General Info

[Bango Cheito]

There's certainly no end of confusion on this subject. I know that all the Canadian banks set their own exchange rates by adding between 2.5 and more percent to the mid market exchange rate. They buy and sell at something close to the mid market rate. Probably close to the published buy / sell numbers. When I withdraw money from an ATM in Colombia or wherever I pay whatever fees the ATM charges (sometimes nothing) plus the fees my bank charges ($5/ per transaction from a foreign ATM or bank) plus the 2.5 or more percent my bank collects. Whether they pay some of that to the foreign bank or not I'm not sure of. But when I check conversion rates that's how it seems to roll.

Also, I doubt you ever get more than the mid market rate in reality. Likely you are comparing the wrong numbers. For example you do a transaction at 2 in the afternoon, but the currency has changed by the end of the day, etc. I have noticed this when I check back. The quoted rates are end of day usually, sometimes average for the day. And your bank may use the rate plus their markup from a specific time.

I don't know how American banks do it. But I believe that in Canada it is my bank that determines the exchange rate. The Colombian bank on the other end gets pesos for pesos in effect. My bank exchanges the Canadian bucks for pesos and sends the pesos to the Colombian bank and its ATM.

I've lived all over Canada and the US. If you really knew how much worse Canadian banks are compared to your US counterparts you'd probably burst into tears, and then immediately figure out how you could get a Schwab account. .

[Zeos1]

People might be getting confused because you have to subtract all the fees to calculate the exchange rate. Your bank potentially has multiple fees. The owner of the ATM usually has fees; those should not be used to calculate the exchange rate:

Respectfully, I disagree. Many times I have received more than the current rate posted on X-rates. Multiple fees or not (my Colombian bank has none charged) I have received different rates on the same day from 2 different banks. But in the end the contra bank has no say so in the transaction. It is determined here in Colombia.

There's certainly no end of confusion on this subject. I know that all the Canadian banks set their own exchange rates by adding between 2.5 and more percent to the mid market exchange rate. They buy and sell at something close to the mid market rate. Probably close to the published buy / sell numbers. When I withdraw money from an ATM in Colombia or wherever I pay whatever fees the ATM charges (sometimes nothing) plus the fees my bank charges ($5/ per transaction from a foreign ATM or bank) plus the 2.5 or more percent my bank collects. Whether they pay some of that to the foreign bank or not I'm not sure of. But when I check conversion rates that's how it seems to roll.

Also, I doubt you ever get more than the mid market rate in reality. Likely you are comparing the wrong numbers. For example you do a transaction at 2 in the afternoon, but the currency has changed by the end of the day, etc. I have noticed this when I check back. The quoted rates are end of day usually, sometimes average for the day. And your bank may use the rate plus their markup from a specific time.

I don't know how American banks do it. But I believe that in Canada it is my bank that determines the exchange rate. The Colombian bank on the other end gets pesos for pesos in effect. My bank exchanges the Canadian bucks for pesos and sends the pesos to the Colombian bank and its ATM.

[Mr Enternational]

Thank you for that. I have investment accounts with them, but never thought of them as a bank. I guess I will see my broker soon. Thanks again.

You don't need to see a broker. You just go online and link a checking account to your brokerage account and get them to send you a debit card.

[Bango Cheito]

I do not use Charles Schwab. But this is how it works:

Your conversion rate is determined by the InterBank Rate.
This is a "wholesale" rate because it's the rate that banks use when they are trading foreign currencies with *other banks*.

The conversion rate you see online is the InterBank Rate. However, you will NEVER get the InterBank rate.
The Banks have to make money, so they have a mark-up. On average, banks can mark up an exchange rate by 3-6%. This mark-up is not publicized.

InterBank rates fluctuate through out the day. They change based on several factors like Geo-political events, Interest rates, Trade deficit, National elections etc.
Usually Banks use the Interbank rate at the end of the business day to calculate your conversion rate. This is public information. You can ask Schwab about their InterBank rate.

~BKKguru

I often get what xe says to be the interbank rate or better with my Schwab card.

Other banks (US, non Schwab) will typically charge a fee OVER AND ABOVE what the ATM's bank charges you. This doesn't show up anywhere, it's incorporated into the rate they give you.

[Pilot Pete]

If you frequently travel to any place that doesn't have a branch of your bank, it is worth setting up a Schwab account. It doesn't cost anything and the amount you are required to keep in the account is very little. There are no fees; they even pay you interest on the money you keep in their bank.

Thank you for that. I have investment accounts with them, but never thought of them as a bank. I guess I will see my broker soon. Thanks again.

[Fun Luvr]

For a couple month stay, does it make sense to set up an account with any particular banks?

If you frequently travel to any place that doesn't have a branch of your bank, it is worth setting up a Schwab account. It doesn't cost anything and the amount you are required to keep in the account is very little. There are no fees; they even pay you interest on the money you keep in their bank.

[PirateMorgan]

People might be getting confused because you have to subtract all the fees to calculate the exchange rate. Your bank potentially has multiple fees. The owner of the ATM usually has fees; those should not be used to calculate the exchange rate:

Respectfully, I disagree. Many times I have received more than the current rate posted on X-rates. Multiple fees or not (my Colombian bank has none charged) I have received different rates on the same day from 2 different banks. But in the end the contra bank has no say so in the transaction. It is determined here in Colombia.

[GreenBud]

The bank here decides how much it is going to charge your USA Bank for the 500,000.

Incorrect. All the banks use the same electronic exchange rate. There is no way I would blindly trust a 3rd world bank to give me a fair rate. The cash exchange rate is determined by the bank / exchange center; but those numbers are posted.

The exchange rate has been the same between all the ATMs on the same day in every country I've been to and tested. In addition, the exchange rate between my debit card and my visa card is virtually the same; sometimes there is a negligible difference.

People might be getting confused because you have to subtract all the fees to calculate the exchange rate. Your bank potentially has multiple fees. The owner of the ATM usually has fees; those should not be used to calculate the exchange rate.

[Pilot Pete]

Schwab has no interbank conversion. That is not their business. It is not that complicated. You withdraw 500,000 pesos. The bank here decides how much it is going to charge your USA Bank for the 500,000. Period. You are debited the charge. With CapOne within about 2 seconds. It hits the US account before I can walk away from the machine.

For a couple month stay, does it make sense to set up an account with any particular banks?

[BKKguru]

"This nation will remain the land of the free only so long as it is the home of the brave. ".

Happy 4th to all mongers from and in the USA!

BKKguru

[PirateMorgan]

Schwab has no interbank conversion. That is not their business. It is not that complicated. You withdraw 500,000 pesos. The bank here decides how much it is going to charge your USA Bank for the 500,000. Period. You are debited the charge. With CapOne within about 2 seconds. It hits the US account before I can walk away from the machine.

[BKKguru]

This maybe true, but when I purchase an item using my Schwab card at either Exito or Home Center or where ever I get an outstanding conversion rate, so who rate is this?

I do not use Charles Schwab. But this is how it works:

Your conversion rate is determined by the InterBank Rate.
This is a "wholesale" rate because it's the rate that banks use when they are trading foreign currencies with *other banks*.

The conversion rate you see online is the InterBank Rate. However, you will NEVER get the InterBank rate.
The Banks have to make money, so they have a mark-up. On average, banks can mark up an exchange rate by 3-6%. This mark-up is not publicized.

InterBank rates fluctuate through out the day. They change based on several factors like Geo-political events, Interest rates, Trade deficit, National elections etc.
Usually Banks use the Interbank rate at the end of the business day to calculate your conversion rate. This is public information. You can ask Schwab about their InterBank rate.

BKKguru

[Magaman]

Well yes, but I don't see too many of the guys here giving out a referral link to a stranger, which connects to their bank.

If that's a fear someone has then don't get a referral link, or get one from someone you know. My main point was that using a link from the internet wasn't valid and Schwab will refuse to honor it.

[The Tall Man]

Schwab does not determine the conversion rate. The owner of your ATM does.

This maybe true, but when I purchase an item using my Schwab card at either Exito or Home Center or where ever I get an outstanding conversion rate, so who rate is this?

The Tall Man.

[PirateMorgan]

Schwab does not determine the conversion rate. The owner of your ATM does.