€ vs $

For a few months in the spring, we were really worried about the cost of living in Europe. The falling $ did not help. Then (all the sudden) in August, $ began to gain ground on €:

Here are what we found about currency exchange (some are our own experience, and some are advices we got before we left the US):

1. Avoid exchanging money at foreign currency kiosks or counters at retail banks. Their rates are usually 4% (or more + commission on top) worse than the interbank rates that you find in the finance section of newspapers or on the web. Alan had enough leftover € from his previous travels that we did not need use this option before we found an ATM.
2. The rates you get from your ATM cards are by far the best. This is how we get cash these days, and the rates are consistently slightly higher (0.6-0.8%) than the interbank rate. There are two caveats however. The first is that you have to make sure your own bank does not charge you a fee for accessing foreign ATMs (or any ATMs that it doesn't own). Before we left the US we opened an account at Wells Fargo that would not charge any ATM fees, or we would be paying $5 per transaction (which would wipe out any gain from the better exchange rates). The second caveat is that the amount of money you can withdraw daily is limited. That's many trips (i.e. many days) to the ATM before enough has been withdrawn for the kids' tuition!
3. And that means it's necessary to wire money to the school's bank account. Wiring $ from the US can be a cumbersome process. It usually requires a trip to a local branch, and filling out some papers (and then a not-so-desirable retail exchange rate is offered). The biggest logistic problem for us would be going down to our local branch in the US whenever we need to wire money! We were advised to set up an international banking account before we left. With this account, we could just fax our wire order to the US. However, the exchange rate is not so good for this option. It is not as bad as the retail rate, but is about 3% higher than the interbank rate (as opposed to <1%).
4. The credit card exchange rates are usually 2% higher than the interbank rate. but then we get 2% rebate on purchases with our credit card, so that breaks even! But if we use our ATM debit cards (which have a VISA logo on them) to pay for purchases here, we would be paying the same rate as ATM withdrawals. Options, options, options...