First mistake: currency exchange at the airport.
The world is going “cashless” and some countries such as Sweden and Norway already largely are. Where travelers might expect to see “cash only” signs, they now find “we don’t aceept cash” warnings.
The pandemic only accelerated the trend, but it’s still not everywhere, plus, cash can provide a vital level of comfort to people far away from home, for “just in case” things.
From German cafes to street markets in Laos, there are a million reasons to carry cash abroad and unfortunately, even more ways to completely overpay for it in the process.
For once and for all, here’s how to take money out abroad and get the best rate on currency exchanges, wherever you go…
Don’t Do This
Know this: the airport is not the best place to take out money, wherever you go. Those inviting booths are ripping you off, as sad as it may be.
Airport currency exchange businesses dangle great customer bait, with “real time” currency tickers, just like the stock market and signs like “no commission”, or no fee.
But even if either are true (they’re usually not), you’re not getting anywhere near the best rate of exchange that you’d see if you google something like US Dollars to Indian Rupees. In fact, you’ll get around 10% less cash than that, on average.
These airport services, much like high street “currency exchange” stores in touristy areas, give you a consumer rate of exchange rather than an actual bank exchange rate.
To be clear: the bank rate of exchange is better than the consumer rate of exchange, in almost every example on earth. So whereas the British Pound is currently worth $1.32 USD via bank rate, you’d end up getting around $1.22 for each pound you exchange through one of these consumer currency exchange stores, or worse.
Not good, when you’re exchanging hundreds, or thousands.
Google is a great way to get instant currency exchange rate updates, for a general ballpark. Simply searching “1 GBP to USD”, or “500 INR to HKD” will show you a real time estimate. You can see roughly how much you should be getting for any amount.
Before you feel too confident, there’s another rookie mistake to avoid. Taking out “too much” money abroad increases the likelihood that you’ll end up getting hit with bad exchange rates or fees at the beginning and end of your trip, since you’ll want to get rid of the soon to be useless cash.
Getting hit on one end is bad enough, but both ways – double bad!
Airport currency exchange businesses love when you’ve got an extra $50 you need to get rid of, and give an extra poor exchange rate for such small exchanges. Don’t take out too much, but don’t take out too little either. If you do take out too much, spend it on something good.
You’ve got options, which is nice.
The best ways to take out foreign currency are…
Technology and competitive banking has greatly transformed the landscape for taking cash out abroad in any currency and new apps are taking things even further. With this in mind, the best ways to take out money abroad are to…
- To use your debit card to make one large withdrawal at your destination.
- To visit your bank at least 10 days before travel and make an exchange.
- To load money onto a new style of international payment app without ATM fees.
Visiting The Bank
Many banks are happy to arrange foreign currency for you for no fee or minimal fee. By going through the bank, you’ll naturally get the more competitive bank rate of exchange which gives you more for each buck you exchange.
Plan for at least 7-10 business days for your currency to arrive, so planning ahead is big here, but it’s unnecessary if you have a good debit card to use abroad.
Use Your Debit Card When You Land
Be sure to inform your bank of your travels in advance, but one of the best strategies can be taking out money with your debit card at destination. Taking out one money in one big withdrawal means you only get hit with one ATM fee, if any, depending on your bank.
This allows you to take advantage of real time bank rate of exchange while paying a small flat fee (usually around $5) for most travelers, or zero for savvy others. Even if a potential withdrawal fee is involved, it’s going to get you more money than using an airport or high street service.
Always confirm any fees before going through with a transaction.
Use Clever New Money Apps
The list is almost endless. New apps and banking products are emerging each day, which allow you to take money out abroad with no fees and pay in various currencies. Woohoo!
And yes, that definitely makes the main “one transaction on arrival” method above even more compelling! Rather than endorse one, we highly suggest investigating: Monese, Charles Schwab (US), Revolut, Starling Bank (UK), Monzo (UK).
Happy travel and spending abroad!