How To

The Best Ways to Exchange Currency Abroad

You might have experience booking hotels, planning rental car pick-ups and purchasing the cheapest flights within the United States, but when you travel abroad, you have many more things to take into consideration, especially when you’re budgeting. The main concern: Currency exchange. If you’re going to a country that uses another currency, it’s important to know the best ways to exchange without getting hit with fees or losing a ton of value in the process. Here are all the ways to exchange currency while abroad and the details of why you should.

ATMS

Avoid or Use: Use

Why: Debit cards often get you the best deals when used at ATMs and when you withdraw via a debit card, you are able to take out a high quantity of money, which lowers your rate and allows you to pay fewer transaction costs, according to MSNBC.

What to be aware of: MSNBC also advises you to let your bank(s) know you’ll be abroad. If you don’t, they might assume the card has been stolen and freeze your account. Also, Rick Steves says in his European money travel tips to avoid ATMs that aren’t bank ATMs, as any other type will most likely charge extremely high fees.

FOREIGN BANKS

Avoid or Use: Use (sometimes)

Why: Exchanging at foreign banks is better than exchanging at airports or train stations (as explained below), but there are sometimes better options (like using an ATM or even sometimes checking out currency exchange businesses).

What to be aware of: USA Today says the fees that come along with in-person bank transactions are generally more than at currency exchange businesses, so check those out first and scope out the area for any bank ATMs nearby before you head into the bank. However, The New York Times quoted Tom Meyers, the editor of eurocheapo.com, who said, “European banks’ rates are generally lower than other commercial exchanges.” It seems this advice may differ according to what country you’re in.

CURRENCY EXCHANGE BUSINESSES

Avoid or Use: It depends on the following factors.

Why: USA Today also mentioned that currency exchange businesses compete with each other when they’re in busy tourist areas, so negotiating a better rate or lower fees is usually possible.

What to be aware of: That said, it might not always be that easy to make a deal in areas that aren’t major cities, so it’s always best to know the exchange rate before comparing the businesses’ offerings and those of local banks, hotels, etc., so that you know where to get the best deal and can avoid getting ripped off.

AIRPORT EXCHANGES

Avoid or Use: Avoid

Why: Airport currency exchanges have high fees, according to bankrate.com. The same goes for train stations and probably any other major transportation destinations where people can be entering a country.

What to be aware of: Bankrate suggests looking around for an ATM before settling for the airport’s currency exchange. They can come in handy, though, for small amounts of exchanges so that you can get by in the first few hours.

HOTEL EXCHANGES

Avoid or Use: Depends

Why: Sources don’t always match up about this topic, potentially because the hotel currency exchanges vary too much from hotel to hotel and from country to country. The MSNBC information previously mentioned in this piece says that hotels and banks tend to offer better prices than local exchange booths, so opinions differ. Your hotel might actually have a good rate comparatively.

What to be aware of: The same NYT article previously mentioned has Meyers’ opinion on hotel exchanges, as well, and he says they tend to have bad rates and high fees. The important thing to keep in mind is that every area will be different, so compare rates and choose what’s best.

CONCLUSION

While there are some general rules of thumb when it comes to choosing a currency exchange location, it’s always best to do research and look into the area you’ll be staying at. If you trade Forex online, then you may have some knowledge on exchanging currency.  Compare the rates when you arrive at your destination, especially when it comes to the differences between hotel exchanges and general exchange businesses. Regardless of where you get the money, it’s advisable to withdraw or exchange a decent amount so that you can minimize the number of fees you have to pay.

“The Best Ways to Exchange Currency Abroad” was written by Kelsey Libert on behalf of UFXMarkets.