Best exchange rate at ATMs?

2 minute read

Have you ever seen an ATM offer to make currency conversion for you? For example "This ATM offers conversion to your home currency" or something similar. I, for one, had always been wondering what's behind this sneaky question. It can’t be that the bank is actually offering a deal where you will win?

So I decided to test it and see the result both ways. Last Monday I used a nice ATM machine in Gatwick airport for the test. I used my EUR denominated credit card from a friendly Estonian bank. When picking an amount I figured that 100 GBP seems like a nice amount to test with.

atm exchange rate

Based on the interbank rate for the day, it should be equal to exactly 126.01 EUR. Of course I would not expect to see exactly that on my statement, but hopefully not too far from this.

First I took 100 GBP from the ATM without performing a currency conversion, later on looking at my credit card statement I saw that 126.12 EUR had been taken from my account - that's a really good result!

Next up I went for the conversion option and let the ATM perform the currency exchange and debit my account in EUR. Holy-moly was what I said when I looked at my account. This time 135.51 EUR was deducted. That's almost 10 EUR more.

And its a real rip-off when looking at percentages, comes down to being 7.4% more expensive.

Morale of the story is - never ever let the ATM perform currency conversion for you, charge in local currency at let your bank do the conversion. Many credit cards have extra charges when using them overseas, but these charges are usually in 1-2-3% range.

These guys behind the ATM were taking 7%... When, oh when, can we all use banking services without a commission hungry banker taking 3 or 5 or 7 percent from every move?

Taavet @ TransferWise