Military Finance is always confusing,
and this is especially true when moving overseas. Read our
Military Finance Tips and Essential Information to ensure to find out
more about your Military Money Matters. Armed with this
knowledge, you can protect your interests and ensure that you get
everything that you are entitled to.
By following our guide to currency conversion and banking, you can
save over $1000 over your tour in Europe. And you don't have to
do anything but use the right ATMs and banks!
Living in Europe as a Military Servicemember or DOD civilian means
that you will need to keep track of the currency exchange rate between
the Euro and the Dollar. These rates change daily and may
fluctuate quite a lot over time.
The best way to keep track of the exchange rate is on the internet at
such sites as http://xe.com/, which allows
you to view every world currency.
CURRENCY CONVERSION ON POST
The banks and credit unions on post also post exchange rates and allow
you to exchange euros for dollars (and vice versa). The exchange
rates available at these businesses, however, deviate from the open
market rate by 1 to 2 cents.
You can view the different exchange rate offered by Service Credit
Union, a credit union facility available on post in Europe, by
If the open market exchange rate for 1.00 Euro is $1.25, the on post
banks and credit unions will charge you $1.27 per Euro. The
reverse is also true: if the exchange rate for $1.00 is 0.90 Euro, you
will have to pay 0.92 Euro on post. In other words, you will
lose 2 cents on each and every dollar/euro you exchange simply by
going to a facility on post. This also applies to withdrawals of
Euro from ATMs on post, and to money transfers to German accounts when
done using a bank or credit union on post.
While 1 to 2 cents may not seem like much, over time the money adds
up. This is especially true for large sums of money (such as
when you are paying for rent if you live off of post). For
example, if your rent off post is 1500 Euro, you will lose 30 dollars
each and every time you pay your rent. Over a period of 24-36
months (depending on the length of your tour), you will end up losing
$720 to $1080 simply on paying rent. Factor in utilities and
vairous ATM withdrawals every time you want to use Euro or purchase
anything off post, and you will end up losing a lot more money simply
by using the on post exchange rate.
The best exchange rates, believe it or not, are offered by credit card
companies. So if you really are looking to save, use your card
whenever possible instead of paying in cash. Just remember to
track your expenses and to pay them off at the end of the month.
This will take some fiscal discipline, but if you follow this plan you
In Europe, most monetary transactions are made via wire
transfers, rather than paid by checks, credit, or even in cash.
When you receive a speeding ticket and have to pay the local
government, you must wire money from your bank account to the local
government's account. When you pay your rent, you will have to
transfer money from your bank account directly to your landlord's bank
Unfortunately it is impossible to transfer money from a US routing
number to a European routing number (without paying an exorbitant
amount in fees). Therefore it is necessary to open up either an
account on post or at a bank on the economy.
The facilities on post are special in that they have both a US and a
European routing number, enabling you to transfer money from your
account in the US (or direct deposit your pay) into your account on
post. However, any money deposited in that account is kept in
dollar amount. When you end up transferring money to a European
account to pay for a speeding ticket or to pay rent, the bank or
credit union will change your dollars to Euro using their poor
exchange rate and end up costing you money.
OPENING A LOCAL BANK ACCOUNT
One way to avoid the exchange surcharge is to open up a bank account
on the economy. All you need is a phone number and a physical
address (NOT your APO address) so that you can get your locally
addressed bank statements.
Whether you live on or off post, you have a physical address, so this
should not be a problem. However, this is especially important
for people who live off post, because they will end up exchanging
large amounts of currency to pay for rent, energy, and heating.
Most European banks have online banking, which
makes a money transfer to pay rent, utilities, or a ticket as easy as
getting on the Internet. Be sure to ask for this capability if
you open a local account.
An additional advantage to having an account at a European bank is
that you will get an EC card. An EC card is simply a debit card
to your European bank account. Where it differs from any other
card is that EC cards are accepted at just about every business in
Many businesses in Europe do not accept credit cards (notable among
them are the popular furniture store Ikea and pay-at-the-pump gas
stations in France) and you will have either the choice of carrying
large amounts of cash at all times, or using your EC card.
WITHDRAW EURO FROM ATMs OFF POST
In addition, NEVER withdraw Euro from an ATM
on post. Go to an ATM on the economy whenever you
have to withdraw money. You DO NOT need to have a local bank
account to withdraw money from an ATM off post, you just need a ATM
card with the MasterCard or Maestro logo.
Keep in mind that these ATMs will charge you a withdrawal fee each
time to withdraw money. This withdrawal fee with vary from
machine to machine, as it does in the US. If you bank with USAA,
you do not have to worry about this hassle because USAA will reimburse
your ATM withdrawals up to $10.00 each month.
The best exchange rate credit cards
Finally, when traveling to other countries in Europe (or around the
world) do not exchange your money at the
"money exchange shops" available in airports and in
GETTING MONEY INTO YOUR LOCAL BANK ACCOUNT
One disadvantage to having a local bank account is that it is
difficult to get money into it!
You cannot wire money into it from your US account, and opening up an
account at a facility on post would defeat the purpose of having a
local account (because the bank/credit union on post would still be
exchanging your dollars into Euro in order to transfer it into your
local account). Therefore it becomes impossible to automatically
deposit money into your local bank account.
You could write a check to deposit money, but the check must clear
both the European banking facility and your US banking facility.
Plus, large checks typically are held at a Customs account to ensure
that the money being sent does not violate any legal issues. A
check written to deposit money into a German account could take up to
a month to clear and enter the local account.
One quick way to get money into your local account (while avoiding the
exchange surcharge) is by withdrawing your money at a local ATM, and
then entering the bank and making a cash deposit. Using a local
ATM would enable you to get the better exchange rate, and a cash
deposit of Euro makes your money immediately available for wire
In order to limit the number of trips to an ATM you have to make (and
to still be able to get enough money into your account), write a
letter to your US bank at which you have your checking account and ask
to raise your one-day ATM withdrawal limit to an acceptable amount
that will cover your monthly payments.
European ATMs have a one-time withdrawal limit of 500 Euro. So
in order to get 1500 Euro into your account to pay your rent, you will
have to make 3 separate transactions. However, this does not
mean you will have to go to 3 separate machines around town to
withdraw money. Simply make one 500 Euro withdrawal, and after
your card is ejected, put it right back into the ATM. You can
make as many consecutive withdrawals at the same ATM as you need (up
to the new one-day limit you set with your US bank, of course).
Once you have all your money in hand, walk in to the deposit line of
your bank and you will have your money available in your account to
make your necessary payments!
This may seem like a tedious process, but it only takes 15 minutes
every month, and when you consider the fact you will be saving
thousands of dollars over the course of your tour in Europe, this is
time well spent.
Even if you do not want to go through the trouble of opening up a
local account, we must emphasize to you that you should
NEVER withdraw Euro from an ATM on post.
This is a small sacrifice to pay for the money you will save