We Saved €3,274.95

By Making a Phone Call

I was okay in math, though it was never my strongest subject. But I do care about money. So when it comes to currency exchange I always need to check myself twice. I also learned, it helps to have a good relationship with your banker.

US Dollar Account

Banks in Portugal will allow you to have an account that is in Euros and another where money remains in US Dollars. This can be helpful. For example, it can be easier, quicker, or less costly to wire money from a US Bank Account to a Portuguese bank in dollars. For example, when we wired money from Schwab to Abanca asking for it to be converted to euros we waited three days for the money to hit our Portuguese bank account. When I requested the money to be transferred as dollars, it appeared within hours. (Now to be fair, we didn’t need the money immediately … but there is something about our money being suspended in the “wire transfer ether” that gets me nervous. When it is not in either account, I worry that I transposed a digit in the account number or entered the wrong SWIFT code.)

There is also the potential benefit of timing the market. That is, if you don’t need the money immediately, you might want to watch the exchange rate and choose a time when it is more favorable. While I learned a long time ago not to try to time the stock market, it seems that my natural inclination is to try to figure out when I should convert our money.

Allforecast.com

Watching the Rate

In anticipation of purchasing a property, but not certain when we would actually need the money, we had moved extra money from the US to our Portuguese bank in US Dollars. While we are still not certain if or when we might close on the property (it is complicated) I started trying to decipher the tea leaves, i.e. I started reading USD-Euro exchange forecasts. Frankly, I got a bit obsessed with the charts…looking two or three times a day, not always sure what I was learning.

But with the prospects of a dysfunctional Congress, unable to agree on a budget or to extend the debt ceiling, I decided to bite the bullet. We would convert $274,000 to Euros. [Please note, I am not saying we picked the optimum moment! The chart above shows we might have done better by waiting another week. But I was getting just a bit crazy…sometimes your mental health is worth 0.0124 points in the spread.]

We Called Frederico

So I decided to call Frederico, our favorite banker. I could have done the conversion via the bank’s app…but it was the first time converting so much money. It turns out calling Frederico saved us €3,274.95. When I called him he said he would have to call me back with the rate. He called back a few minutes later and said the home office had quoted him a rate of more than 1.19. But he asked that I not convert the money yet, that I give him a bit of time to “work on it” and he would call me back.

He called back about 30 minutes later. He was now able to quote us a rate of 1.1772. I quickly pulled up the best available rate on my phone and found it was a competitive rate. I asked him to proceed. He said he would and asked that we visit the bank before the end of the business day to sign some papers. I happily agreed.

If you are as mathematically challenged as I am, let me run through the math again. We converted $274,000 to euros. We received €232,755.69. Had our friendly banker not negotiated on our behalf, we would have gotten €229.480,74…€3,274.95 less! (That’s roughly $3,850 if you are still with me.)

Next Time

We now have enough money in Euros to purchase the building (fingers crossed) and get us through 8-12 months. However, looking at the chart above, it would appear that I will want to keep an eye on the rate. Of course, no one can predict what the future holds. But this is once again a caution to those who are planning to move to Portugal hoping to stretch their retirement income. If you are renting and the rate goes from $0.83 to $0.78 your €1000/month rent will go from approximately $1,118 to $1,263.

And one last note, do as I say not as I do … take the time to learn how to use a money transfer service such as Wise, XE, etc. I am not sure why I continue to drag my feet on this. But after the past week, I can assure you our next transaction will utilize one of these services.