Foreign Exchange 101: Travel Tips and Tricks

While traveling abroad gives you tons of life experience, what it doesn’t prepare you for is those high bank charges and conversion fees. Sigh! It’s a sad reality that traveling can be very expensive. After the flights are booked and accommodation is secured one of the biggest concerns of many travelers is ensuring they have enough of the right currency but this can be so confusing. Here are 10 simple tips and tricks to help you save when it comes to foreign exchange.

Exchanging Money at your Bank

Before traveling, it’s a good idea to contact your personal bank and find out what their rate is to convert your money. Your personal bank may offer better rates and a lower fee for currency exchange because you bank with them.

Never Exchange Currency at the Airport

Avoid using the currency exchangers at airports as these counters usually charge extremely high service fees and lower rates because so many travelers feel they have no other choice but to use these counters.

Withdrawing money from international ATMs

While it may seem like ATM’s offer better currency exchange rates, be mindful of the service fees and additional charges. Often ATM’s charge a fee for access when you are abroad as well as international cash withdrawal fees and foreign currency conversion fees.

Never take a cash advance on your credit card

Using your credit card to withdraw cash at a foreign ATM will result in you paying some extremely high foreign transaction charges. In addition, the interest rate that you will pay, will be even higher.

Use credit cards for large purchases

Most credit cards charge a foreign-transaction fee of between 1% and 3% whenever you buy something abroad. This is still lower than using you credit card at an international ATM. It is also one of the safest ways to make a large purchase overseas.

Traveler’s Cheques are a good fallback in an emergency

Carrying traveler’s cheques are not only a safer option, but in many cases you can purchase them without paying a fee. They serves as a good fallback in an emergency and each cheque has a unique tracking number which means they can be reissued should you loose them.

Keep a hidden stash amidst your traveling accessories

Keeping some already converted money somewhere separate from your other travel money stash is a good idea should you lose your valuables or not be able to convert currency in time. Make sure this is a currency that is accepted worldwide and in a place that no one would think to look. Old lip gloss bottles or deep in a pair of socks are often good hiding places.

Use your rewards to buy foreign currency

American Express Currency Exchange stores allow you to redeem your American Express points for over 60 currencies. If you use your credit card a lot and have accumulated a large amount of points, why not convert those points into foreign currency instead.

Use local currency when arriving

While it is imperative to change your cash into major currencies (dollars or euros) before traveling, upon arrival you should convert some of the major currency into the local currency being used. Using dollars to pay in countries where this is not the official currency can sometimes cost you about 20 percent more in a purchase.

Consolidate your transactions

Every currency exchange transaction has associated costs with it. Fewer transactions will mean a lower overall cost which in turn will save money. Also, some foreign exchange providers may even offer better rates, or waive commission fees for currency exchanges over a certain amount. Try to group your purchases so you pay for all your items at once, rather than breaking it down into smaller transactions.