Travelling abroad already comes with many expenses; visas, baggage fees, car rentals and hotel rooms really begin to add up. Don’t tag costly currency exchanges onto that list. Although it is very unlikely you will find somewhere that exchanges money cent-for-cent at the real currency conversion rate, you can keep exchange costs low by following these tips.
Check the Trends
You don’t have to keep a constant eye on the markets, but knowing about your currency and a foreign currency’s trends—whether the value is high or low, going up or coming down—can be helpful in deciding when to exchange your money for the best value.
Be Aware of Costs
No matter what the actual conversion rate is as cited by world banks, there is no getting around spending a few cents more on each dollar that you exchange to a foreign currency. After all, the businesses exchanging your money need to make some cash too. What you can and should try to do is avoid foreign exchange fees.
The best bet is to exchange your money before leaving the country, either at your bank—some banks offer free conversions—or at a currency exchange centre/credit union; however, it is still best to research first which locations around you offer the best rates.
When abroad, try not to use ATMs or currency exchange kiosks (especially airport exchange kiosks) as they will often charge high fees for exchange services. Banks will often offer the best conversion rates, although not all banks will charge the same amount. To know which ones offer the best rates will require research before going on your travels.
Exchange Large Amounts at Once
Changing currency will always cost you something, but exchanging larger amounts less frequently will save you some cash. There will often be a base exchange fee on top of which you will be charged a certain percentage for each dollar you convert, so avoiding these base fees as much as possible by exchanging as infrequently as possible will help you keep money in your wallet.
Forget the Traveller’s Cheques
Someone from a past generation may tell you to pick up traveller’s cheques before your journey, but the heyday of the traveller’s cheque is long gone. Many foreign banks will no longer accept them.
No Foreign Transaction Fee Credit Cards
Although using your credit card abroad will often cost you less in exchange fees than taking out paper money, not all credit cards are created the same. Many banks offer cards that do not charge foreign transaction fees, and many also have $0 annual fees. Check with your bank or look on this site to see if these cards are for you.
Use Local Currency
Using local currency, even if vendors accept your home currency, will keep you from overspending. Often when paying in a different currency than the local option, you end up overpaying as you try to approach the equivalent value.
Take Only What You Need
Converting back to your own currency can be costly and challenging. Your bank will likely buy back certain popular currencies, but for those that are less popular you will need to buy your currency back while still abroad or at the airport, both of which are more costly choices.