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Money Exchange: 8 Things to Know Before You Go

By Daniel Bortz
July 9, 2019
A pile of foreign currency
Roman Romaniuk/Dreamstime
Make the most of every dollar you spend when traveling internationally.

Traveling abroad? Nabbing a great exchange rate is one of the best ways to save money.

Unfortunately, many international travelers make mistakes when converting their dollars to foreign currency. But, with a little planning you can find a great exchange rate and make the most of every dollar you spend abroad.

Here are eight things to know before exchanging money overseas.

1. Check what the official exchange rate is before you go

This will give you a benchmark that you can use to compare exchange rate offers. To see what the current exchange rate is, simply Google “currency converter” and select the currency at your destination.

2. Avoid currency exchanges at airports

A big flub international travelers make is exchanging money at an airport. Sure, it’s convenient, but that convenience comes at a price. Indeed, exchange kiosks at airports tend to charge significantly higher rates, since travelers who just touched down at their destination often need local money ASAP. Some airport exchange centers charge as high as a 15% premium. Thus, your best approach is to exchange for foreign currency at a local bank or credit union before leaving the U.S.

3. Find a bank that doesn’t charge commission

Be prepared to shop around if you’re truly determined to find the best exchange rate you can get. Some U.S. banks and credit unions charge commission and extra fees when exchanging currency, while others don’t. Find one that’s going to give you a fair shake.

4. Consider withdrawing cash from an ATM abroad

Withdrawing money abroad using a debit card means typically you’ll get a better exchange rate than you’d get from a bank or credit union, a recent study from WalletHub of the most popular currency exchange services found. But, make sure you’re bringing a debit card with low international ATM withdrawal fees. This NerdWallet chart shows that the foreign ATM and debit card transaction fees are at more than 20 national and online banks. Some financial institutions (Alliant and Ally) charge fees as low as 1%.

Pro tip: bring a small amount of cash with you so that you have a little money to pay for any expenses you’ll have to shoulder before you can access an ATM, like taxi fare from the airport to your hotel. Also, don’t forget to notify your bank of your travel plans before you go—if you don’t, your bank will likely freeze your account when you start making withdrawals or purchases abroad.

5. Only exchange as much money as you’ll need

Ideally, you want to only get as much foreign cash as you need for your trip. Why? Because you’ll end up paying an exchange fee again to convert any money you have leftover back to U.S. dollars when you get home. Also, you don’t want to be carrying around a ton of cash; cash is untraceable, meaning if it’s stolen there’s no way to get it back.

Granted, this entails figuring out roughly how much money you’ll have to spend on your vacation. The best way to do this is to use a spreadsheet. There are a number of travel-budgeting spreadsheets that are available online for free. Our favorite is this easy-to-use template from Vertex42.com. As you enter your travel costs into the worksheet, the handy pie chart will show you exactly where your money is going based on spending categories (e.g., hotels, meals, flights). Pretty nifty.

6. Forget about using travelers’ checks

Though travelers’ checks were once a popular option for exchanging money, they’ve largely been replaced by debit and credit cards, especially those with no foreign transaction fees. Another reason to steer clear travelers’ checks: they can be a hassle to exchange, often requiring you to hunt down a bank at your destination that accepts them. And, FYI: many banks no longer accept travelers’ checks, and some banks charge a fee of 1% to 3% for cashing them. Also, fewer stores and hotels accept travelers’ checks than in the past.

7. Find out what form of money is widely accepted

How you pay for things while on vacation depends on where you’re going and what form of money is commonly accepted there. In some countries, such as Sweden, cash is on the verge of extinction, as more hotels, shops, and other merchants are only accepting debt or credit cards. However, in countries like Germany, cash is still king. Cuba, for example, doesn’t have the infrastructure in place for widespread acceptance of credit cards. (Also, American dollars are subject to an extra 10% fee in Cuba on top of all exchange rates!)

8. Use a credit card with no foreign transaction fees when you can

No matter how much research you do, chances are you’ll essentially “lose money” when exchanging dollars for foreign currency, since you’ll get hit what some type of fee. That’s why Bill Hardekopf, a credit expert at LowCards.com, recommends international travelers rely on a credit card with no foreign transaction fees when making purchases abroad, such as the Chase Sapphire Preferred card, Barclaycard Arrival Plus World Elite Mastercard, or United MileagePlus Explorer card.

The caveat? Because credit cards with no foreign transaction fees often have higher interest rates, they’re not right for everyone. “You shouldn’t have a rewards card unless you’re going to pay off the balance each month,” Hardekopf says.

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