When traveling abroad, you are likely to need at least a small amount of the local currency. Even in countries where you can use a credit or debit card for your purchases, you will need some cash for tips, cabs, and as an emergency in case you lose your credit or debit card. And if you are traveling to a country where cash is the preferred payment method, you will need to bring even more. Unfortunately, the process of exchanging currency can be confusing – and expensive. So before taking your trip and going to a currency conversion shop when you get there, consider these tips.
Ask Your Bank – When it comes to currency conversion before your trip, your local bank is probably your best bet. They can usually order just about any currency at a reasonable rate with only a few days’ notice. This allows you to get the currency you need safely at a rate you can compare, with no fees. If your bank doesn’t offer this service, or their exchange rates are high, check competitor banks in your area for a better deal.
Find Out the ATM Policy – Every bank is different, but talk to your bank about how they convert currencies at the ATM in a foreign country. Try to get a debit card which offers free currency conversion and free ATM withdrawals outside of the United States. If they don’t offer that, find out if there is a partner bank in the other country where ATM withdrawals will be free of charge.
Avoid Exchanges at the Airport – Currency exchange at the airport is usually very expensive and does not offer favorable rates. You are paying more for convenience, so try to avoid that whenever possible.
Avoid “No-Charge” Currency Exchanges – When abroad, you will find currency converters who claim to offer “No Charge” for the exchange. These shops generally convert at rates worse than anywhere else and can wind up costing you more than the ATM would have.
Avoid Currency Conversion on Purchases – Many stores will allow you to make purchases in either the local currency or US Dollars. Always opt for the local currency. You know what your bank’s conversation rates will be, however, you can’t control the conversion rates or fees of this third party company doing the conversion.
Use an ATM – If all else fails and you need cash, use an ATM, preferably one that is affiliated with your bank. This ensures you will get a decent rate and there will be no hidden fees. Most banks will have an option to avoid all fees while abroad, so try to understand those options, then use them.
In the end, worrying about the best conversion rates should not consume your thoughts on your trip. But by following these tips, you won’t return home after the trip having spent more than you planned because of bad conversion rates or excessive third party fees.