One of the first things you should do before going on a trip abroad is to know what local currencies you will be using and the corresponding exchange rate. If you are going to Europe or an Asian destination, then make sure that you have an idea on how much your whole trip will cost so you can prepare on the currency that you need to exchange when you get there.
Do Research on the Local Currency of the Country before Leaving
There are many options when it comes to exchanging your money. If you do not want to use the local ATM, at least have a knowledge of the local currency before arriving. You must know the conversion rate from dollars to Euros when heading to France or Germany, or the amount that you will most likely receive when exchanging 100 US dollars in Hong Kong.
If you research ahead, then you will be able to save time and minimize trouble. Having an idea of the exchange rate will also guide you in choosing the best place to exchange currency when you arrive in your destination country.
Best Places to Exchange Currency Abroad
- Getting Money from the ATM
This is still the best place to exchange currency and the cheapest option when exchanging money abroad. Even if the bank will charge you with a foreign transaction fee around (3% or less), you will still get the best deal and the conversion will be exact as compared to unreliable exchange kiosks in airports and tourist centers. Getting local money from an ATM makes you avoid carrying too much cash around. If you are traveling to a remote place with no ATMs available then make sure you have enough cash to get around before heading off.
Tip: Before leaving home, ask your bank for a list of their local bank partners in the country where you are headed. The rationale for this is that affiliated banks will charge a lesser fee compared to banks that are not part of their network. Do not forget to inform your bank as well that you will be traveling and the countries you will be visiting.
- Using your Credit Card
The good thing about using your credit card in a foreign country is that these purchases are exchanged using the interbank exchange, which is pretty much the best rate you can get. Some credit cards will charge you with currency conversion fees every time you make a purchase in a foreign currency. Visa and MasterCard will usually charge 2-3% from your card, but you have to remember that such fees are lower than those charged by money-changing agencies.
If you are traveling to Europe, most automated ticket machines in roads and toll ways would require a chip-and-PIN card (a card equipped with a chip that requires you to enter a PIN number to make a purchase). Most US credit cards and debit cards do not issue this kind of card so you might not be able to use them in ticket machines in Europe.
The downside of using credit cards is that not all establishments will accept them as payments particularly small restaurants, souvenir shops and resorts in isolated areas that do not have facilities for such mode of payment. It is best to use your card only for large purchases such as hotel bills, airline tickets and car rentals.
Tip: Inform your credit card company that you will be traveling. Be specific about the countries you will be visiting, so that they will not assume that your card was stolen or compromised upon unexpectedly seeing a notification that you used it in a restaurant in Hanoi when you told them that you would visit LA. The bank may freeze your card. As a result, you will find yourself stuck abroad with no funds to spend. Before leaving for your holiday, notify your bank or set up an online notification that you will be overseas.
- Use Travelers Checks for Emergency
Keeping a stash of traveler’s checks during your trip can be a lifesaver during emergencies when you can’t find an ATM or when you have used up all your cash. They are also more secure to carry than a wad of dollar bills and you can replace them within 24 hours when lost or stolen.
The disadvantage of using this is the exchange rate may not be the same as the interbank exchange rate you will get when using your credit card. You will also be charged a lot of fees on top including commissions and conversions. When you are planning to go to Asia, American Express Travel Checks can be exchanged in banks throughout the region.
Tip: You may also use travel cards that work like travel checks since they are prepaid and you can use them in the same way as a debit or credit card. Companies such as Visa and Travelex offer this type of card.
- Exchange Currencies at the Bank vs. Airport Kiosks
Most travelers upon arriving to the airport will have their currency exchanged at the exchange booths. While this is safe, you will not get the best deal since their exchange rates are usually low. You may get better exchange rates at the bank, which is one of the best place to exchange currency, or at reliable money-changing agencies in the city. So, think twice before exchanging cash at the airport. Try to go to the nearest bank or a money-changing bureau that can offer you a better deal.
Tip: Avoid exchanging currencies at tourist areas because there are many shady dealers in these locations who are ready to take advantage of your dollars.
In discovering the best place to exchange currency for your trip abroad, always remember that it really depends on what country you will be going to since the currency exchange rate is different for each. Availability of banks and ATMs may also vary depending on the location.
Most countries will have a bank or ATM in each block but for rural areas and island nations, this situation may be different. A smart traveler will do his homework first by knowing the local currency, exchange rates, credit cards accepted and availability of ATMs. There is no reason not to be prepared when going on an overseas trip.