RAJAF at http://tntdinar.boardhost.com/viewtopic.php?id=7480&p=3
When it comes to something like exchanging currency from another Country into US Dollars, the Public is charged the Service Fee of around $15 as well as the Spread Fee on each unit of the currency exchanged.
When Bank Personnel tell you “We will not charge you a fee if you have an account with us” they are talking about that $15 service fee only.
For these examples, we will use the US Dollar (USD) as the currency and USA as the Country in which you are located, and the Kuwaiti Dinar (KWD) as the foreign currency being exchanged for or into US Dollars at a US Bank.
The KWD is considered to be an “Exotic Currency” just as is the Iraqi Dinar (IQD), whereas currencies such as the Canadian Dollar (CAD) is not considered to be on the exotic list of currencies in the USA (and visa versa), the CAD is known as a “Popular Currency” and the spread fees reflect the difference on these two currency classifications greatly.
At the moment I wrote this, one CAD dollar (as listed at xe.com) was valued at $1.02015 USD, and the KWD was valued at $3.59712 USD.
Using the Wells Fargo Bank Web site currency chart at http://www.wellsfargo.com/foreignexchange
(Click on “ORDER FOREIGN CURRENCY then click on the TODAY’S RATES Tab to access the rates page and charts) we can see that they will ‘sell to you’ CAD and KWD (Click on the ALL CURRENCIES Tab to see the KWD), and it is easy to calculate what the spread fees are using this page and comparing the rates to the actual value of the currencies shown at:
Again, at the moment I wrote this, one CAD dollar (as listed at xe.com) was valued at $1.02015 USD, and the KWD was valued at $3.59712 USD, and on the Wells Fargo chart these two currencies are listed at what they will sell them to you at; 1- CAD at $1.0232 USD and 1- KWD at $4.0846 USD
1- CAD at $1.0232 USD minus $1.02015 USD (actual value) = $0.00305 USD (Spread Fee)
1- KWD at $4.0846 USD minus $3.59712 USD (actual value) = $0.48748 USD (Spread Fee)
See the difference?
- Wells Fargo will charge you $0.003 US-Cents (under 1/3 of a US-Cent) to buy 1-Canadian Dollar from them
- Wells Fargo will charge you $0.49 US-Cents to buy 1-Kuwait Dinar from them
At smaller or State Only Banks, these Spread Fees are even greater; for example, when the First Convenience Banks in Texas were buying and selling the KWD currency the spread fee they were charging was about $0.60 US-Cents to both Buy and Sell the KWD through them, and the spread fee they were charging was about $0.06 US-Cents to both Buy and Sell the CAD through them.
This is part of the reason you want to deal with the Big-4 Banks instead of the smaller or State-only banks.
The Big-4 Banks are: Bank of America (BOA), J.P. Morgan Chase (Chase), Wells Fargo (WF), and Citibank (Citi).
NOTE: the rate example below is based on a rate of $3.60 (not the $20+ we are expecting within the US).
Upon revaluation of the IQD most expect the value will be close to the KWD, so let’s start doing some math with the Wells Fargo $0.48748 USCent
Spread Fee and for example purposes let’s say that 1- IQD revalues at $3.60 USD…
If you have 100,000 IQD, to exchange that many IQD with a spread fee of $0.48748 US-Cents per 1-IQD you would be paying $48,748.00 to Wells Fargo to change your IQD into USD
- That’s $487,480.00 in Spread Fees per 1-Million IQD!
100,000 X $3.60 = $360,000.00 (Nice Profit for You!)
100,000 X $0.48748 = $48,748.00 (Nasty Bank Fees!)
You receive $311,252.00 after paying the Bank’s Spread Fees…
- This is also the number you will be taxed on.
It is these ‘Spread Fees’ that you can get some Banks to forgive or cancel
- But only if you ask them to forgive them.
NOTE: The United States Treasury (UST) also charges a spread fee on foreign currency exchanges done at all Banks, and Banks can NOT forgive or cancel that spread fee. The UST spread fees are between 1% and 1.4% – That equals between $0.036 cents and $0.0504 cents using the $3.60 IQD example above.
At $3.60 per 1-IQD, 100,000 IQD = $360,000.00 X $0.036 (1%) =
$3,600.00 (UST Spread Fees)
At $3.60 per 1-IQD, 100,000 IQD = $360,000.00 X $0.0504 (1.4%) =
$5,040.00 (UST Spread Fees)
Certainly a lot nicer than paying almost $50-Grand in Bank’s Spread Fees huh?
I requested that he show us the spread fees of the Kuwaiti Dinar, and he did, with the buy rate showing a 43-cent per 1-KWD spread fee at (one of the Big-4 banks), and he then brought up a Wells Fargo page that showed their spread fee and it was 3-cents more at almost 47-cents on the KWD.
Well, now you know that my Banker friend is a Manager at one of the other Big-3 Banks, and that Wells Fargo has higher fees than the Bank he Manages, and this is what is meant by “Shop around at the banks for the best rate before you cash-in.”
This is where we want to save – Taxes are inevitable, so do not look to reduce the taxes, look to reduce the spread fees that banks charge. This is where you will save money, and here’s how you do it…
Every single Branch Manager is able to remove the spread fees up until the UST spread fees.
The UST spread fees of a currency’s value is hard coded into their systems – The only way to possibly get rid of that fee would to do your exchange directly with the UST, of which of course none of us can or will be doing.
Every Bank Branch Manager can do this – You only need to ask.
And if they say “no” you simply tell them “Thanks very much I’ll take my business to a different Bank and Branch Manager that will, thank you.” – They will make the deal with you, Folks, you just have to ask them, and with knowing all this ‘Public Information’ you are empowered to talk with any and every Branch Manager – There are no secrets to any of this and it is all just that simple.