Plan Ahead
Before exchanging any currency, consider how much money will be needed for the destination. This can be estimated by figuring the average cost for meals, any needed transportation, excursions, and any lodging that will be paid for in cash. Also plan to have some extra for emergencies and any souvenir shopping. It’s also important to consider any fees or commissions that must be paid to exchange currencies.
There may be a flat fee and or a percentage charged each and every time. So it is beneficial to limit the number of exchanges and save on these fees. Transferring back to the original currency will also have additional costs associated with it. So look to strike a balance between getting enough money while also not overdoing it and requiring a large conversion back again.
Exchange Before You Leave
Several options are available to exchange currencies. Depending on the destination, it might be more convenient to do so at a local bank. Banks might require a notice to ensure the have sufficient foreign currency on high hand.This is a great way to control some of the exchange costs, and lower the stress of finding a good deal at the destination. Also ask your local bank if they will convert back any unused currency. Consider shopping around banks for the best rates. However, some banks do require membership before exchanging currency.
Exchange at the Airport
Many travelers opt to pick up local currency at destination airport. While this is a convenient option, it can have much higher costs associated. Just like retail shopping and restaurants, there is a premium price for these services at the airport.
In Country ATMs
Urban areas in developed countries often have extensive ATM networks. These can be a less expensive way to pull out money from a connected bank account in another country. Unfortunately there is some misinformation on the internet about the cost to use the kiosks. For example, several sites report that Bankomats are common throughout Italy, and these ATMs have no fees.
During a recent trip to Italy we learned that this was incorrect on both accounts. Over the nearly two weeks there, we saw a single Bankomat. All the other kiosks were simply labeled ATM. All of these ATMs had a fee to withdraw money which was 2.50 Euros. Thankfully we were able to closely estimate the needed currency, and only made a few withdrawals.
Check with your own back to see if they have any foreign transaction fees. If they do, you can get hit with charges in the country you visit and from your own financial institution. This will make your trip much more expensive and frustrating. Credit cards are typically the most expensive to use and can carry fees on both ends. The best option we have found is the Capital One Debit Card, which has no foreighn transaction fees.
Currency Retail Stores
Many large cities will have retail locations that can exchange currency. Since the local money is essentially their product, there will be a commission charged for this service. This is typically the second most expensive place to complete the transaction after doing so at the airport. To save on costs, it’s best to avoid doing the exchange here unless you’re in a pinch.
