If you have a PayPal account that you regularly use for collecting payments, and your main home currency is not US dollars, you would do well to read on.

Not too long ago, I had written about biding your time to get the best exchange rate possible when transferring your money from PayPal to your bank account. Soon after that, I discovered that there is another area of optimization which we should be aware of.

My home currency is the Euro, so my bank account uses Euro by default. Online I collect payments in USD since that’s the de facto currency on the web. That means that when it’s time to get the gold home I am subject to conversion rates when changing from USD to Euro. This is precisely where many people lose a good chunk of money, so you have to be careful.

Since your bank account is in Euro and your PayPal account is in USD, a conversion needs to take place. Now it’s a well-known fact that PayPal currency conversion rates aren’t the best; they incorporate quite a healthy profit for themselves here. So it might actually be better for you to let your bank handle the conversion at their exchange rates.

All you need to do is check out your bank’s exchange rates, make your calculations on how much Euro they would give you for a given amount of USD, then compare it to what PayPal would give you via their currency converter.

Beware also that some banks charge an extra fee for currency conversions. My bank charges around 1 Euro each time there is a conversion.

If you establish that it would indeed be beneficial for the bank to handle the conversion, you can change your PayPal account from being Euro-based to USD-based via this link.

Setting the currency to use when withdrawing money

On a related note, you can check the net amount you will receive from a PayPal money transfer via this PayPal fee calculator. Sadly, it appears that the calculator’s formulae are a bit out of date as the net amounts didn’t exactly correspond when I tested it on my account.

Note that if you have a Europe-based USD bank account, you will not be able to send USD directly from PayPal to that USD bank account. There will always need to be a conversion happening on the bank’s side, and the money will then go to your Euro account. You can try your luck with linking a multi-currency account like Wise Borderless to go around this issue, but it doesn’t always work.

As a test, I made a few transfers of $2,500 to my Euro-based bank account just to test the difference in money between using PayPal’s exchange rates and those of the bank.

Here are the results:

• $2,500 converted to Euro by PayPal: €2,171.92
• $2,500 converted to Euro by my bank: €2,216.06

Crazy huh?

More than €44 difference on each transaction!! That’s around 2% more added cost on each transaction. Keep in mind that PayPal is already charging you $2.50 per transaction as a fixed fee.

It definitely works better for me to use USD as my PayPal account currency, then withdraw directly in USD to my credit card. Note that changing your withdrawal currency has to be done manually by following my guide.

Timing Your Withdrawals Right

Make sure you choose the right time to make the withdrawals, I show you how to do that on this post.

Note: If you have any questions after reading this and the several other articles relating to PayPal on this site, please leave a comment or contact PayPal directly. Unfortunately, due to time constraints, I am unable to offer any advice over email so all emails related to PayPal will remain unanswered.

This is a post for all those of you who don’t have a US-based bank account but work online and receive payments via PayPal.

At some point, you will want to transfer your PayPal funds to your local bank account so you can withdraw and use your hard-earned money.

However, you could be making a fundamental mistake during the process of withdrawal. Actually, I’ve been doing it myself for many years. I felt really dumb when I realized.

By the way, did you know that you can now buy Bitcoin and cryptos with your PayPal account on eToro? Read my guide to buying crypto with PayPal to find out how.

As you know, exchange rates are always fluctuating, so your aim is to get the best deal when transferring money from PayPal to your bank account.

Let’s say we want to transfer US dollars to Euro, which is what I do every so often. What I do nowadays is to first check the exchange rate, and also historical rates via this website. That gives me an idea if today is a good day to make the transfer or not. Looking back at the historical rates of the past 3 months, I then decide on a target rate I want to aim for. At present my target rate is 1 USD = 0.78 EUR.

Historical exchange rates

With that figure in mind, I then head over to XE and set up email alerts. Now as soon as the exchange rate climbs to 0.78 I will immediately get an email and that’s when I will make my withdrawal from my PayPal account to my local bank account.

Setting up email alerts for my desired conversion rate

When2convert is an excellent service in my opinion, because it automates the whole thing and makes it very easy for me. Before I used to check the exchange rates every couple of days (every day is just too tedious), and sometimes I used to miss a good day. So I knew I need an automated shortcut of doing this checking. Luckily I found this site, and I hope you find it useful too.

Update: I found a similar tool (also free) at https://www.specificfeeds.com/Free-Forex-Signal-and-Exchange-Rate-Tracker and there you can not only define strike prices, but you can select to get updated every time the EUR/USD rate changes by 0.02 points or so, so that it’s not a one-time notification, but you always know if there have been significant changes without spending too much time to checking it every couple of days.

Another option is to just withdraw every month on a specific day, and in this way you eliminate the hassle of trying to time the forex market to your benefit. You might lose out sometimes, but it might be more important for you to have money coming in on a regular basis, so you have to factor in the pros and cons.

Do you have any other related tips you’d like to share? Let me know in the comments section below!

Note: If you have any questions after reading this and the several other articles relating to PayPal on this site, please leave a comment or contact PayPal directly. Unfortunately, due to time constraints, I am unable to offer any advice over email so all emails related to PayPal will remain unanswered.