Better Exchange Rate: Credit Card or ATM or Hotel?

This is a follow up to my last post (Better Exchange Rate: Credit Card or ATM?).  In this post I provide another example comparing Credit Card and ATM exchange rates and add one more exchange rate comparison – a Hotel front desk.

The transactions took place in Mauritius where the local currency is the Mauritian Rupee, or MUR.  All transactions occurred on September 14th, 2013.  I haven’t posted the receipts (which I just found cleaning out my desk the other day) but hopefully I’ve shown enough of my receipts in the past that you know I don’t make up any data.

The ATM Transaction from Barclay’s Bank: Using my Charles Schwab Checking account (which reimburses me for all ATM fees), I took out 11,200 MUR  from a Barclay’s ATM in Flic-en-Flac.  Below is a screenshot from my online banking transactions that shows the converted amount was $363.67 USD.  The effective MUR to USD exchange rate was  0.03247.

The Credit Card Transaction:  As always, I use my Capital One Visa credit card for all transactions in foreign currencies because the card has NO foreign transaction fee, and receives the exact rate that is published on Visa’s corporate exchange rate website.  For this purchase, I bought a bunch of groceries from a local supermarket for 2,689.71 MUR.  Below is a screen shot from the Capital One transactions webpage which shows I paid $87.34 in USD.  The effective MUR to USD exchange rate was  0.03247 (same as the ATM rate above!).  Please notice that the exchange rate is for September 16th (posting date) not September 14th.

The Hotel Front Desk Currency Exchange:  Just for fun, I took a picture of the exchange rate offered by the hotel when I got back from my grocery shopping trip.   I didn’t actually change any money, because as you will see it was a horrible rate.  The exchange rate from the hotel was .0348 (1/28.771).   If I were to get 11,200 MUR like I did for the ATM, it would cost me 389.28 USD instead of 363.67 from the Barclay’s ATM.  That is $25.61 extra, or a 7% surcharge!

Comparing the Three Methods:  It should come as no surprise that exchanging money at a Hotel is a bad deal.  However, similar to the previous post comparing ATM and Credit Card Exchange rates, it turns out that getting money from an ATM or paying with your credit card is almost the same when it comes to exchange rates.  In the previous post, comparing the ATM to credit card was a little difficult because the credit card transaction was posted a day later than the ATM transaction.  In this particular case, making the transactions on a Saturday actually worked in our favor, which means we can compare the rates apples to apples.

As explained on Visa’s currency exchange FAQ page, “Every day—except weekends, Memorial Day, Christmas Day and New Year’s Day—Visa calculates the rate for the next day’s transactions.”   That means on Friday September 13th, 2013, Visa calculated the exchange rates for Saturday the 14th, Sunday the 15th, and Monday the 16th.  I checked on the corporate exchange rate to make sure, and the rate was the same for all three days.  So even though the transaction occurred on the 14th and was posted on the 16th, the exchange rate was the same.

The fact that the ATM exchange rate is exactly the same (to the 5th decimal point) as the Visa exchange rate makes me think that my Charles Schwab debit card – which is also a Visa – probably uses the Visa corporate webpage rates as well.