Exchanging Your Money Abroad: 10 Simple Tips

Posted by Doug Stallings on February 15, 2014 at 2:59:00 PM EST | Post a Comment

One question I see a lot in the user forums here on Fodors.com is how best to get foreign currency when traveling abroad. When I first started traveling abroad, there were two basic choices: take and exchange cash or take and exchange traveler's checks. I usually did the latter. How times have changed. Now, anyone younger than 25 might look at me with a raised eyebrow if I mentioned a traveler's check. But the question still persists. With bank fees rising every year and exchange rates seemingly in constant flux, what's the best way to change your money? There are many threads on this subject in our user forums. Here are some simple rules to follow.

Ten Simple Rules for Exchanging Your Money

1. ATMs are still the best choice for day-to-day funds.

Although some banks have high fees to use foreign ATMs, not to mention adding on high foreign-transaction fees (Bank of America, for example, charges $5 per withdrawal plus 3% premium on top of each withdrawal at a non-partner ATM), the ATM is still almost always the cheapest option for changing your money. And if your bank has international ATMs or partner banks abroad, you can sometimes save a little on your cash withdrawals; that's true even at BOA, which charges just 1% at member banks and no other fees. Capitol One Bank charges nothing for a foreign ATM withdrawal, while other banks such as Chase charge 3% on top of every withdrawal as well as a $3 fee. It pays to shop around for a bank if you travel a lot internationally.

2. "No-fee" bureau de change are usually the most expensive places to change money.

When you see a sign that offers "no-fee" currency exchange, be sure to check the rates. You'll notice that they are almost always significantly worse than what you'd get if you had simply taken money out of an ATM. It's a good idea to keep up to date on the latest Interbank rates (the rates banks pay for foreign currency) to find out if you are getting a good deal. A web site like www.xe.com can give you those rates, which change daily. At best, you normally pay between 4% and 9% of the total amount you are exchanging to change money into a foreign currency, and this cost is usually built into the bad exchange rate. You pay again to change your euros or pounds back into dollars, so think carefully how much cash you actually need on a day to day basis.

3. If you need a lot of cash, ask your bank to raise your daily withdrawal limit.

Say you are renting an apartment for a week in Rome or Paris and you need a lot of euros at once to pay the landlord, your bank may be able to raise your daily withdrawal limit temporarily to allow you to withdraw much more money than you would normally be allowed to take out. ATMs may have smaller withdrawal limits, but you can make multiple withdrawals from the same ATM or from several ATMs in that case. If you can't get enough cash to pay for a week in advance, perhaps your landlord will allow you to pay in several installments throughout your stay. If you have a traveling companion, you can both withdraw cash to make the initial payment.

4. Never take a cash advance on your credit card except in a dire emergency.

If you take cash from a foreign ATM, you will pay a fee; you'll be charged a percentage on top of your withdrawal as a foreign-transaction charge; and you will start to pay very high interest (sometimes up to double the regular interest rate you are charged on your credit card) the moment the cash reaches your hands. It's a pretty bad deal. Avoid it at all costs unless you have no other choice. Bank of America has pretty egregious fees, as posters in our forums have found.

5. Use credit cards for large purchases.

Most credit cards charge a foreign-transaction fee of between 1% and 3% whenever you buy something abroad, but this is still the safest and often the cheapest way to make a large purchase. You'll almost always come out ahead on the conversion since credit cards add their fee on top of the Interbank rate. So you are almost always getting the best possible rate of exchange even though you are paying a fee. (And some banks, like Capital One, still do not charge anything extra for foreign purchases beyond the 1% that Visa and Mastercard charge; some credit unions also have very low fees, though membership in credit unions is usually limited.) Other banks, including Citibank, really gouge consumers by charge a 3% foreign-transaction fee even if the purchase is made in U.S. dollars.

6. Avoid dynamic currency conversion.

If you are ever given the opportunity to charge your purchase abroad in U.S. dollars, decline. In fact, you should insist that you be charged in the local currency. So-called dynamic currency conversion not only offers lousy exchange rates, but it also includes hidden fees, and your own credit card will charge you its own foreign-transaction fee on top of the cost of the purchase. In effect, you will be paying double the fees and getting a bad exchange to boot. You might pay a 10% premium for a purchase. Here is one discussion of the process from our forums. Just remember, you are always charged a foreign-transaction fee by your credit card company (if it charges such fees) whether your purchase is made in dollars or foreign currency.

7. Don't make purchases with your debit card abroad.

It's very simple. Use your debit/ATM card to make cash withdrawals. Don't use it to make purchases. If something goes awry, your account will be debited immediately for the purchase; even if you return something for a refund, your account may not be credited for several days (perhaps for more than a week if the purchase is made abroad). If a sales clerk makes a mistake, it could take several days for an erroneous charge to be credited back to your account. With a credit card, you might never notice that a particular charge has appeared and disappeared because it will never show up on your statement. But it's different with a bank account. The money actually disappears and may not come back for several days even if it's an error or even if a transaction is cancelled. You might need that cash in the meantime.

8. The Chip-and-PIN situation in Europe.

Most European countries now offer credit and debit cards with a computer chip that requires a PIN to activate and make a purchase. This is especially common in automated ticket machines in Europe, even on European toll roads. If your credit or debit card doesn't have a chip and PIN (hardly any U.S. credit or debit cards do), then you may not be able to buy a ticket from a machine with your card. Although both Visa and Mastercard promise U.S. cardholders that their cards are usable anywhere in the world where they should be accepted with just a signature, you may still have some occasional problems in Europe using your card. Posters in our user forums have discussed this issue here. The subject was also covered earlier this year on SmarterTravel.com.

9. Traveler's Checks are a good fallback in an emergency.

Although the predominance of ATMs has made some people feel that the simple traveler's check is a relic of a bygone era, it can still be a godsend in an emergency. It's true that few places in the world still accept traveler's checks as payment. Normally, you must change them in a bank and will be charged a hefty fee for the privilege (though in some destinations like Mexico, it can be difficult to find a bank that will exchange your traveler's checks). But if you can buy your traveler's checks without paying a fee, they are a good fallback as an emergency stash of cash. And if you have American Express checks, they can still be cashed in an Amex office abroad. While these aren't as prevalent as they once were, they are still found all over Europe and in many other countries.

10. A Ben Franklin is also a great emergency reserve.

A crisp, new US$100 bill is also a good fallback as an emergency reserve of cash. While I would not travel abroad with a big stack of cash, having a single $100 bill somewhere separate from your other travel money is a great idea. Even if you lose substantially on the currency exchange, it's a currency that's accepted worldwide.

Doug Stallings
Senior Editor, Cruises and Resorts

A native Kansan, I moved to NYC after college, found a job through the Village Voice, and realized I'm a city person. I live on the Upper East Side and love Central Park, though not as much as my dog.

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Posted in Travel Tips

Member Comments (26)  Post a Comment

  • roadmamask on Jun 27, 14 at 08:04 AM

    Typo....not debut but debit card. Did not try to use card n train ticket machines just used with the ticket agent once.

  • roadmamask on Jun 27, 14 at 07:57 AM

    We just returned from a trip to Paris with a side tour to a couple of other towns in France. I used my stripe and signature card without any problem. The only time there was an issue was when my son was told a restaurant had a minimum of 16 euros to use the credit card. We also used the striped debut card in ATMs without a problem. We were using Capital One cards.

  • grankin on May 29, 12 at 01:57 AM

    Magnetic stripe cards are utterly useless in the Netherlands in ATMs or ticket machines. This was true i October of 2011. Both require chip & pin. At least they can be used to buy stuff.

    Who has attempted to use a chipless US debit card for cash withdrawals from an ATM in France recently? Did it work?

  • BittenByTheTBug on Apr 11, 12 at 06:42 AM

    In doing research for our trip, it appears those who live the UK have more options for reasonably priced currency exchange than those of us who live in the US do? (i.e. - order online and pick up at airport, order prepaid cards etc.) In fact the United States American Express Travel Services web page doesn't even mention foreign exchange, whereas the U.K. version does, front and center. I plan to use my debit card anyway but I'm still curious as to why there is a difference. Anyone know the reason for that?

  • 0428 on Apr 9, 12 at 10:44 PM

    We've just returned from Italy (March 2012) and can report that we had no difficulty anywhere using a US credit card, with no chip and pin technology, The only place we found that needed a chip and pin card were the automatic ticket machines at the train stations. Bank of America is affiliated with BNL bank in Italy. If you use your B of A debit card in a BNL ATM machine, you are not charged the $5.00 transaction fee that you will be subject to if you use your B of A card at any other bank's ATM. You are, however, charged a 1% 'conversion fee.' I didn't realize that we could have used our Capital One card at any ATM with no fee! We used it exclusively for all purchases.

  • Mikifanti on Mar 3, 10 at 06:23 AM

    the tip with the pre-payed card is good!! you can upload it whenever you want with the amount you want. I found it out when I was in Australia, bank commissions are much lower compared to those charged when using normal credit cards.

  • antormarchi on Feb 27, 10 at 09:44 AM

    To carolynbpriest, I would check your credit report maybe there is some fraud someone opened up something, because I just applied and have excellent credit as well, and have never been late on any payments, and got approved. Warning on pre paid cards, not accepted in some places and cannot use in some ATM's over seas, research on that. There are some good applications to download on smart phones that keep an up to the minute current exchange rate.

  • Ray_B on Feb 22, 10 at 06:42 AM

    I came across a site a few weeks ago, I think they are pretty new as I've not seen them before http://www.currencyexchange-uk.co.uk which offer independent comparisons and recommendations with regard to currency exchange. I've also used http://www.mytravelcash.com before and was impressed. I now have a pre-card card which I can upload when heading on my travels.

  • carmar on Feb 20, 10 at 10:36 AM

    We use our Costco Amer. Express whenever we can in Europe and they charge 3% conversion rate but give us back 2% on travel. With all the money we spend overseas, what's 1%! We also always carry US cash and bring back any leftover Euro for our next trip which I keep as emergency money. An ATM is the way to go for walking around $$.

  • MusiCelt on Feb 19, 10 at 05:20 PM

    Thanks, Doug... and everyone else! This is very helpful to those of us who seldom go abroad. I'm going to Great Britain this summer, and -- being a good Scot -- want to get the most for my money. Thank you.

  • tapata on Feb 19, 10 at 03:21 PM

    Good idea about the cash emergency reserve, but I suggest putting aside 5 x $20 bills rather than 1 x $100 as many places will not accept a US $100 bill.

  • jahlie on Feb 17, 10 at 01:52 PM

    Thank you for the information about dynamic currency conversion fees. I had no idea and from now on I'll stick to local currency only.

  • BuffCrone on Feb 17, 10 at 01:50 PM

    Travelex used to offer very competitive rates and low fees (including overnight delivery) of Euros on the Internet. Now they have stopped. There is no place for me to exchange Euros in my city. Does anyone know why Travelex stopped doing Internet exchanges?
    Also, if you are near a Travelex store, they currently have a coupon that waives the transaction fee. You can download it here:

  • carolynbpriest on Feb 17, 10 at 11:47 AM

    I applied for Capital One card before going to France last Fall and was rejected. I have an excellent credit rating, a stable retirement income and own my home. They couldnt give me a good reason for rejection but it was apparent to me they do not want customers who pay their credit card bills on time every month. That is where they make their money!

  • carolofla on Feb 17, 10 at 11:41 AM

    In Paris I use my Bank of America cash card at BNP Paribas bank cash outlets (there are a lot of them) so the fee is minimal and I take the maximum amount at one time. (Yes, I call my bank before leaving to ask for a highter daily amount allowed, and let them know what countries I will be in.)I start out with about 350 E 'leftover' from my last trip. I bring travel checks for emergency only and have never had occasion to use them. I do not charge anything anymore...but maybe I will look into Capital One.

  • misesq on Feb 17, 10 at 10:15 AM

    In Paris I use Multi-Change (multiple locations) to change cash. They have a website (google it) to see what the daily rate is. There are no hidden charges. My French colleagues also use it after I informed them.
    Are all the Capital One cards fee free or just specific ones?

  • raz1024 on Feb 17, 10 at 10:02 AM

    In my above posting, I meant "they prefer cash to credit cards" especially in smaller villages...

  • raz1024 on Feb 17, 10 at 10:00 AM

    We are just back from a trip to Austria - they prefer Euros to cash especially in the smaller villages. When we used our Mastercard to pay for 2 weeks of ski tickets for 2 people, we were told they would charge an extra 3% to use the card and was that okay- we had no choice but agree, but in actuality, she only charged us an extra 3 euro per person which was less than 1% on what we spent. The exchange rate they charged was comparable to what we were charged for a purchase at another location.
    I also find that it is just as cheap to get money exchanged (prior to leaving Canada), at a local Money Mart Money Exchange location, than it is at my own bank(Bank of Montreal) and a fee of 1.99 Cdn is charged at the Money Mart on top of any amount I buy - I also find I don't have to order ahead of time like I do at the bank (convenient if you're a last minute person like me...)- though if you need a large amount of money you could be without (I didn' find this a problem).
    As for using a chip Mastercard, we did have trouble using it at 2 locations in Austria - at one location, they had another machine they were able to put our card through, however, at another store, we just could not use our card(as they did not seem to have the updated machine)and had to use cash instead. The transaction machine would keep saying card error, or unable to process transaction.

  • Bagger on Feb 17, 10 at 09:58 AM

    Two things. 1) USAA Master Card does not charge any foreign transaction fees. It is a great card to use overseas. 2)The money exchange at Philadelphia airport gives you good rates. Keep your receipt. When you come back from overseas if you have any cash left, you can turn it back in for the exact same rate you bought it at.

  • Eurocentric on Feb 17, 10 at 09:44 AM

    I'm with Crisco0. We take at least several hundred euro with us, often more because we rent apartments and often must pay in cash. Once there we use the ATM for cash withdrawals and credit cards for large purchases.
    Bringing foreign money back leaves you vulnerable to exchange rate fluctuations before your next trip, but avoiding fees and the hassle of getting euros from a bank (we do not live in a large city where it's easier) is worth the risk.

  • Crisco0 on Feb 17, 10 at 09:33 AM

    While this method is not for the unorganized or faint of heart..We always carry at least half of what we expect to spend on our trip in US dollars and exhange it at a walk in European bank. There is a minimal transaction fee (5 Euro) and the currnet exchange rate. We carry our Euro with us at all times, and charge only large purchased items or hotel bills. Near the end of our travels we use almost all Euro to pay expenses, but keep a "buffer" stash to take home for our next European trip.

  • arnieswife on Feb 17, 10 at 09:29 AM

    I agree about Capital One. It is the only card we travel with when we visit Italy. They also send a wonderful itemized account of charges etc.

  • BarbaraMH on Feb 17, 10 at 09:05 AM

    At present, Capital One does not charge a foreign-transaction fee.

  • thursdaysd on Feb 17, 10 at 09:04 AM

    How can you write all this advice about using ATM and credit cards and NOT tell people to call the companies to say they're traveling abroad??? If you don't call, it's extremely likely that the card will be blocked the first time you try to use it - at best requiring a foreign phone call, and potentially leaving you temporarily broke. And you also need to advise people to make sure they have a non-800 number to call if necessary (every time I ask my bank for this, they are surprised to learn that 800 numbers don't work outside N. America...)

    Also, this advice is fine for well-traveled places like Europe, but there are countries in Asia where old-fashioned TCs or cash are still needed, or where only certain bank's ATM machines take foreign cards. People should always research their specific destinations.

  • Where_is_Craig on Feb 17, 10 at 09:01 AM

    If you happen to finish your trip with more cash than you needed you can always use some of it to pay the hotel account. This reduces fees both on the credit card charge from the hotel as well as to change the money back into your home currency. Just make sure you have enough to get to the airport and pay any departure taxes!

  • misesq on Feb 17, 10 at 08:55 AM

    The cost of using a ATM machine off an American bank account is the same as using a credit card. TD Bank and HSBC kick back most foreign bank fees if you keep a minimum balance ($2500 with TD) in the account. As a rule unless you are with TD or HSBC, use your credit card because you are better protected in case of a problem. Your pin can only contain 4 numbers!!!

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