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Are You Losing out from PayPal’s Exchange Rates?

Last updated: January 11, 2019100 Comments

currency conversion

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.

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

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 Sadly, it appears that the calculator’s formulae are a bit out of date as the net amounts didn’t exactly correspond when I tested it on my account.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.

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.

This is post 2 of 17 in the series “PayPal”

How Startup Funding Works – Infographic

Last updated: October 16, 20183 Comments

Having bootstrapped all my business ventures to date, I lately had a curiosity to find out exactly how startup funding works. Luckily, I found this great infographic which really made the whole concept very easy to understand. I’m considering getting some funding for a particular idea I have, and this infographic helped me see the big picture.

how-startup-funding-works-infographic

Do You Make This PayPal Currency Conversion Mistake?

Last updated: January 11, 201933 Comments

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.

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 OANDA

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.

When2Convert Currency converter and email alerts

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.

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

This is post 1 of 17 in the series “PayPal”

The Shocking Truth about Online Airline Ticket Prices

Last updated: October 16, 20183 Comments

Online air ticket prices

As you search for the cheapest air ticket to your next travel destination, did you ever wonder what dark forces are at work behind your browser window?

Apparently, airlines sometimes use some shady tactics while delivering the price of a ticket to you, as indicated in a thread I came across recently on Reddit.

Basically what happens is that airlines will try collect as much data about you as possible, sometimes through the use of a cookie stored on your computer, and sometimes just from your IP address.

If using the IP address method, they can serve different prices depending on your location. The logic in this is of course that in general, a person accessing the site from the US is more likely to have a higher disposable income than another accessing the site from India. I’ve personally seen this happen when comparing ticket prices with friends overseas while we chatted on Skype. The prices given to us (in the same currency) were indeed different.

With the cookie method, a website can track how many times you’ve checked a particular trip, if they see that you are checking frequently for the same flight, they might start hiking up the price by a few dollars each time, instilling a sense of urgency in you, and thus being in a better position to make you buy the tickets. I guess most of us know that bad feeling when you see a cheap ticket and make up your mind to buy it, only to go back again in a few days ready to purchase, and find out it’s now double the price or more.

This isn’t something that is guaranteed to always happen, but it’s a good idea to take precautions against such manipulations by not allowing cookies when searching for tickets. The easiest way to do this is to open an incognito window in Firefox or in Chrome. These windows won’t store any cookies so the airlines can’t play their nasty tricks on you. Clearing your cookies before a browsing session won’t hurt either.

Have you encountered such practices yourself?

When to Buy

Everyone knows a last-minute plane ticket is probably expensive, but how far in advance do you need to purchase a ticket is a little less known.

According to a study by Cheapair.com, the best window of time to purchase a ticket in 2017 was 70 days in advance, a bit higher than the sweet spot in 2016 which was 54 days. However, that 70 was an average. The “best” time to buy actually depends on the season when you plan to travel.

In winter you want to try for 62 days in advance, spring 90 days in advance, summer 47 days in advance, and fall 69 days in advance, on average. And as for that theory that there’s a best day of the week to buy—CheapAir says that’s not really true. Airfare during the week traditionally doesn’t fluctuate more than $2 from day to day, so you’re fine buying a ticket any day you want.

When it comes to when you fly, there is a difference. The cheapest days to fly are Tuesday and Wednesday, while Sunday is the most expensive.

Affiliates vs Referrals

Last updated: October 16, 20185 Comments

Here’s a really neat infographic I came across on the Get Ambassador blog, it clearly shows the difference between affiliates and referrals, and why they are both important. I hadn’t really thought of the ‘referral’ concept before, and always categorized any type of recommendation into the ‘affiliate’ box.AffiliateVsReferral

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Jean Galea

Online Entrepreneur. Global Citizen. Padel Player.
Founder of WP Mayor & WP RSS Aggregator.

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