Cheapest Sources for Foreign Currency While Traveling

Before my honeymoon, my dad gave me great advice for avoiding hefty foreign transaction fees and ATM charges. The advice has served me well, and served several friends well. Now I’ll share it with you.

Best Places to Get Foreign Currency
You’ll need some cash while traveling in a foreign country. If you’re traveling in the Caribbean or parts of Central America, you can usually use US dollars without trouble, but you’ll need the local currency in most other places.

The very best place to get local currency is an ATM. Before you leave, call your bank to do two things:
1. Inform them of your destinations and travel dates so they don’t lock down your card for suspicious activity.
2. Ask if they have any agreements with banks in your destination country that will let you use the other bank’s ATMs without a foreign ATM fee. You’ll still have to pay a foreign currency conversion fee (usually 1-3%), but at least you’ll avoid the extra $3-$5 fee. The list of countries varies by bank, and changes regularly.

If your bank doesn’t have agreements with other banks, take out cash in larger increments to avoid racking up too many ATM fees.

If you’re using US dollars, your hotel can change your money, but you’ll receive a poor exchange rate and they may charge you a fee.

Currency Exchanges
These should be your last resort. They charge high fees and offer poor exchange rates. If you must use them, get just enough cash to get your from the airport or train station to town where you can find an ATM.

Using Credit Cards in Foreign Countries
You should always take 1 or 2 credit cards with you when traveling abroad, even if you don’t like to use credit. You never know when you’re going to be in a jam and need money instantly. Even though debit cards can be used like credit cards, I’d feel more secure with the flexibility a real credit card offers. Recently, I’ve seen several horror stories of people having their cards locked or closed while traveling. Always bring a back-up just to be safe. Even if you don’t use it, you’ll have peace of mind.

If you primarily use an American Express or Discover card, you can take those with you, but always bring a Visa or MasterCard, too. What the commercials say is true – not everyone takes American Express, but they all take Visa or MasterCard if they accept credit cards.

Before leaving for your trip, call your credit card companies to do three things:
1. Notify them of your destinations and travel dates so they don’t lock your card.
2. Get their toll-free foreign number in case something goes wrong with your card. American Express also gave me an emergency number in case we had a non-credit-related emergency, but most other issuers don’t do that.
3. Ask what their foreign transaction fee is. Fees are typically 1-3%. One of my cards had a 1% fee, one had a 2% fee, and one had a 3% fee. I brought the 1% and 2% cards and used the 1% card most of the time.

Some hotels and stores will offer to process the charge in US dollars. Ask to have it charged in local dollars. Some banks will charge you the foreign transaction fee even if the charge is in US dollars, and the store or hotel usually uses a less favorable exchange rate than the bank will.

Finally, know the exchange rate so you can do quick calculations in your head. For example, the pound is usually double the dollar, so a $30 item in the UK, is $60 US dollars. On the other hand, Brazil’s currency is roughly half the dollar, so a $30 item there is $15 US dollars. Fix those figures in your mind to keep track of the amount you’re really spending.

Now that you’re in a fee-avoiding frame of mind, check out my tips for packing a suitcase so you can avoid baggage fees.

Leave a Comment

Your email address will not be published. Required fields are marked *