Moving from the US to Europe is a daunting task, and needless to say I was scared out of my wits before I left. As I result I over-prepared and lined up an American client and got a chip credit card[1] to ensure easy access to my American money. I thought I was all set – I had a lot to learn!
“It is easier to send one billion dollars from New York to San Francisco than $100 from the US to France.” – Mike Laven, CEO, Currency Cloud, 2016 NACHA Conference
I found when I arrived in the Netherlands that my credit card wasn’t universally accepted. Not to mention that I had entered into a vortex of terrible exchange rates and extra fees that were eating up my cash. The exchange rate was already taking a substantial bite out of my revenue (the US dollar was weaker then) and I simply couldn’t afford the extra charges.
I began cobbling together a strategy to access my money quickly and cheaply. Here are a few tips on what worked for me. Full disclosure: I was not clever enough to get paid by any of the companies recommended below.
Do:
Get a credit card with no Foreign Transaction fee
The kind of credit card is you get is important – look for a card with no foreign transaction fee – a card without that will tack on a 3% charge per transaction. I use Bank of America’s BankAmericard Travel Rewards card, and generally accrue enough points to pay for a three-night stay at a reasonably priced hotel once a year.
Look for International Peer 2 Peer (P2P) companies that give you the real exchange rate
Transferwise and Currencyfair have both been godsends for me. They allow you to transfer funds internationally at approximately the exchange rate for a small fee. I prefer Transferwise, which takes about 1-2 business days to move money from my US bank account to my Dutch bank account. When I arrived I used Currencyfair, which was slower (about 4 – 5 business days) but charged a smaller fee. Currencyfair has a MarketPlace feature that allows you to set the exchange rate that you want, and seeks a peer for you to complete the transfer. I stopped using them because they now require that US account holders send a wire to their bank account. Since I don’t do wires (see below), that’s no longer an option for me.
Don’t:
Use wires
Wires should be avoided if possible because of their high transfer fees and unfavorable exchange rates.
This screenshot shows the terms from my US bank to send a wire from my American bank to my account in the Netherlands:
Basically, I’ve agreed to spend $50 in order to send $50 before the money has even left my bank account. Then factor in the fact that the exchange rate can be 3% less favorable than the actual exchange rate.[2]
Wires should only be used as a last resort. They are terrible way to transfer money internationally, since you run the risk of forfeiting hundreds of dollars a year by relying exclusively on them.
Rely on your debit card
Using your US debit card to get money is also not a good idea – just like banking in the US, you’ll be charged a fee from your bank (mine charges $5.00) as well as the other bank’s ATM.
Think your US credit card will work everywhere
The credit credit card standard that the US uses is different than Europe’s. The US opted for “chip and signature” while much of Europe uses “chip and pin”. This means that all readers in Europe are not set up to work with chip and signature. You’ll have no problem at larger retailers like IKEA, but won’t be able to use your credit card at the grocery store. Where you live also matters. I lived in smaller towns that didn’t get many tourists; larger cities like Amsterdam are more likely to accept US credit cards.
I’d love to hear any tips you may have, especially if you’ve had any luck using PayPal or virtual currencies like Bitcoin.
[1] Chip credit cards were not required at the time I left the US; they became the standard in October 2015.
[2] My own experience was mixed on this – the April 2013 transfer was about 3% less than the exchange rate, and the May 2013 transfer had only a .1% difference. 