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How to Exchange Currency While Traveling

A Currency Exchange counter in a train station.
June Marie Sobrito/Shutterstock

Going on a trip to a foreign country? You’re probably pouring over Airbnb listings and planning the meals you’re going to eat. But it’s equally important (although, less exciting) to plan how you’re going to get money on your trip.

Currency exchange requires some time and effort, so you need to plan if you want to avoid exorbitant fees or getting stuck without any money.

Here’s how currency exchange works, and what you should consider when you use it.

How Currency Conversion Works

Currency exchange is when you change your money from one currency to another. When you travel to a foreign country, you almost certainly need to exchange your money to a different currency.

Here are some of the basics:

  • All currencies have different values, which change daily based on inflation, economic stability, interest rates, etc.
  • When you exchange currency, you trade a certain amount of money in one currency for the equivalent amount of money in another.
  • Currency exchange rates are always changing. They vary day by day according to where you buy and sell your currency. Anyplace you exchange currency will have fees and rates. You need to research and understand your options, so you don’t get ripped off!

Things to Consider When You Exchange Currency

As mentioned above, there are several things to consider when you exchange one currency for another. Let’s take a look at some of the most important factors:

  • Fees: When you exchange currency, you usually pay a set fee. For instance, if you wire money to a foreign bank, you might need to pay a flat, one-time fee of $20. If an airport currency exchange teller converts your money, the charge might be 1 percent of your entire transaction. Think about how much money you’re exchanging when you assess the fees. For instance, if you exchange a small amount, a 1 percent transaction fee won’t be a lot. However, if you exchange a lot of money, those variable fees add up.
  • Conversion rate: These are almost always different from the actual rate of exchange. For instance, if the currency exchange rate is $1.25 per 1 euro, a currency exchange merchant might charge $1.265 per 1 euro. That might not seem like a lot, but it adds up—especially if you exchange a lot of money.
  • Convenience: Location is another thing to consider. Your bank might have the best conversion rate and the lowest fees. However, if it’s on the other side of town and you’re only saving $3, it might be more convenient to exchange at the airport. If you’re traveling to a place where currency exchange options aren’t readily available, it might make sense to exchange your money before you leave.

Best Exchange Options Abroad

A row of currency exchange ATMs in an airport.
JooFotia/Shutterstock

There are many ways you can exchange currency while you travel. Let’s take a look at some of the most common options, and some things you should keep in mind when you use them.

ATMs

ATMs are often the most time-saving and cost-efficient way to exchange your money. If you have a Visa or Mastercard, you can probably withdraw money from a foreign ATM while you travel.

However, withdrawing money from an ATM isn’t foolproof. Here are some things to consider if you plan to use this option:

  • You pay multiple fees. You pay a small flat fee just to use the ATM, and your bank might also charge a foreign transaction fee. If you plan to withdraw a lot of money from foreign ATMs, consider opening a checking account at a bank like Charles Schwab, which doesn’t charge transaction fees.
  • You have to find an ATM that accepts U.S. debit cards. Most countries with a lot of U.S. tourists have at least a few ATMs that accept U.S. cards, but definitely check in advance. In Japan, for example, the only ATMs that accept U.S. debit cards are in post offices and 7/11s. And if you’re traveling to a more rural country, just finding an ATM might be difficult.
  • Your bank might lock you out. Always let your bank know you’re traveling abroad, so it won’t lock your card when you try to buy something. Even if you let the bank know, you might still run into problems with your card, so it’s always good to have a backup.

Airport Kiosks

If you’ve ever been to any large airport, you’ve probably seen the kiosks that advertise quick and easy currency exchange. Unfortunately, these are often a huge rip-off.

While they’re convenient, airport kiosks usually have the worst exchange rates and the highest fees. We recommend you only exchange your money at an airport kiosk as a last resort.

Credit Cards

Credit cards are an ideal way to pay for things abroad because you won’t need cash as much. You can find many travel credit cards that don’t charge international transaction fees on purchases.

If you prefer cash, you can withdraw it as a cash advance from your credit card. Beware, though: most credit cards charge higher interest rates on cash advances, and there’s also usually a fee.

Cash Conversion

If you have access to cash, you can exchange currency at a bank or credit union. These institutions typically have the best rates and lowest fees.

Before you head to the bank, though, there are a few things you should know. First, not all banks offer a currency exchange service. Check with yours before you make the trek. Second, banks usually don’t have every currency available. If you’re traveling somewhere less common, your bank might not carry the currency you need. It’s best to call ahead and check before you go.

Best Exchange Options in the U.S.

If you come back to the U.S. with foreign cash, you can trade it back for U.S. dollars. You can exchange foreign currency at the following places:

  • Your bank: This is probably where you’ll get the best rate for your foreign cash. Remember though, banks don’t accept all types of currency, so check ahead before you go. The bigger your city and the closer it is to an international airport, the more likely it is your bank will exchange your money.
  • Airport kiosks: You might not get a great exchange rate, but they buy all kinds of currency at the airport. If your bank can’t help you out, there’s always this option.

If you’re going abroad, you’ll need to exchange your money. And with a little bit of planning, you can find the most cost-effective, convenient way to get foreign currency.

Hayley Milliman Hayley Milliman
Hayley is a former Teach for America teacher turned curriculum developer and writer. Over the past five years, she's written hundreds of articles on everything from education to personal finance to history. She's co-author of the book Museum Hack's Guide to History's Fiercest Females. Read Full Bio »

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