates) and exchange the dollars for pesos. Note that years ago, banks did not give USD bills, when dollars were scarce in the Philippines.

However, this process does not work in Thailand, due to bank rules against private individuals opening a USD account, with exceptions. And there are still fees involved.

March 2017

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