As we all know, exchanging currency is necessary for most trips outside the United States, and there are a variety of ways to convert U.S. dollars into the currency used in your destination. Banks, credit card companies, credit unions and the currency-exchange companies that typically operate out of airports and train stations all offer currency conversion services at varying rates and with different fees. But which one offers the best deal? It’s commonly said that credit cards are the best way to save on currency conversion, but is that true? And if it is, how much can consumers expect to save using a no foreign transaction fee credit card?
In order to find out, Card Hub conducted a study whereby we analyzed online rates and anonymously called the nation’s largest consumer banks as well as Visa, MasterCard and one of the Travelex locations in the John F. Kennedy Airport (Visa and MasterCard are the most widely accepted card networks around the world, and Travelex is the world’s largest currency exchange operator). Both for uniformity’s sake and because the Euro is the most prevalent foreign currency, we gathered information about the U.S. Dollar-to-Euro exchange rate as of May 7, 2013. In other words, we determined the dollar amount needed to buy one Euro from each of the companies polled. Please find the results of this study, as well as our findings from last year, below:
Credit Card Networks (for credit card usage)
| Credit Card Network | 2013 Exchange Rate | 2013 Fee | 2012 Exchange Rate | 2012 Fee | 2011 Exchange Rate | 2011 Fee |
|---|---|---|---|---|---|---|
| Visa | 1.3142 | 0-3% depending on your credit card | 1.2579 | 0-3% depending on your credit card | 1.4237 | 0-3% depending on your credit card |
| MasterCard | 1.3078 | 0-3% depending on your credit card | 1.2557 | 0-3% depending on your credit card | 1.4345 | 0-3% depending on your credit card |
| Average: | 1.3110 | 2.24%* | 1.2568 | 2.38%* | 1.4291 | 2.52%* |
*According to Card Hub’s Credit Card Landscape Report.
Based on the rates available at the time this study was performed, one can expect to get one Euro for every 1.3110 dollars when using a no international fee credit card.
15 of the Nation’s Largest Banks (for converting cash)
| Bank | 2013 Exchange Rate | 2013 Fee | % Higher Than CC-2013 | 2012 Exchange Rate | 2012 Fee | % Higher Than CC-2012 | 2011 Exchange Rate | 2011 Fee | % Higher Than CC-2011 |
|---|---|---|---|---|---|---|---|---|---|
| Bank of America | 1.3802 | None | 5.0% | 1.3333 | $7.50 | 8.1% | 1.5021 | $7.50 | 7.2% |
| Chase | 1.3864 | None | 5.4% | 1.3336 | None | 5.8% | 1.5111 | None | 5.4% |
| Citibank | 1.3802 | $7.50 | 7.4% | 1.300 | $5.00 | 4.9% | 1.5168 | $5.00 | 7.3% |
| Wells Fargo | 1.3771 | None | 4.8% | 1.3290 | $7.00 | 7.6% | 1.5037 | $12.00 | 8.8% |
| HSBC | 1.379 | $8.00 | 7.5% | 1.3200 | $12.00 | 8.6% | 1.4900 | $11.00 | 7.6% |
| U.S. Bank | 1.500 | $9.95 | 15.5% | 1.4400 | $9.95 | 15.6% | 1.6100 | $9.95 | 14.2% |
| PNC | 1.398 | None | 6.2% | 1.3494 | None | 6.9% | 1.5289 | None | 6.5% |
| Capital One | 1.400 | None | 6.4% | 1.3513 | None | 7.0% | 1.5311 | None | 6.7% |
| TD Bank | 1.3934 | $7.50 | 8.3% | 1.3450 | $7.50 | 8.9% | 1.5239 | $7.50 | 8.6% |
| SunTrust | 1.3939 | $10.00 | 9.1% | 1.3348 | $10.00 | 9.0% | 1.5160 | $10.00 | 8.9% |
| BB&T | 1.3900 | $10.00 | 8.8% | 1.3361 | $10.00 | 9.1% | 1.5140 | $10.00 | 8.8% |
| Harris Bank | 1.3683 | None | 4.2% | 1.3207 | None | 4.8% | 1.4964 | None | 4.5% |
| Fifth Third Bank | 1.4131 | None | 7.2% | 1.3600 | $10.00 | 10.7% | 1.5454 | $10.00 | 10.6% |
| KeyBank | 1.3869 | None | 5.5% | 1.3300 | $10.00 | 8.7% | 1.5160 | $10.00 | 8.9% |
| Northern Trust | 1.3627 | None | 3.8% | 1.3153 | None | 4.4% | 1.4881 | None | 4.0% |
| Average: | 1.3939 | $3.53 | 7.1% | 1.3399 | $5.93 | 8.1% | 1.5196 | $6.20 | 7.9% |
*Fee assumes you are a customer of the bank. Certain banks charge increased fees to non-customers.
**Based on a $300 conversion and use of a no international fee credit card
Airport Services (for converting cash)
| Bank | 2013 Exchange Rate | 2013 Fee | % Higher Than CC-2013 | 2012 Exchange Rate | 2012 Fee | % Higher Than CC-2012 | 2011 Exchange Rate | 2011 Fee | % Higher Than CC-2011 |
|---|---|---|---|---|---|---|---|---|---|
| Travelex | 1.5000 | $9.95 | 15.5 | 1.4493 | $9.95 | 16.2 | 1.6200 | $9.95 | 14.7 |
*Fee assumes you are a customer of the bank. Certain banks charge increased fees to non-customers.
**Based on a $300 conversion and use of a no international fee credit card
Conclusions
Without a doubt, Visa and MasterCard provide the best exchange rates between the U.S. Dollar and the Euro, with MasterCard being slightly better as of 5/7/13. On average, credit cards save consumers 7.1% relative to bank conversion services and 15.5% relative to companies found in airports. In order to save the most money, customers should use a no international fee credit card and avoid dynamic currency conversion. However, even if a consumer was to use a credit card with a 2.24% foreign exchange fee — the current market average – they would still be saving 4.86% and 13.26% relative to banks and airport currency exchange services, respectively.
Major banks, on the whole, also outperform the airport services, which many consumers opt for out of convenience and/or necessity. However, the services offered by banks are certainly not equal, as the rates (including any fees) offered by the best and the worst banks differ by 10.08%. The banks that offer the best deals are Northern Trust and Harris Bank, which charge 1.3627 and 1.3683, respectively, and do not apply fees to the transaction The banks offering the worst rates are U.S. Bank, which has a 1.5000 conversion rate and a $9.95 fee, and SunTrust, which has a 1.3939 conversion rate and a $10 fee.
Interestingly, the currency conversion landscape has not changed much in the past year. The exact rates are obviously different, but Northern Trust and Harris Bank offered the best deals in 2012 and 2011, and U.S. Bank was also in the bottom two both years (SunTrust replaced Fifth Third Bank in 2013).
