5 Ways to Save When Converting Currency

Foreign Currency

My souvenir and future-trip stash

When you’ve taken the time to pinch your pennies for an upcoming getaway outside the United States, the last thing you want to spend your money on is surcharges and fees during currency conversion. Since you’ll want to spend your money on the actual trip, I’ll offer some advice when it comes to traveling to locales that don’t except the ol’ Greenback.

Avoid airport and train station currency exchange counters
If you are unfamiliar with these greedy, red and blue monsters, currency exchange counters are small booths within airports and train stations that will trade your money to Euro, English Pound, Swiss Francs, Austrailian Dollars, Chinese Yuan or any other desired currency. Currency exchange counters have the worst rates.  If you absolutely must use a currency exchange counter, choose a bank at your destination. Wherever you are, exchange only enough money to aid your immediate need and then find an ATM, pronto.

The ATM is your best bet if you need cash abroad
Most debit cards can be used internationally to withdraw money in local currency. The exchange rates given by banks tend to be better than those at currency exchange counters, and the fee your bank charges you for your transaction (typically 1 – 3 percent) will also usually be lower than exchange counter transaction fees. To avoid excessive fees, take out large amounts of cash at a time and store the excess in a money belt or hotel safe. I prefer to withdraw the cash I need for the next few days, or country I’m in, if on a multi-leg trip. I’ve also found it interesting that ATMs in Europe do not charge you when you withdraw money. So, if you are one of the lucky ones whose bank doesn’t charge you a fee for foreign ATM withdrawals, this is a great option to have cash in hand. Also be sure to check with your bank on the maximum amount you can withdraw in a 24-hour period.

Use your bank card for purchases
My preference is to not exchange my money at all prior to travel, including at my personal bank. If you go in-person to your bank to exchange U.S. dollars for foreign currency, you will likely be charged a convenience fee on top of the exchange rate. I found this to be the case with my bank. Check with yours to find out their convenience fee.

If your bank card is a Visa or MasterCard, you’ll find most restaurants, hostels, hotels and attractions will accept them. Some banks charge a foreign transaction fee for purchases on top of the exchange rate. Check with your bank to be sure. Using your bank card reduces the amount of cash you need to have on hand. For many, that’s a great sense of security. If you prefer to keep some cash on you, see above.

Avoid fees altogether by using a credit card with no foreign transaction fees
I love using my Capital One Credit Card when traveling to another country because there are no foreign transaction fees. The charges on my card reflect the exchange rate, and it sets my mind at ease knowing it’s not a bloated rate seen at many currency exchange counters. I also avoid the withdrawal and purchase fees associated with my bank card.

The list of cards that have eliminated foreign transaction fees is growing, and using the right card can save you money on your vacation. Here are some options:

  • Capital One offers several cards including some with no annual fee
  • Chase: Sapphire Preferred Card, British Airways Visa Signature Card, Hyatt Card, Priority Club Select Visa Card
  • Citigroup: ThankYou Premier and ThankYou Prestige Cards
  • American Express: Platinum and Centurion Cards

The point of the credit card is not to make purchases beyond your means. Only spend the amount you have budgeted, so that you can pay off the card when you arrive home. If you have more money budgeted for your trip than your credit limit allows, use the credit card’s website to make same-day payments.

An analysis by Cardhub showed that using credit cards with no currency conversion fees saves you an average of 7.9 percent when compared to exchange rates offered at banks and 14.7 percent when compared to airport exchange services. Even if you use a card that charges the fee, you’ll save 4.9 percent and 11.7 percent on average, compared to banks and airport currency exchange services, respectively.

Keep any remaining foreign currency when you return home
If you are budgeting your daily money well, you won’t have a lot of cash left over. At the end of the trip, keep what ever bills and coin you have. Rather than incur a currency conversion fee twice, keep it as a souvenir or use it on your next trip. Always assume you will go back!


Got your own suggestions to share? Post them in the comments!


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