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 “no card” signs, they now find “no cash” warnings. But that’s not everywhere.

From German cafes to street markets in Laos, there are a million reasons to carry cash abroad and even more ways to overpay for it in the process. For once and for all, here’s how to get the best rate on currency cash 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. Airport currency exchange businesses dangle great customer bait, with currency tickers and signs like “no commission”, or “no fee” but even if either are true, 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 on average.

Why That’s True

These airport services, much like high street “currency exchange” stores in touristy areas give you a consumer rate of exchange rather than an actual banking currency exchange rate. To be clear: the bank rate of exchange is better than the consumer rate of exchange. So whereas the British Pound is currently worth $1.29 USD via bank rate, you’d end up getting around $1.19 for each pound you exchange through one of these consumer currency exchange stores. Not good.

Hot tip: Google is a great way to get instant currency exchange rate updates. 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.

Don’t Do This Either

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. 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.

Here’s How To Take Money Out Abroad

You’ve got options, which is nice. Technology and competitive banking has greatly transformed the landscape for taking cash out and new apps are taking things even further. The best ways to take out foreign currency are…

  • 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 payment app with no 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 big withdrawal means you only get hit with one ATM fee, if any. 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. Even with the fee it’s going to get you more money than using an airport 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. Woohoo! And yes, that definitely makes the method above even more compelling! Rather than endorse one, we highly suggest investigating: Monese, Charles Schwab (US), Revolut, Starling Bank (UK), Monzo (UK).

That’s it, no excuses.

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

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26 Comments

  1. What poor advice from a seasoned traveler. Most banks in the USA who do forex hit consumers with massive service charges and bad rates. Similarly an ATM that charges a $5 service fee plus 3% forex (pretty standard for US checking accounts aka UK “current” accounts) is a whopping 8% gouge on $100 withdrawal.

    The better advice: (1) open an account with a bank that has 0% forex fees and reimbursed ATM fees (in the USA this would be Fidelity, Schwab or a high net worth account like Citigold or Chase Private Client) (2) Look carefully for ATMs that don’t have ripoff fees or rates e,g, avoid Raphaels and Thomas Crook at all costs. (3) exchange large bills for cash at a bank branch after you arrive. Many times this is the best rate.

    Never buy foreign currency in your home country – it is always a ripoff.

    1. Did you actually read the article? I literally mention doing exactly the same thing… in the article. And even name check Schwab!

      And on top of that 3% forex, if charged, which many wont, is a lot better than 10% at the airport.

      Please read the entire article before going to town on me here.

      1. Your #1 option is “visit the bank” before you go which in the USA is often the worst option. Maybe UK is different. Yes I like ATMs too but not the best option in every country. And you need a backup plan as ATM cards don’t always work. Good luck in Africa.

  2. I still can’t forget the American “youngster” trying to show off our something at the airport in Bali by changing $1000 into the local currency. He lost a lot of money that day…

    In most of Asia, travel with big US$ notes, as you often get a much better exchange rate using them, sometimes better than the office exchange rate. Don’t expect fancy Forex offices though, most are small shacks. Banks aren’t always the best option.

  3. I always take out currency at home at Chase, and this is from someone who works in Finance. It’s not the most cost effective but it puts my mind at ease. The reason why is because I’ve encountered twice where ATM’s are out of money. Specifically in Manila. I use my Fidelity card for additional withdrawals in the country which refunds ATM fees. Just my two cents but I’ve encountered hell when you land and there are no ATM’s that have money, Uber doesn’t exist in that country and you need a cab to your hotel which only takes cash.

  4. I agree in general with this post — I wish I had known this 10 years ago. I learned my lesson a few years ago (e.g. avoid airport exchange kiosks, instead find an ATM card that works abroad (btw, I recommend First Tech Federal Credit Union for their REAL chip n pin credit card and ATM card)) However, one thing that I learned is that I withdraw so little in cash (< $100) that I don't need to obsess about a 1% vs. a 3% exchange fee, since where I choose to shop has a greater impact on prices than the exchange fee. For example, a 2 liter bottle of coke might be 2 EURO, or 2.10 EU, or 2.50EU depending on where I shop — that's a 25% price difference — so why am I obsessing about a 1% vs. 3% fee?
    Obviously my spend is on little things (such as a 2 liter of coke..) and not anything major (like booking a hotel room) and I just accept that fact that things may cost a little more than optimal, but I'd rather spend my time exploring a new city I've never been to rather than chasing around for the most optimal exchange rate.
    Just my 2 cents. Or should that be my 0.018 EURO ?

  5. From my experience banks have worse exchange rate then you get on streets (Europe). In Asia you will get hit with local fees when trying to withdraw from Atm. I would recommend if in the absolute need change small amount at the airport and then find better exchange in city in case you not using your Debit card.

  6. All Thailand ATMs charge $6 now so you are better exchanging cash. Mexico ATMs charge $1-3 per transaction. Banks are catching on to the ATM gouge.

    1. Let’s do some math. Assuming a worst case scenario like a $6 ATM fee and a $5 fee to use your debit card abroad, you’ve gotta recoup $11.

      Since you’ll get a 10% or better rate using ATM versus currency exchange place, you need to withdraw any amount over $125 to come out ahead.

      $125-11 is still $114 which is a 8% loss. And even in that bad case, it’s 2% or better than doing it at a currency exchange. The higher the withdrawal (so you only make one) the lower your % loss on the transaction. Ideally, you use a no fee ATM card and so it’s even better.

  7. Not helpful for most travelers, but I have a small supply of Japanese Yen, Euro, British Pounds, Singapore dollars, Swiss francs, Swedish kronas and Australian dollars. I don’t have every country, though. That way, I can take a train or bus using cash and exchange money in town. I only use a little cash but having cash from previous trips helps.

  8. One drawback is that a few countries demonitize currency (cancel the value). I got caught with that with British pounds (banks will change small amounts) and British 1 pound coins (banks might not) but changed the coins in time. Sweden did the same.

  9. For US based int’l travelers the Schwab debit card is 100% the best tool to exchange currency. All ATM fees get reimbursed and I’ve always gotten basically right at spot rate for the exchange.

    Their app is easy to use too for transferring money between accounts or depositing checks. I don’t like to keep much money in my checking account that is linked to the debit card in case it gets lost/stolen. So I usually transfer the money I intend to withdraw from the ATM right before I actually do.

    Good article. Even the most seasoned travelers can be wasting money by using unfavorable money exchange services.

  10. So in general I agree airports are the worse place to exchange money, I find this 100% not true in East Africa. Both the Dar es Salaam and Nairobi airports have the best cash exchange rate I have been able to find in the country. These rates are similar to and ATM rate and much better than most banks. Usually, the rate I have gotten is within 1 or 2% from the rate found on XE.com. Always have large bills though, $50 or $100 USD in most cases.

      1. Muchas gracias senior. I once did a big exchange at Heathrow airport, they generously gave me an additional 20quid, why wouldn’t they since they were ripping me off. I got into town and found out I could get a bit more, so I used my card through out the trip, and refunded the cash at the same rate only they let me keep the 20quid, big smiles. Great tips, thanks.

  11. Those aren’t bad options, but, to add to that:

    Option 4- do some pre-work and find out where the ATM’s at your destination are and if the bank is fee free. ex…Caixa bank in Spain= Cajeros that do not add or charge additional fees for withdrawals if it’s in the local currency. Most Credit Unions here in the US offer no foreign transaction fees and may even refund the fee charged by the bank for using their ATM ex RCU here in the States will refund 2 foreign ATM fees and will not charge FX fees. Caixa Bank in ES does not charge FX fee or ATM convenience charge for withdrawal in EURO currency.

    Just my $.02 from experience.

  12. There is a new mobile app coming out soon called Cashswapper. It allows users to swap currency at the interbank rate by providing a peer to peer platform for users. It looks pretty nice.

  13. I was surprised in Japan when my ATM card didn’t work in any of the machines. I squeaked by with $200 in cash and credit cards. My backup plan was to use a remittance service like WorldRemit or TransferWise to send money to myself for pickup at a Tokyo bank. The fees and exchange rates weren’t nearly as bad as exchange counters.

    As Boraxo said above, I would never go to a bank in the US for foreign currency. Their fees are purposely exorbitant to cover their holding costs. I exchange at the destination and make sure I’ve spent or converted it all before I board the flight home.

  14. Where there’s competition, the rates are better. US banks have little competition. I have my own list of decent places to exchange money. I don’t even know the names of some of these places.

    In Vancouver, BC, Canada, there’s a place on Oak (or is it Granville) a little in from the McDonalds. I know that is crappy. It’s either the VCBE or VBCE.

    In London, there’s this place near Victoria Station around where the round curves. That is even crappier a description.

    In Incheon Airport near Seoul, Korea, they are not the best place to exchange money. However, if you are going on a day trip and need only a little money, why not? But wait! Go to the departure level, not the arrival level. The same banks are in both location BUT the departure level gives a better rate! HA!

  15. An fyi: I have traveled to Italy every year for 15 years. As of 2 years ago (?), you can not take USD into a bank to exchange it, nor can you take a large-amount euro bill and get smaller euro bills, if you are not a bank customer. Only the post office will do those transactions. This caught me by surprise in Florence.

    If the exchange rate is good, I always bring a good amount of euros home with me for the next year, so that I don’t worry initially with getting to the bank and taking my max allowed each day. I pay cash for my hotels, which give me a lower rate for cash. I realize this is not an issue for travelers not returning to the same places.

    On a larger scale, such as wiring funds in euros for buying property, has anyone used Interactive Brokers? I have heard that they can save you a bundle in exchange rates/fees.

  16. I use a combination of my USAA debit card that reimburses ATM and forex fees for all trips, and also carry an amount of crisp, new $100 bills if going to SE Asia. Never had a problem getting money with either of them. I look for the ATMs that are part of a legit bank and not some fly by night in a quickie mart. Also, if I have money left over, depending on where its from (Euros or Baht, etc…), I just hold on to it as I am sure to be back within a year or two and will spend it next time, plus it saves me from having to scramble for cash when I first get to a place! Not so handy the first time, I know, but great when going back just to be able to cruise on out of the airport. 🙂

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