During our family’s study abroad in Spain, one logistic I took on was getting cash for minor purchases that couldn’t be done via credit card. My goal was to avoid paying excessive foreign exchange or ATM fees.
P2P Exchange Rates – 0%
The first stop on the road to cash was a little unexpected. After we started telling close friends and relatives about our trip, two of them told me about their experience getting cash using the relatively expensive options of a foreign exchange kiosk (during the trip) or buying euros from their local bank (before the trip). I offered to buy their remaining euros for the current spot price on Google. This created a win-win situation as we’d both avoid fees converting euros to dollars and vice versa.
This unexpected cash swap probably could have taken us all the way through the 12-week trip.
Fidelity’s Cash Management Account
Before our trip, I did a little research on how to get cash during the trip. I stumbled on Frugal Professor’s guide to using Fidelity as a bank, which included using Fidelity’s Cash Management Account (CMA) to avoid ATM fees. Already having several other accounts at Fidelity, it was a simple matter to open a CMA account. I funded the account with a couple hundred dollars and setup the minimum target balance feature to transfer cash from my brokerage account whenever the balance dipped too low.
Since we’ve been using a credit card for nearly all of our transactions, we probably could have made the whole 12 weeks on just the euros that I swapped with my contacts.
ATM Withdrawal #1
However, I wanted to kick the tires on the CMA account to test the extent of the zero ATM fees. In Granada I found a local bank branch of Caja Rural and attempted a small withdrawal of 40 euros. The ATM informed me of a 3€ fee but then choked with a “Unauthorized by your bank” error.
When I called Fidelity to see what was up, they said the transaction never made it to their end. Perhaps Caja Rural was being super fraud sensitive?
ATM Withdrawal #2
My next ATM was from a larger bank, a branch of BBVA not far from the Caja Rural. The ATM warned of a 6€ fee. That is crazy high for withdrawing less than 100 euros. Wanting to see if the CMA account would cover the fee, I went ahead and the transaction completed successfully. I watched the CMA transactions and, sure enough, two days later the CMA account rebated the fee.
ATM Withdrawal #3
Even though CMA was covering the ATM fees, I didn’t really want to stick them with what I felt was an excessive fee, so I decided to try another bank, this time a branch of IberCaja in Valencia. This time I was surprised that there was no fee and the transaction was successful.
I heartily recommend the Fidelity Cash Management Account for anyone traveling abroad and I’m looking at switching over all of our banking to the CMA account as the Frugal Professor does.
One thing to watch about foreign ATM withdrawals is the exchange rate. Most of the ATMs offered an exchange rate that was inferior to the one offered by the CMA account. I’m not sure this is universally true, but given it was true in every case in my small sample, I plan on sticking with CMA’s exchange rate each time. So watch for the prompt.
Foreign Exchange Kiosks and Your Local Bank
So what about currency exchange kiosks? I’ve used them before and in my experience they charge a high fees, around 5% or more. Some of them advertise “no fees” but in reality you pay with a less advantageous exchange rate. I don’t begrudge them wanting to make money, but you really don’t need to go this expensive route any more.
Before our trip, I found it necessary to step into a local bank and they had their exchange rate listed. It was almost as high as the currency exchange kiosks. Again, I didn’t find it necessary to take this high expense route.
Here’s more details in the form of an FAQ about Fidelity’s Cash Management Account.