How do you access money when you’re in a foreign country? Some people carry large amounts of cash, which isn’t recommended for the obvious safety and security reasons. Other people use traveler’s checks, though these are becoming less-widely accepted around the world. Some rely on plastic, both for card purchases and cash withdrawals and some travelers might make arrangements to have money wired to them regularly.
For most travelers, especially those who are traveling long term, getting the best exchange rates while traveling is a major concern. Nobody wants to pay more for getting their hands on their own cash!
Know the Exchange Rate
You’ll only know if you’re getting a good deal if you actually know what the relevant foreign exchange rates of today are. Do note that the exchange rates fluctuate so, if you’re on a longer trip, check regularly. Don’t rely on the rates stated by money exchangers; they’re simply the rates that they will buy and sell currency for, not necessarily what the rates of exchange actually are.
Avoid Changing Money at Exchange Kiosks
The easiest way to lose out is to change money at a booth or small exchange kiosk. Such money changers generally do not offer good deals when it comes to the exchange rate. Although sometimes you may not be left with many other choices, if you must exchange cold hard cash, try and find a larger bank or post office. Don’t be sucked in by “no fee” exchange counters; they can afford to offer fee-free transactions because they make so much on providing a low rate of exchange.
Compare Exchange Rates
Always check the rates offered in a few outlets if you need to exchange cash; not all establishments give the same rate. When you know what the exchange rate is, it is easier to find somewhere that offers close to the official figures. You might need to visit a few outlets to get the best exchanges rates while traveling, but the effort can be well worth it when it comes to getting more bang for your buck.
Check Rates for ATM Withdrawals
Generally, you’ll get the best exchange rates when abroad by withdrawing funds from your bank account directly from an ATM. You will likely get hit with bank charges, which can mean you spend more to access your money, but the rate of exchange is often very reasonable. Plan before your trip and open an account with a bank that has international partners and / or does not charge hefty fees for overseas withdrawals. This way you can get the best exchange rates and also avoid high foreign transaction fees. Remember, the best bank for banking while at home won’t necessarily be the best bank for you when you travel.
When it comes to getting cash from an ATM using your credit card, however, the situation is very different. You will probably still get one of the best exchange rates, but the large fees do not balance out and make it worthwhile. In addition to fees for using a foreign ATM you will likely be charged a large foreign transaction fee. On top of that, the interest rates for cash advances are usually a lot more than interest charged on credit card purchases. Cash advances on credit cards should only be used as an absolute last resort.
Use Credit Cards for Significant Purchases
Unlike accessing your day-to-day funds, credit cards can be a good option for making larger purchases overseas. You may consider using your credit card for booking expensive flights, paying for a long-term room and similar. You’ll benefit from a good exchange rate and, despite the foreign transaction fees, your credit card can yield a much better deal than obtaining cash in another way. Some credit cards charge low fees, and others may not charge anything; plan ahead before you travel to get the best credit card for foreign use. Conversely, using a debit card for purchases in a foreign country is not recommended.
Tip Regarding the Best Exchange Rates
Sometimes, you might not actually need to exchange currency. For example, if you are from the USA, there are several countries in the Americas that will accept US dollars with no extra charges or inflated prices. Do be cautious, however, when you are able to pay in your own currency; compare the prices in your own currency against those in the local currency. If there’s a significant difference, consider paying to exchange currency. If the difference is negligible, though, you may be better off simply paying in the currency that you already hold in your hand.
Exchange Rates Summary
• Using a debit card for ATM withdrawals typically gets you the best exchange rates.
• Don’t withdraw cash from ATMs using a credit card.
• Credit cards can be ideal for large purchases.
• Don’t make purchases using debit cards.
• You should avoid small money changers.
• If you need to exchange currency, use a large bank or post office.
You’ll probably be using your smartphone or other mobile devices to check your bank and transfer money online too while traveling; make sure you protect your devices! Getting the best exchange rates while traveling may sound complicated to begin with, but it will soon become second nature when you’re on the road. While you’ll be unlikely to ever be able to exchange for free, changing your money does not need to be that costly.