Created an account to hopefully offer a more satisfying Option #3 from someone else living in the EU with most of her money in dollars! There are a couple of great free US debit cards that offer free ATM withdrawals from anywhere in the world. I’ll follow your lead and not name banks, but there’s a great one from a company that rhymes with Snarls Bob, and anyone is eligible to sign up. I highly recommend one of these for someone who travels abroad even occasionally! I can vouch that the exchange rate is market rate and there are no extra fees — you do get charged initially if the foreign ATM has a withdrawal fee, but at the end of every month Snarls Bob credits your account in one lump sum for all the fees you were charged over the course of that month. Customer service is also superb — they rushed me a new debit card at no charge to the middle of nowhere South America after I used a bad ATM that skimmed my number. But anyway, to pay my rent, I go to my European bank, use the US debit card to pull euros out of my US account, then immediately redeposit those Euros on the spot to my European account so I can transfer the rent. Easy, peasy.
A few minor fact-checking quibbles, the dollar/euro exchange rate can’t be 20 years old since it wasn’t launched until Jan 1 1999! And I do find it misleading when you say “banks love to use non-market exchange rates” and linking to a bunch of scandals that are really manipulation on a way larger scale. While some banks most certainly have manipulated currency exchange markets (which in turn manipulates exchange rates you see published), it’s not the same as a bank saying “oh, today we’ll charge Romie $1.15 for every Euro that she wants, even though the published exchange rate is $1.05.” That is illegal, and even if you don’t check your statements closely enough, I can assure you some people do and it would never fly!
One more big correction here: Romie, I noticed in response to another comment you said that you think even credit cards with no foreign transaction fees manipulate exchange rates to pad them in the same way retail stores/restaurants do when offering you the “favor” of converting to your own currency vs. using local currency. Not true! Always, always, always choose to be charged in the local currency of the country (in your case, Euros) and NEVER choose to be charged in USD. If you do agree to be charged in USD when they ask you and show you the “daily rate”, the issuer is allowed to choose whatever rate they want (and yes, it’s frequently inflated by 5% or more). Because you see the rate and agree to it, it’s allowed, and the retail store/restaurant/whatever actually keeps that extra amount after the bank takes the published rate for the day. This is why, unfortunately, if you don’t specify that you want to be billed in local currency, some places will run your card in USD without asking, claiming it’s more convenient for you when really they get to keep that extra money from the padded rate.
But, if you choose to be billed in local currency, your bank must use the average published exchange rate for the day (most banks use WSJ exchange rates) and are not allowed to choose whatever they want and pad your purchase (as I mentioned above). This is the case no matter what bank issues your card, and if you want to double check, you actually can do that pretty easily — most banks print the exchange rate used for every single purchase right on your credit card statement. While it might be a fraction of a cent higher than what Google might say for the day, it’s certainly not going to rip you off in the way that it does when you let the retailer effectively choose their own rate.