Cash or Credit Card comparison

[Dave Hounddriver]

2 minutes ago, OnMyWay said:

I have written before about Capital One having great exchange rates

That is a refreshing reminder.  I should try a similar experiment with my Capital One card.  I assumed that all credit cards would use the same exchange rate and that could be a false assumption.

6 minutes ago, OnMyWay said:

It would appear that your bank gave you a rate 2-3% lower than the XE mid-market rates of the last 7 days

It would indeed.  Few banks give the mid market rate so I gave it no thought.  It has been my experience that they buy at one price and sell at another price.  The mid market rate is the middle of the 2.  If the banks charge the mid market rate for transactions in both directions and do not charge a fee, how do they make a profit?

But I will try Capital One some day soon and see what the result is.

[OnMyWay]

26 minutes ago, Dave Hounddriver said:

It has been my experience that they buy at one price and sell at another price. 

Yes, correct.  The mid-market rate fluctuates all day long.  Add by edit:  I'm not sure how / when XE freezes their daily historical rate, but there is a GMT timestamp on each date, so that might be it.

Banks, Credit cards, etc. normally have a spread between their buy rate and sell rate, thus that is their transaction profit, in theory.  However there are many other ways it can be applied to credit card transactions that would amplify (or not) the transaction profit.  Perhaps they have a base rate (like I use XE) and then subtract X %.  Capital One may choose to subtract 0% on transactions because their business model makes money in other ways.

Edited February 27, 2018 by OnMyWay