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Comment by arjie | Hacker News Reader

I'm not sure if I understand. Essentially you're saying your credit card company has a better exchange rate than the other two services?

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Yes, I can believe that is what he is saying. Certain banks/credit cards have relationships with foreign institutions that can cause unexpectedly low fees, given the right circumstances. On top of which, I've found that both Western Union and bank-to-bank transfers, on the whole, are a huge ripoff on both rates and fees--especially for frequent, small volume scenarios.

When I worked in Canada, I used the no-ATM-fee agreement [1] between ScotiaBank and Bank of America to convert USD to CAD and transfer money between the accounts. This involved the rather odd procedure of going to a ScotiaBank ATM, withdrawing a lot of CAD off of the USD in the BofA account, and stuffing the cash right back into the ATM as a deposit on the ScotiaBank account. Any other procedure, including using a teller or trying an online wire transfer, would have been more expensive and inconvenient. The above had no per-transaction fees and only a 3% conversion fee added to the market rate, which is about average compared to credit cards. (Any of Western Union's "instant" options for this kind of transaction require about 9% in fees.)

There are some credit cards with no foreign transaction fees, which is what I would use today if I had to do it again. Using such a card to purchase items in the foreign country, and then paying off the balance with the home country bank, results in "free" currency conversion. That's what GP is referring to.

[1]: http://en.wikipedia.org/wiki/Global_ATM_Alliance

Yup, I did the same thing in China by withdrawing RMB from my bank account at Bank of America at a China Construction Bank ATM and immediately depositing it in my local account. Zero fees and good exchange rate.

The only annoying part was that the amount I needed to pay my initial rent + security deposit was more than my daily withdrawal limit, so I had to transfer up to the limit three days in a row to get enough money in there to start.

I heard from a colleague that this deal no longer exists.

I opened a CCB account before my last trip to the US. I was charged a 3USD ATM fee at the BofA ATM. I don't know what exchange rate was applied when the 303USD was converted to CNY, but most Chinese banks load these transactions much less than those in the UK (which usually charge 2.25% to 2.75% above the Visa wholesale rate).

Yeah, that was in 2009. I don't know if CCB/BoA still have the no-fee agreement.

But now I have a checking account at Schwab that refunds all ATM fees, including internationally, so I could do it with that.

FWIW, I opened a French HSBC account (I am a US citizen, btw) and used the ATM withdraw-deposit trick you just described in order to produce Euros for local use. I was subsequently called in by the bank because they found my high denomination cash deposits very suspicious and requested that I stop doing it.

I wanted to offer an anecdotal warning that such a trick may work fine, or it may ruffle feathers; just be aware.

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