Would it make sense to use your trading account as an inexpensive way to exchange currencies for personal use? For example, I'm Canadian and most of the money I earn is in Canadian dollars. A lot of my expenses are in American dollars. Anywhere I go to purchase American dollars charges me about 2.5% on top of the going exchange rates. Would I be better off to send a Canadian dollar check to my IB trading account, change it to American dollars as a currency transaction then withdraw an American check? I have to convert about 100,000 Euros to American or Canadian dollars. If I go to the bank I'll probably lose a couple of thousand dollars to make the exchange. Would I be better to do that with my trading account? Then I would only have to pay the much smaller trading spread which should be nowhere near a couple of thousand dollars.
If the euros are cash, it's a problem as you would have to have it in bank to a) wire funds or b) send check. IB won't accept any 3rd party deposits. If you have Euro bank, yes, deposit euros and then convert to trade or withdraw Also rememeber with IB, if you convert amounts for less than 25k us, you get the wider spread 10-15 pips.
Makes perfect sense cost-wise, but I'd stick to wire or ACH transfers, instead of paper checks by mail. Especially with IB.
10-15 pips sounds a lot better. If my calculations are correct, 2 1/2 percent that I pay at the bank is 250 pips.
250 pips on euro means 1.40 ~ 1.3750. Who's your bank? Vinnie's House Of Pain? Never mind. just looked at exchange center and 250 pips is actually a good rate for money exchange center. http://www.nyforeignexchange.com/?gclid=CKnQhaqU144CFQolHgodVSpm8g Doh!
Yeah. Walk into any major bank branch in the US and take a look at their currency exchange board. It's an unbelievable racket / scam... yet unregulated and therefore perfectly legal. Europe is somewhat less usurious, but not a whole lot.
The banks in Canada have always gouged people when exchanging currencies. I've heard that currency exchange is the biggest money maker for banks in Canada. I'm surprised that the banks in Europe didn't put up more resistance against a single currency. They must have made a fortune in the old days with all the different currencies. Last week on Canadian television news they talked about how they checked many different banks and found that they all charged the same 2 1/2% fee for any foreign credit card transactions. In my opinion those banks should be charged with price fixing. But then in Canada, a lot of our police still ride on horseback, don't expect them to learn how to use a calculator. In the USA I believe they charge for foreign transactions but the fee is a lot lower and it varies a lot more.
Most credit cards will charge you the at the moment spot exchange rate if you use a card for a purchase. Simply make sure you pay off the card so as not to get hit with interest and you should be fine.
Most US credit cards give you a very competitive Spot rate LESS 3%! (AMEX, CITIBANK, and BANK OF AMERICA all charge 3%)
With 100,000 europes you can negotiate with a bank. If you are in Toronto there is a bunch of private exchange places. Some of them used to to 50 pips per side with 20k and over. TD bank will do 120 when you exchange over the internet. You need accounts setup to do that. Fairly easy.