What Your Bank Won't Tell You About Currency Conversion

Traveling abroad isn't cheap to begin with, so it's doubly painful when converting currency starts to add up—if you're not careful, you could lose up to 22¢ for every dollar. Here's what you need to know to protect your purse.

Buy Traveler's Checks
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How it works Travelers' checks function just like U.S. dollars, except they can be replaced if they're lost or stolen. Once you get to your destination, you still have to find a place that will exchange the checks for local currency, and you'll pay any associated fees, which can add up to $9 per check. Bottom line: Not convenient. $100 buys 63.11.
Best for Those who don't want to use credit or ATM cards or carry large amounts of cash. Also, if you're worried about theft and loss, this option comes with peace of mind—if, for example, your American Express traveler's checks are stolen, the funds can be replaced anywhere in the world and usually within 24 hours.
Exception! If you're going to China, traveler's checks are an excellent value. Fees are low, and the exchange rate is regulated by the Chinese government, making this one of the safest and most inexpensive ways to exchange U.S. dollars for yuan (especially in more rural locations, which are less likely to have ATMs).

Buy a Prepaid Foreign Currency Card
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How it works Launched by foreign-exchange company Travelex in 2007, these cards can be used just like credit or ATM cards, but travelers preload them with a set amount of euros or British pounds (the only two currencies available for now). This seemingly nifty convenience comes at a cost—numerous fees (for withdrawals, inactivity, and to close the card) and restrictions (withdrawal minimums and limits per day). One plus: If the card is lost or stolen, Travelex will replace it; however, the company won't refund the money lost, and it will charge a fee for the replacement card. *$100 buys 68.34.
Best for Purchases big or small (it works as a debit or credit card would).
Exception! Though not very flexible, this option would work nicely for those on a set budget or for those who are sending kids off on a European vacation but don't want to hand over a wad of cash.

Foreign Exchange Desk (Airports, City Centers, Hotels)
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How it works Most international airports have at least one foreign-exchange desk where you can swap U.S. dollars for the local currency. You hand over your dollars; the clerk deducts fees—sometimes up to 20 percent! You can also exchange American cash for local currency at your hotel; commissions and rates there will vary widely. Some currency-exchange desks located in city centers offer better rates than the ones at airports, but proceed with caution: Even those that advertise 0 percent commissions probably have hidden fees. $100 Buys 59.65.
Best for At this rate? Save it for emergencies.
Exception! None—with all the other options available for exchanging currency, we say avoid this scenario.

*All calculations were done on the same day and are based on the interbank euro to dollar rate of 1.2994. Exact figures will vary depending on the situation.


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Note:This story was accurate when it was published. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.

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