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When planning a trip abroad, being able to pay for expenses is bound to be a primary concern. While using a credit card for your purchases can give you the best rate, we know it’s not always possible to pay with a credit card everywhere you go.
So, where is the best place to exchange money? Should you exchange money before you leave or while you’re on vacation? And what do you do with leftover currency when your trip is over? We’ll answer all these questions and give you some great tips for exchanging money on your next trip.
An exchange rate is the value at which one currency can be exchanged for another. Frequently, this value is variable and dependent on the market, but sometimes the value can be fixed, or pegged, to another currency.
Banks and currency exchange stores tack on some sort of charge in addition to the market rate, and these fees can vary significantly.
What does this mean for you? Your spending power on your vacation depends on the value of the U.S. dollar and the currency of the country you’ll be visiting. As these values fluctuate over time, planning a trip when the dollar is favorable can benefit you. Also, where you choose to exchange your money matters!
You have the best opportunity to get the best exchange rates before you ever leave home.
The best place to exchange money is at your local bank or credit union. You will get the best currency exchange rates as rates will closely resemble the market rates, with only minimal added costs added on.
You’ll obviously need to do this before you leave unless your bank has an international presence in the country you’ll be visiting, so plan ahead!
Hot Tip:Before you head over to the bank, give them a call to see if they have your desired currency on hand. Depending on the currency you need, you may have to order it in advance. If it’s a common currency, sometimes banks will have it available immediately.
The pro of exchanging money before you leave is that you can hit the ground running when you arrive. You can also generally save some money if you get the money from your bank or credit union.
Knowing your destination’s currency conversion in relation to U.S. dollars is important! We recommend using an offline currency conversion app, such as Currency (iOS) or Currency Converter Plus (Android). You can also just plug it into Google, but it is helpful to have access abroad even if you don’t have an internet connection.
You might be tempted to exchange money at the airport before you leave, but we generally recommend against this. Airport exchange kiosks and stores are convenient but also tack on big fees and unfavorable rates. This can end up costing you!
You might not need as much cash as you think. Most places accept credit cards, and then you could be stuck carrying excess cash around (and exchanging it back). Try not to take out more than you need.
Regarding traveler’s checks, while they have been popular in the past, they have fallen out of favor. It is increasingly difficult to find a place that will cash them — if your bank even offers them. We don’t recommend exchanging money for traveler’s checks as credit cards (and even debit cards) offer a level of security once only provided by traveler’s checks.
If you’ve already left home and need some tips on exchanging currency, we’ve got you covered!
If you’re wondering how to get local currency when traveling, the easiest way is by using your debit card at an ATM. It’s best to use your bank’s ATM network in order to avoid fees, but any ATM will work. These fees generally range from 1% to 3%. There are cards that will waive (or reimburse) international ATM withdrawal fees, though!
Try to limit your withdrawals and take out the maximum you think you’ll need each time, as there are per-transaction fees as well (generally about $5). In addition, if you’re planning to get money out abroad, knowing your ATM limit is important. You can call your bank to request an increase if it is low.
Also, consider using your credit card when you travel abroad. Most stores and restaurants accept credit cards, which is the easiest and most convenient way to get the best currency exchange rate! Just be sure to select “local currency” and not “pay in U.S. Dollars.”
If you’re looking for a card with no foreign transaction fees, consider popular rewards cards like the American Express® Gold Card or the Chase Sapphire Preferred® Card. Both cards also offer a ton of other valuable travel-related benefits!
Whatever you do, don’t get money from a foreign ATM using your credit card. This is considered a cash advance — the fees can be high, and the interest begins to accrue immediately.
Also, we don’t recommend using those currency exchange stores and kiosks (i.e. Travelex) you see at the airport, hotels, and other major tourist destinations. While they might seem convenient, the rates are not favorable, and the fees are much higher than other options.
For example, let’s say you have $100 to exchange for euros and the current market rate for the exchange is €92.64. Your bank might offer you €92, while a currency conversion kiosk might offer €87. Extra fees could also be tacked on that eat away further at your exchange’s value.
If you have some leftover cash, you’ll likely want to convert it back into U.S. dollars. The best way to exchange foreign currency for U.S. dollars will be at your bank or credit union. Unfortunately, they may not buy back all types of currency.
Those currency exchange stores and kiosks we advised against before might be a good option for less-common currencies. The fees are higher, but at least you won’t be stuck with currency you won’t use again!
Another option might be to donate currency to UNICEF’s Change for Good. American Airlines offers envelopes on its planes and at its Admirals Club and Flagship Lounge locations, but you can also mail currency to the following address:
Change for Good
UNICEF USA
125 Maiden Lane
New York, NY 10038
While exchanging money for cash is a good start, having a good plan in place for all your international spending is important. That’s because it’s just not feasible to pay for all your large expenses (such as hotels, train travel, etc.) with cash. Here is what we recommend:
Where you choose to exchange your currency can have an impact on how much money you’ll receive. The best rates are found at banks and credit unions. Even if you exchange money when you’re abroad, you can save money by using your debit card to take cash out of an ATM. Be sure to bring cards that are meant for international travel and you’ll be sure to save!
For rates and fees of the American Express® Gold Card, click here.
The best method of currency exchange is using a credit card with no foreign transaction fees to pay in local currency. If you want to use cash, exchanging cash at a bank or credit union will be your best option.
There is no way to exchange currency without fees. Banks will always charge some marginal rate to process your transaction. The best way to exchange currency by limiting your fees is at your bank or credit union.
While it can be cheaper to exchange money at your bank before you leave, you might be tempted to exchange too much cash. In this case, it might be better to use your debit card to take out cash from an ATM while you are abroad as you need it.
Unfortunately, when it comes to exchanging currency, it will always cost some money. There are ways to limit how much it costs, including exchanging the currency at your bank or using a credit card with no foreign transaction fees.
Using a credit card will get you the best possible exchange rate, so we recommend using a credit card when you can. There are some instances that it is just more convenient to have cash (such as a small purchase with a local vendor). Having a good way to access both methods of payment is important when traveling.
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After having “non-rev” privileges with Southwest Airlines, Christy dove into the world of points and miles so she could continue traveling for free. Her other passion is personal finance, and is a certified CPA.
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