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2 years ago

How a Charles Schwab debit card works

2 years ago
I often read information on forums such as this related to financial dealings which simply is not true. I'm going to take a few minutes and explain one topic in particular - using a Charles Schwab debit card in Mexico.

If you have one of those cards pull it out and look at it. Notice VISA printed on the front of the card. It is VISA that sets the exchange rate you will receive for your purchase at Costco (or visit an ATM) when you use that card. Has nothing to do with Schwab.

VISA has a "Currency Exchange Rate Calculator". You can find it on this website :
https://www.visa.com.pe/content/VISA/usa/englishlanguagemaster/en_US/home/support/consumer/travel-support/exchange-rate-calculator.html

Notice on the bottom of that page the words "Rates apply to the date the transaction was processed by Visa; this may differ from the actual date of the transaction". What that means is that if you wake up in the morning and the dollar is strong against the peso - you likely will NOT get that exchange rate in the end. It may be better and it may be worse. It is not the day spend money at Costco or visit the ATM, it is the day the event is posted in VISA's books.

AND Visa is in business to make money. They adjust their exchange rate based on what happens in the currency markets - or even better - what they perceive might happen, You can use that calculator several days in a row and notice the rate quoted does not change yet when you look at Yahoo Finance at USD/MXN there are changes.

You might get lucky and you might not.

I no longer have a US address and so my account at Schwab is International. That means I can't do some things the rest of you US residents can - like have a Schwab Bank account. On the positive side all my ATM charges are reimbursed immediately.

Now go back and look at that calculator again for a moment, Where Schwab is really helping us out is in that "Bank Fee" field. With Schwab you can set that to zero, Other institutions may charge as much as 3%.

I hope I explained myself clearly.

By the way - because I am not a resident of the US, Fidelity will not even issue me a debit card - but I believe it works the same with them.

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