I never understood the exact mechanisms behind this. I’m in Thailand right now. I have a savings account with euros at bank A. I want to withdraw Thai Baht from an atm of bank B. I get the option to withdraw with or without conversion. With conversion is more expensive, so I’m advised to go for without conversion.
Since I don’t have thai baht in my savings, I’m guessing at some point my euros always needs to be converted to baht. Who pays for the conversion in which cases? Why would the ‘with conversion’ option be more expensive? Why would I ever even pick the ‘with conversion’ option?
In: Economics
The bank offering to convert will always rip you off. That’s the whole point.
Anyway, there’s a wholesale (interbank) rate that banks use to calculate the conversion (plus a fee which is usually around 3%). I’m pretty sure this is handled through the ATM network that allows communication from your bank to the ATM (ie Cirrus, Plus, etc.)
IIRC-
WITHOUT conversion means the ATM you’re withdrawing from makes the conversion.
WITH conversion means your own bank does the conversion.
Generally, the local bank (the ATM owners) do it cheaper than your own bank in the Euros zone.
It’s a particularly bad ripoff because a lot of travellers go to great efforts to locate credit and debit cards that charge no/low foreign exchange rates. My Mom got swindled by DCC on a restaurant payment device in Mexico and it charged her like 5% for currency even though she was using a zero foreign exchange rate card.
Whoever pays the conversion is you (as always) so the question becomes Who do you pay?
The bank is always more/most expensive for many reasons but also you’re paying for the extra convenience of doing all that from your screen etc.
Cheaper options would be doing the conversion in-country so at the airport or at the hotel and stuff like that. Popular tourist areas typically also has cash machines and exchange booths. There’s always street corner traders (black market dealers) as a last resort of course.
If you select with conversion, then the ATM will convert for you and rip you off.
If you select without conversions, your bank, VIA/MASTERCARD will do the conversion for you and that will be at a really good rate.
I think the only time you don’t want to select “without conversion” is with amex, they will convert your Baht to Dollas, and then Dollas to whatever currency.
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