International travel can be all sorts of complicated. Between not speaking the language and not knowing your way around, thinking of the best way to obtain local currency is probably on the back burner for many people. And the thing is, it’s not like exchanging money is that hard. The problem is, the easy ways are also the costliest. Let’s discuss some of the dos and don’ts of exchanging money in a foreign country.
Don’t Use Credit Cards to Withdraw Cash from ATMs
This is probably the most expensive mistake you can make. Withdrawing cash from a foreign ATM using a credit card comes with all sorts of fees: ATM fee, foreign currency conversion fee, bank fee and the worst of them all—high APR rates that start the moment you withdraw cash from a machine. I’m going to nip this practice in the bud right now and just say, “Don’t do it.”
Do Use Debit Cards That Charge No ATM Fees
A number of banks, such as Charles Schwab and Fidelity, issue debit cards that don’t charge ATM withdrawal fees. Furthermore, they reimburse the fees charged by automated teller machines, so you don’t have to lose money on every transaction. This gives you an opportunity to withdraw as little money as you need without being hit with ATMs costs every time.
Don’t Convert Cash with Exchangers That Charge Commission
You’ll notice this practice is especially popular in Europe. Not only is the exchange rate significantly below the bank’s rate for the day, but a currency exchange place will slap you with a commission fee on top of it. You might as well give your money to a homeless man standing outside the exchange kiosk.
Do Use Credit Cards That Waive Foreign Transaction Fees
If credit cards are a popular payment method in a country you visit, I recommend using one that waives foreign transaction fees to cover your spending. An average fee is 3% of your total charge, so this is a nice way to save money when traveling internationally. Just make sure to pay in local currency when settling the bill. Otherwise, you’ll be charged conversion fees by the merchant, which are sometimes higher than foreign transaction fees imposed by your bank.
Don’t Buy Foreign Currency from a Bank in Your Country
Your financial institution is able to obtain foreign currency should you order some bills before your trip. By doing this, you probably feel safe that you won’t be stranded or go hungry without cash in your pocket. However, your bank will sell you foreign currency at a less-than-favorable rate and make a profit on your precautions. It might seem smart, but I don’t recommend doing this. You’ll be better off exchanging a small amount of cash upon arrival at the airport.
Do Download a Currency Conversion App on Your Phone
Speaking of exchanging cash at the airport, although it’s not always the best place to do so, don’t be afraid to exchange some money. Make sure to cross check the offers with one of the many available currency conversion apps to ensure the exchange is fair and act based on the result. It might sound surprising, but a number of airport money exchangers offer competitive rates. For example, the best currency conversion rates that I saw on my three-and-a-half-week trip to Vietnam were at Tan Son Nhat International Airport in Ho Chi Minh City. Google also can help you find the answer by comparing the two currencies in question.
Do Carry Large, Crisp Bills on You
Depending on the country you visit, some money exchangers scoff at bills with folds or tears that have seen better days. For this reason, make sure the bills you carry into a foreign country are new and crisp. It’ll help you exchange them without much hassle. Additionally, large bills are in demand. I was able to get more local currency in Asian countries, such as Myanmar, Thailand and Vietnam, by exchanging $50 and $100 bills. Twenties and bills of lesser denominations weren’t worth the same.
What kind of money-exchanging and money-saving techniques have you learned while traveling?