Cheapest bank for depositing foreign check

theglobe

Hi! I normally use Bank of Ireland and the credit union but was quite surprised at how much they were charging when I tried to deposit a $ check today. Bank of Ireland would have charged around 300e and the credit union would have charged around 600e based on their exchange rates which seem to be badly skewed to turn a profit.

The actual cost to deposit the check was 15e in the Credit Union and 6e in Bank of Ireland. Which Irish banks would be cheaper if any? I'm happy to set up a new account in a bank as I will be cashing a lot of $ checks over the next few years. I appreciate the help, thanks!

coylemj

It might be worth your while to explore options that avoid getting paid with pieces of paper. Like getting the original payment transferred one for one to a dollar account in your name, then using an FX service provider to convert the money to EUR and transfer it to your Irish bank. Local banks and CUs may be useful as one-stop shops for banking services but they tend to be expensive for FX services.

Recent companies mentioned in threads here were CurrencyFair, Transferwise, Moneycorp. Check out what they offer, you may find they can get the money into your Irish bank with far less overheads.

theglobe

Great advice and I typically try to do that. These checks are IRS refunds and they're always paper cheques unfortunately.

Jim2007

theglobe wrote: »

The actual cost to deposit the check was 15e in the Credit Union and 6e in Bank of Ireland.!

Do you understand that a cheque must be physically presented at the issuing bank for payment? No bank is going to organise the shipment of a cheque to the US and it's delivery to a specific US bank for a couple of Euro... that is why the are looking for a larger fee.

theglobe

Jim2007 wrote: »

Do you understand that a cheque must be physically presented at the issuing bank for payment? No bank is going to organise the shipment of a cheque to the US and it's delivery to a specific US bank for a couple of Euro... that is why the are looking for a larger fee.

I have the IRS check on my person and am depositing it to a euro account in Bank of Ireland or the CU. I am not forwarding the check to America as my bank there is not allowing it.

I do understand there will be related costs but there was a pretty big difference between the CU and BOI so I want to see what other banks charge.

Yggr of Asgard

Don't you still have a US Bank account? They might allow you to deposit the check via mobile banking without the need to send it to them.

Also the IRS now allows direct deposit for tax refunds. So if you don't gave a US Bank account something like Transferwise borderless account would work.

theglobe

Yggr of Asgard wrote: »

Don't you still have a US Bank account? They might allow you to deposit the check via mobile banking without the need to send it to them.

Also the IRS now allows direct deposit for tax refunds. So if you don't gave a US Bank account something like Transferwise borderless account would work.

Yeah, I tried to talk with my bank in america but they only allow deposits of checks in my company name, not checks made out to me.

coylemj

theglobe wrote: »

I have the IRS check on my person and am depositing it to a euro account in Bank of Ireland or the CU. I am not forwarding the check to America as my bank there is not allowing it.

But what Jim is telling you is that the cheque has to be sent back to the US for clearing. What else can Bank of Ireland do with it?

theglobe wrote: »

I do understand there will be related costs but there was a pretty big difference between the CU and BOI so I want to see what other banks charge.

That’s because a CU is nothing more than a local savings and loan society, there is no way they can offer the service you’re looking for at competitive rates. The foreign (paper) currency they sell comes from Fexco in Kerry which means there’s two layers of cost needs covering, that’s why they’re more expensive than the regular banks.

Henry Ford III

€6 isn't too much.

Yggr of Asgard

Henry Ford III wrote: »

€6 isn't too much.

I don't think the OP has an issue with the 6€ fee but rather the exchange rate which will cost him 300€ against market rate with BOI and 600€ with his credit union.

theglobe

Yggr of Asgard wrote: »

I don't think the OP has an issue with the 6€ fee but rather the exchange rate which will cost him 300€ against market rate with BOI and 600€ with his credit union.

Yes, exactly! I am fine with the 6e charge

I also understand there is generally an additional charge against market rate but figured it might be 75-150e.

Tabby McTat

Not a hope of you getting anything close to a mid market FX rate on a cheque I'm afraid. As others have mentioned it's quite labour intensive for the bank to process so there isn't much room for negotiation on the rate. Also the cheque will be sent back to the US for clearing which often takes 3-4 weeks at least. You will get the FX rate on the say the funds have cleared rather than today's rate. The non bank providers of FX will have no interest in a cheque. You could always open a $ account with your bank and convert at a time of your choosing.

theglobe

barrac wrote: »

Not a hope of you getting anything close to a mid market FX rate on a cheque I'm afraid. As others have mentioned it's quite labour intensive for the bank to process so there isn't much room for negotiation on the rate. Also the cheque will be sent back to the US for clearing which often takes 3-4 weeks at least. You will get the FX rate on the say the funds have cleared rather than today's rate. The non bank providers of FX will have no interest in a cheque. You could always open a $ account with your bank and convert at a time of your choosing.

Understood, thank you. I think it would be interesting to research all the banks anyway to see what the best rate is. I'll report back my findings here.

Yggr of Asgard

theglobe wrote: »

Understood, thank you. I think it would be interesting to research all the banks anyway to see what the best rate is. I'll report back my findings here.

As you have a SSN or at least an ITN you could always open a US account with one of the challanger digital banks and cash the check digital there and than use transferwise or Revolut for the conversion.

theglobe

Yggr of Asgard wrote: »

As you have a SSN or at least an ITN you could always open a US account with one of the challanger digital banks and cash the check digital there and than use transferwise or Revolut for the conversion.

Good call. For every 15k exchanged Transferwise charge around $120. So if all Irish banks are significantly higher than that I'll look into this.

coylemj

theglobe wrote: »

Understood, thank you. I think it would be interesting to research all the banks anyway to see what the best rate is. I'll report back my findings here.

Rather than try to take a snapshot of their FX rates on the same day, it's better to do a calculation based on a comparison between their buy and sell rates which you can do on any day. What you need to do is divide the 'buy' rate by the 'sell' rate, that tells you the spread which is an indicator of their charges - the wider the spread, the more they're making on each transaction. Even if a bank advertises 'commission free' FX, it's the spread between buy and sell where most of them make their money.

Divide 'buy' by 'sell' and you'll get a number which is one followed by a decimal fraction. Get the square root of that number, the fraction following the one is the deviation from interbank, that's their profit margin.

So right now, AIB is advertising buy USD at 1.2106 and sell at 1.172. Divide buy by sell and you get 1.028. The square root of that number is 1.014 so their deviation from interbank on both buy and sell is 1.4% Do that calculation for any bank you're looking at, it wont vary at all much from day to day since it's a function of their profit margin, not the actual FX rate on the day.

theglobe

That is great, thanks! AIB seems to be a bit cheaper than BOI anyway

coylemj

theglobe wrote: »

That is great, thanks! AIB seems to be a bit cheaper than BOI anyway

It's not a totally foolproof system and I'm not suggesting that you only do business with the bank with the lowest spread, it's always worth comparing a few banks on the day. What it will help to identify are the banks with big margins that you should avoid. I suspect that your CU will fall into that category.

theglobe

coylemj wrote: »

It's not a totally foolproof system and I'm not suggesting that you only do business with the bank with the lowest spread, it's always worth comparing a few banks on the day. What it will help to identify are the banks with big margins that you should avoid. I suspect that your CU will fall into that category.

Makes sense. I should probably at least set up an account with AIB to give me options. Is it true what a poster said earlier about how I get the exchange rate on the day the check clears? I was told in the bank today I would get today's rate.

coylemj

theglobe wrote: »

Is it true what a poster said earlier about how I get the exchange rate on the day the check clears? I was told in the bank today I would get today's rate.

It isn't necessarily one or the other. It's possible that for cheques where the value is below a certain threshold and which are drawn on major US banks (so will clear in a reasonable timeframe), an Irish bank may rely on their own currency hedging and apply that rate when it's lodged. Whereas any other cheques go into the system and what the customer gets is based on the rate on the date it clears.

MrMusician18

PTSB were going to charge me €100 each to lodge dollar cheques.

Luckily for me I had relatives in the states that could lodge and do a cheap EFT for me, otherwise it wouldn't have been worth my while

theglobe

I checked with all banks today and AIB seems to be the best of the lot, slightly better than BOI but not by much.

All I can do is reactivate my AIB account and check both AIB and BOI on the day I'm depositing checks.

coylemj

theglobe wrote: »

I checked with all banks today and AIB seems to be the best of the lot, slightly better than BOI but not by much.

AIB and BoI typically do a 'Lanigan's Ball' type of dance with their FX rates. For over the counter notes, An Post is always in the middle.