JOFTAA provided this useful information 9 years, 10 months ago:

For Those Keeping Track of the Less Than Stellar DoD Euro Exchange Rate

This discussion has been updated and is now located HERE. If you wish to review the older, outdated discussion, please continue below. Just keep in mind that the information below is outdated.



Preface:
I am coming back to this initial post because this topic ended up turning into a debate, when in fact there really was no reason to debate it. The information I am presenting is correct. The information is completely legal. The following information is not going to cause you any trouble. The following information WILL save you money. DcCow's assertion that this is fraudulent is completely wrong. The post located here is the definitive answer by the department that handles our reconciliations.

Here is the answer, as to whether what I am describing is legit or not. I hope this will settle this once and for all. ANSWER

Yesterday's DoD exchange rate was .6985 -- Capitol One's rate was .7230

Today's/Tomorrow's DoD rate is: .6985 -- Capitol One's rate is .7221

For those of you who don't want to keep throwing away your hard earned money by using the DoD banks on base, Capitol One offers a free online checking account with no international transaction fees, and ATM fees are reimbursed if you are charged. Being a member of the military is not required.

USAA has a similar account, but only for active duty.

Capitol One also offers a Visa Card with no international transaction fees.

This topic has been discussed, in depth, HERE, but it is worth discussing again.

By the way, if you want to know what the rates mean, here is a quick example.

If your rent is €1,000 this will cost you $1,459.85 at DoD banks using today's DoD exchange rate (at time of writing).

The same €1,000 will cost you $1,383.12 at Capitol One using today's exchange rate (at time of writing).

The difference is $76.73. Over $900 a year extra using DoD banks! It is your money. How long does it take you to earn $76.73? Why do you want to give it away?

Now, as discussed in the thread linked to above, when you pay your rent, you use your Capitol One account to get the money. When you are reimbursed for your rent, DoD pays you back at their rate. So, not only do you save money going in, but you make money on the reimbursement.

Note: I have been asked if I profit from writing about Capitol One. The answer is NO. I make absolutely NOTHING from telling people about Capitol One. I only speak of Capitol One because this is the card I have experience with. There may be other cards on the market that offer the same thing. Feel free to do your own research. USAA, for example, offers no international transaction fee and reimburses ATM fees, but only for active duty military. Capitol One's offer is for everyone. The idea behind these posts is not to get people to use Capitol One. The idea is to get people to understand that you can get a better exchange rate for your Dollar to Euro transactions than what is available with DoD.



9 years, 10 months ago

DoD banks....

9 years, 10 months ago

Tonight's rate: €430 = $600.90 which is .7155 from Capitol One

DoD rate for today is .6984.

This means to get the same €430 from DoD would have cost $615.

9 years, 10 months ago

Does the German bank charge a fee or percentage for taking money out?

Also where do you go to check the exchang rate for capitol one?

9 years, 10 months ago

Quote by arjoli:
Does the German bank charge a fee or percentage for taking money out?

Also where do you go to check the exchang rate for capitol one?


The German bank I use (Kreissparkasse) charges no fees at all as long as you have an account. Some of the banks have started charging fees. Opening the account is easy. Take your passport with you.

Capitol One uses the actual exchange rate, so you can check it at forex.com.

9 years, 10 months ago

But the account is with Capitol One, do thy charge you at the ATM for using your Capitol One card to take out Euro?

9 years, 10 months ago

Quote by arjoli:
But the account is with Capitol One, do thy charge you at the ATM for using your Capitol One card to take out Euro?


This is explained in previous posts, but I will review it again. Capitol One does not charge an ATM fee for using their card at any ATM. The only fee that might be incurred is from the non-Capitol One Bank where you use the card. Kreissparkasse does not charge an ATM fee for using their ATM either, so there is no ATM fee to worry about. Should you incur an ATM fee, Capitol One will reimburse you up to a certain amount. I think it is $10, but since I have never seen a fee, I don't remember.

What happens is when I take out Euro from the ATM at Kreissparkasse, I can immediately go home and login to my Capitol One Direct Banking account to see what the U.S. Dollar amount is for those Euro. Then it is easy to calculate what the exchange rate was for the transaction. It is ALWAYS better than what DoD is offering. Never, even once, has DoD had a better rate than Capitol One.

If you have a Kreissparkasse near you, just walk in with your passport and open an account. Deposit a few token Euro to keep the account active. There is a €6 annual fee if you want to have an ATM card with Kreissparkasse, but it is not mandatory.

I hope this answers your question.

9 years, 10 months ago

Ok I knew how most of it worked, but was not sure about the ATM charging a fee. I will be be opening an account, acutally 2 accounts with Capitol One tonight. They have a max withdraw amount and cannot overide it with a phone call, like USAA, but I can have 2 accounts sounds like alot of work, but really its not. I can use the extra 100.00 or so that I will save per month to offset these insane gas prices. Thanks for all your info!

9 years, 10 months ago

Quote by arjoli:
Ok I knew how most of it worked, but was not sure about the ATM charging a fee. I will be be opening an account, acutally 2 accounts with Capitol One tonight. They have a max withdraw amount and cannot overide it with a phone call, like USAA, but I can have 2 accounts sounds like alot of work, but really its not. I can use the extra 100.00 or so that I will save per month to offset these insane gas prices. Thanks for all your info!


That is a FANTASTIC idea! I never thought about having two accounts. For me, that is not practical, but it is a great idea for those who want to get all of their Euro in one shot.

Since the daily limit is $600, that is between €430-440 a day. As I said, I walk by the bank several times a day, so the minute to withdraw from the ATM and deposit with the teller is hardly a problem. For those who are not close to a bank, you would have to do this a few times a month to make it work (like I do), so having a second account might be worth it.

As you said, it really is not a lot of work for the extra $90 a month.

9 years, 10 months ago

When I was talking to Capitol One they said it was 600.00 per day, per card. Still not enough to get all for the rent, but the with the other account its not a problem.

9 years, 10 months ago

Quote by arjoli:
When I was talking to Capitol One they said it was 600.00 per day, per card. Still not enough to get all for the rent, but the with the other account its not a problem.


It takes me 5 withdrawals to get my rent and other utilities. The exchange rate does not change enough, day to day, to make a difference of more than a buck or two. For some people, this is not really a feasible option just because of the inconvenience. For me, saving over $1,000 a year is worth the 5-10 minutes per month.

9 years, 10 months ago

Let me get this straight. The Government gives me dollars to pay my rent. I make the exchange to Euro and pay my rent. My rent is the same ammount that I claimed and am reimbursed for.
Just because I choose not to use the DoD exchange rate to convert US $ to € does not constitute fraud.
Using the Fraud logic then the banks are defrauding the Government for not giving the actual exchange rate.

Regarding LQA reconcilliation you have 15 months to provide 12 consecutive months worth of bills. CPAC has a LQA section that will contact you (your wife in this case) with a notification to reconcile. JOFTAA if you need more information on this PM me.

9 years, 10 months ago

Another way to look at it is this. Suppose I exchanged my U.S. Dollars at a bank that had a worse exchange rate than the DoD banks. Would I then have a claim with DoD for the difference because I did not get enough Dollars from DoD to get enough Euro to pay my rent? I think not. It is a two way street. Just because I choose to obtain Euro at a better rate than what DoD provides, does not constitute fraud. Remember, it is DoD providing the exchange rate for Dollars to Euro. If they want to calculate using a rate that is not competitive, that is their prerogative. It is my prerogative to choose to use a different bank. I am still getting the same amount of U.S. Dollars from DoD regardless of where I do my exchange.

All that matters to DoD is that they are paying me the proper amount of U.S. Dollars for my rent and utilities. This is the case. There is no foul play. If DoD wishes to change their exchange rate, perhaps I will start using their bank. For now, while DoD is not being competitive, I will not use the DoD banks.

9 years, 10 months ago

Quote by -Lee-:
Let me get this straight. The Government gives me dollars to pay my rent. I make the exchange to Euro and pay my rent. My rent is the same amount that I claimed and am reimbursed for.



Lee, when you reconcile your LQA all your actual expenses are converted from Euro to dollars. The amount you are claiming is the actual amount you paid in expenses. If the dollar amount is higher because you used a different (more advantageous) exchange rate and do not disclose it – that would constitute fraud. Below is the statement you will sign during the reconcile process:

"The information given on this application is true and correct to the best of my knowledge and belief. I also understand that I am obligated to notify the authorizing office immediately of any change in conditions which may affect the amount of allowances and/or differential authorized herein. I also understand that false statements made to the United States on this form may subject me to criminal penalties (including fines and imprisonment) under 18 U.S.C. 287 and 1001 and/or civil penalties under 31 U.S.C. 3729 or administrative penalties under 31 U.S.C. 3802. I understand if my employment is terminated prior to liquidation of any of these advances, any outstanding amount is due and payable immediately."

Quote by -Lee-:
Just because I choose not to use the DoD exchange rate to convert US $ to € does not constitute fraud.


You are correct in as far as you go – but putting the extra money in your pocket and not disclosing such to the government does constitute fraud. Remember, LQA is a Tax Free allowance for reimbursement of actual expenses. Not a part of this discussion, but something to consider, if you are pocketing tax free money - there can be a tax implication if not reported on your taxes.


Quote by -Lee-:
Using the Fraud logic then the banks are defrauding the Government for not giving the actual exchange rate.


Oh, please, at least do a little research before spouting nonsense. DoD Community bank is contracted by the U.S. Government to provide banking services to DoD individuals assigned overseas. The government provides oversight to the rates the contractor charges – if you have a problem with the rates then file a complaint with the DoD IG Office. If you want to know why the DoD Community bank exchange rate is higher, then look here.


Quote by -Lee-:
Regarding LQA reconcilliation you have 15 months to provide 12 consecutive months worth of bills. CPAC has a LQA section that will contact you (your wife in this case) with a notification to reconcile. JOFTAA if you need more information on this PM me.


You are absolutely correct. Per Army in Europe Regulation 690-500.592 (which only applies to Army personnel). “When utility costs are based on estimates, employees will submit receipts for all utilities to the CPAC at the end of the first year, but not later than 15 months.” (Note: I’m an Air Force Employee and JOFTAA’s wife is a DODDS employee – so rules may differ).

I consider this as a theoretical debate and that no one on this forum is advocating defrauding the government by utilizing the method described by the OP without proper disclosure. If you are considering doing this, I highly recommend you seek legal advice from the base legal office prior to completing your reconciliation (hey,it is free!).

9 years, 10 months ago

If you want to know why the DoD Community bank exchange rate is higher, then look here.


From the link you provided:

The answer is the Community Bank Accommodation Rate, computations that result in a 2.5
percent increase to defray costs associated with providing exchange services to bank customers.

According to DFAS officials, the DoD Community Bank purchases foreign currency from in-country sources and delivers it to bank customers at its branches in Germany, Italy, United Kingdom, Netherlands, Japan, Okinawa and the Republic of Korea. The 2.5 percent exchange rate increase covers these expenses.


In other words, DoD Community Bank is incapable of providing exchange rates without a markup when other banks are. Or, put another way, DoD Community Bank wants to make more money, so they pad their exchange rate by 2.5%. I wonder, does Capitol One Bank not have expenses as DoD Community Banks do?

I think we all know the answer to this question. The answer is that DoD Community Bank (as well as the other DoD banks such as Service Credit Union) are making a huge profit off of their customers when providing currency exchange services.

It is interesting how a news release had to be published in order to try and convince people that it is OK to over charge.

I'm not buying the rhetoric.

Lee, when you reconcile your LQA all your actual expenses are converted from Euro to dollars. The amount you are claiming is the actual amount you paid in expenses. If the dollar amount is higher because you used a different (more advantageous) exchange rate and do not disclose it – that would constitute fraud.


The only person who mentioned fraud was you, DcCow. Nobody here is talking about defrauding the government out of anything. It really doesn't matter because DoD is not about to start telling people where to exchange their money.

The way it works seems pretty simple to me. DoD knows my rent is €100 per month (using a nice easy figure). They use their own rate, to their own satisfaction, and convert that to $143.16 and use that as their figure for reimbursement. If the person being reimbursed uses less because of a more favorable exchange rate, I highly doubt DoD is going to ask for that back. If they do decide to play it that way, what would happen is that instead of getting a better exchange rate, people could use their own bank, regardless of the rate, and then claim DoD owes more money because the rate was not good enough to be covered by the reimbursement. It would have to work both ways.

What I would suggest, if you are really worried about all of this, is to suggest to DoD that instead of having people pay their own rent, that the leases be given to the housing office, and DoD can automatically pay the rent to the landlords, thus keeping the entire process out of the hands of DoD employees. The leases could be signed by the housing office, paid for by the housing office, and this would streamline the entire process. Imagine the amount of paper work that would be eliminated by simply cutting out the thousands of individuals who are paying rent and then having to be reimbursed.

What do you think of that idea?

9 years, 10 months ago

Quote by JOFTAA:
I'm not buying the rhetoric.


I’m not saying you have to buy it. My point was in relation to Lee’s comparison to fraud because they charge a higher rate. You are always free not to use their services or file a complaint.


Quote by JOFTAA:
The only person who mentioned fraud was you, DcCow. Nobody here is talking about defrauding the government out of anything. It really doesn't matter because DoD is not about to start telling people where to exchange their money.


Yes, because your original post was that you can make extra money by utilizing an exchange rate that is more advantageous. Knowing your wife is a DODDS employee and receiving LQA – I was pointing out that making money from this allowance would be defrauding the government. Plus, a good majority of people visiting this site may also receive a like allowance. I want to make them aware of the implications of this.


Quote by JOFTAA:
The way it works seems pretty simple to me. DoD knows my rent is €100 per month (using a nice easy figure). They use their own rate, to their own satisfaction, and convert that to $143.16 and use that as their figure for reimbursement. If the person being reimbursed uses less because of a more favorable exchange rate, I highly doubt DoD is going to ask for that back. If they do decide to play it that way, what would happen is that instead of getting a better exchange rate, people could use their own bank, regardless of the rate, and then claim DoD owes more money because the rate was not good enough to be covered by the reimbursement. It would have to work both ways.


Okay, we are almost at the point of beating this to death!

In the end, the exchange does not really matter except as way to advance LQA. When your wife reconciles her actual cost, she is going to file a claim in dollars for actual reimbursement cost. If she used a more favorable exchange rate, then the amount she is claiming will be higher than actual cost (this is the extra money you are claiming to make). If she claims the dollar value based on the exchange rate from DoD, rather than the dollar amount from the actual exchange rate she used for the purpose of pocketing the extra money – then that would be committing fraud.

As I pointed out, for those of using LQA – it doesn’t matter what exchange rate we use – we are reimbursed dollar for dollar for housing and utilities (at least to our cap). Being reimbursed for anything else not authorized is illegal.

Quote by JOFTAA:
What I would suggest, if you are really worried about all of this, is to suggest to DoD that instead of having people pay their own rent, that the leases be given to the housing office, and DoD can automatically pay the rent to the landlords, thus keeping the entire process out of the hands of DoD employees. The leases could be signed by the housing office, paid for by the housing office, and this would streamline the entire process. Imagine the amount of paper work that would be eliminated by simply cutting out the thousands of individuals who are paying rent and then having to be reimbursed.

What do you think of that idea?


Good idea, though not really pertinent to this discussion. Probably deserves its own thread.

Quote by JOFTAA:
If they do decide to play it that way, what would happen is that instead of getting a better exchange rate, people could use their own bank, regardless of the rate, and then claim DoD owes more money because the rate was not good enough to be covered by the reimbursement. It would have to work both ways.


Sorry - didn't answer this before. I actually made a claim on what you are describing above. When advancing LQA, they use the previous two week average exchange rate, so it is possible to be overpaid or underpaid because of the exchange rate - though it normally will be pretty close.

I kept an excel database with all the amounts I actually received and paid (in dollars and Euros) and during my final reconciliation, my figures showed they owed me $30 more because of the exchange rate averaging. Since I had all the documents that are required (bills, bank statements) to show this, I was reimbursed that amount. Again, this is assuming that you are below your authorized LQA cap (you are not reimbursed for expenses above the cap).

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