If you're a seasoned traveler, you know that you can make or break a trip based on how much foreign currency you have in your pocket – and where you got the best rate on it! With that in mind, it's important to know where you can turn to get the best rates and how to trade in and exchange currency once you get there.
Not all of us are involved in some businesses or trade where currency rates relate to our daily work, but that vacation date is upon you, and now it suddenly matters a lot. Many of us are forced into the world of currency exchange as soon as we start planning for that holiday abroad.
This leads to unending search results and the stress of those currency exchange calculations and related market conditions. The fees vary, and you fear making a bad decision and losing money. Not the anxiety cocktail you want at this point, right? All you need are some good travel tips regarding the currency exchange services available.
So, where should you get your dollars exchanged? Let’s break it down and see the options to get and exchange foreign currency and which method can save you all those extra fees.
Where to exchange foreign currency
Local banks
Hands down, banks and credit unions are the best options to get your currency exchanged with minimum to no fees. You can buy foreign currency from most major U.S. banks without costing you more than the exchange rate. You can obtain your intended currency orders from your local bank or even get the currency delivered to your doorstep via online banking or phone. Some U.S. banks have "sister banks" abroad that don’t charge fees for use. You should always check with your bank before you depart, to be sure.
Some less-used currencies might require you to give a few business days' notice to the bank for arrangement. Also, remember that banks mostly offer bills and don’t provide foreign coins. Watch out, as many U.S. banks usually have a lower limit on how much currency they exchange for free. For example, a bank may require you to exchange a minimum of $1,000 for waiving its fees. If you only need $650, you will end up paying unwanted charges for the exchange.
Plus, banks declare one exchange rate per business day rather than fluctuating with the market. This can sometimes get you a slightly more expensive rate if the currency exchange market via other financial institutions or currency bureaus suddenly becomes favorable the same day.
Related: What Is a Multicurrency Account?
Exchange firms
Exchange firms or foreign exchange bureaus can be a good option for some quick cash. Firms like Travelex do not require you to order currencies in advance and will even deliver the money to your home or the airport. Apart from online orders, branch locations for exchange firms, many found at international airports, may be a little cheaper. Some companies even buy back unspent currency for no additional charges.
Currency exchange firms all have service charges, and you have to check and compare their charges before choosing who is providing the best deal. You also may be bound to buy certain minimum amounts to save extra fees.
Airports
In case you couldn’t get some currency exchanged before flying. Airport kiosks or currency exchange counters may get you out of that desperate situation.
While kiosks or currency exchange counters at the airport may look convenient, they typically offer the worst currency exchange rates. You may also pay higher currency conversion fees if you use airport kiosks. Unless it’s a desperate situation, avoid using kiosks and currency exchange counters at the airport to save your hard-earned money.
Cards and ATMs
Your debit or credit card is a decent backup option when short of local currency. Most merchants and businesses abroad easily accept debit or credit cards. You may also use your cards to withdraw money from ATMs. If you frequently travel, getting a credit card with no foreign transaction fees can be of great value. Many credit cards also offer reward points you can utilize on the next trip. Cards save you from carrying too much cash, minimizing risk as it can be easily lost or stolen. Cards may also provide fraud protection and insurance and typically offer a more competitive exchange rate than your ATM options and currency exchange stands.
While using your routine bank ATM card or a credit card, banks in foreign countries may often be free to use, but if they aren't a partner to your U.S. bank, you may end up paying service fees that could cost you more than what you expected. Often, you will be charged a foreign transaction fee, which makes you pay an extra 1 to 3% in bank charges. Also, U.S. debit cards, especially ones that don’t have the EMV chip, may not work in Europe, Asia, or Latin America.
International banking apps
Frequent travelers can rely on
international banking apps like TransferWise (now known as Wise), Revolut, or Bunq. With these, you can manage multiple currencies and even use wire transfer options to manage your finances.
However, be careful. Technology disruptions, internet access, or connectivity problems could leave you in a bit of trouble if you rely on banking apps to solve your currency exchange issues in a foreign country. Unsecured or public networks can also pose the additional risk of hacking or fraudulent access to your app account.
Online marketplaces
Sometimes, people who still carry foreign currency from their recent trip abroad are willing to sell it through online marketplaces like Craigslist, eBay, or Facebook Marketplace. You can often find good deals as you avoid fees and maybe even make the exchange at competitive exchange rates without any markups.
Without the knowledge and understanding of calculating exchange rates, this can be a difficult option to navigate. Though, if you want, you can use
online currency exchange rate calculators. Since this may be a one-to-one exchange with a random person, there are risks of fraud. Make sure to exchange the currency in a public place; having somebody with you is best.
FAQs
What is currency exchange rate?
It is the value of one country’s currency compared to another. Exchange rates can fluctuate at any day and at any time.
What is the best source to get your currency exchanged, and when?
The best source, as we mentioned above, is your local bank or credit union. You will find them to be the cheapest and most convenient. The best time to exchange the currency is before leaving so you can stay hassle free regarding your trip.
Do U.S. banks also exchange foreign currency?
If you have some foreign currency left with you, some banks might exchange it for dollars. However, you generally will need to get dollars first before you can deposit that money into your account.
Why is the bank not offering the currency I need?
You will find that banks in the U.S. offer a list of currencies for exchange. If you can’t find the currency you need, you might want to check with another bank that does.
Can I sell U.S. dollars to foreign banks?
Yes, you can, as many international banks exchange your dollars for the currency of your country of visit. However, it is best to learn about those banks beforehand.
How can I avoid excessive fees and charges?
There are many ways to do that as we have discussed the pros and cons of each method available to you. Some best practices may include getting your currency exchanged from your local bank before leaving; paying in local currency at your destination; knowing your banking and ATM fees along with withdrawal limits for any desperate times; and staying clear of the expensive routes identified by us for currency exchange.
The bottom line
Understanding currency exchange options and associated fees is essential before traveling if you want to save money. Try to learn more about foreign transaction fees, ATM withdrawal limits, and other aspects of paying in foreign currencies to help you save money and enjoy your trip.
