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When planning a trip, we can often spend days or weeks researching flights, booking accommodations, and ordering travel gear online. We strive to be the Marie Kondo of the travel world, and we get our best packing cubes to keep our luggage tidy and organized.
During this trip planning process, does anyone stop to think about currency exchange rates and how to get the best exchange rate? It’s such a big trap for travelers, and you can easily end up losing a lot of money if you don’t learn how to get the best exchange rate while traveling.
Good currency exchange rates can help you get amazing bargains while bad currency exchange rates can make your vacation more expensive than you expected.
Surely we can find a better use for our money than losing a big chunk of it to foreign currency conversion fees. Maybe with all that money you save on foreign exchange fees, you can get a seascooter?
Based on years of experience (and several mistakes along the way), here are our top tips for getting the best exchange rate while traveling.
How to Get the Best Exchange Rate While Traveling
1 – Know the Currency Exchange Rate
Look up the exchange rate before you leave the country. Being informed is the first step in getting a good rate. It will prevent you from exchanging the money at a very unfavorable rate. So, find this information before you set off on your trip and check the rate occasionally to stay informed about any major changes.
Our favorite currency app for checking the exchange rate is XE Currency. You can look up the live currency exchange rates on the app. And, when you check the rates, the app actually saves the rates so you can access this information offline. So, even if you don’t have internet access, you can still have a good idea of the exchange rate based on the last saved rates.
2 – Use a Credit Card with No Foreign Transaction Fees
If you have a credit card with no foreign transaction fees, use it whenever possible. If you don’t have one you should most definitely look into getting one if you travel quite a bit. In the U.S., there are many such options. Some options to consider include CapitalOne’s VentureOne Rewards Card, Chase Sapphire Reserve, and The Platinum Card from American Express.
Before paying by credit card, though, take into account a few factors and see if they apply in your situation:
- Local shops and restaurants may add a fee for transactions made with credit cards.
- Some credit card companies charge fees for transactions made in foreign currencies. That’s true especially if you’re based outside of the U.S.
3 – Use a Debit Card with Low or No Foreign Transaction Fees and No ATM Fees
When using your debit card to withdraw money from ATMs, you may have to pay additional fees, including the following:
- a currency exchange fee,
- a fee from the local bank’s ATM, and
- a fee from your bank back home for using an ATM abroad.
In the U.S., you can find some debit cards these days that waive most or all of these fees. In the U.S., you have the Schwab Bank High Yield Investor Checking® Account and Capital One® 360 Checking® Account. If you travel quite a bit, you can save hundreds of dollars in ATM fees annually using the no-fee debit cards.
In the U.K. and some other countries in Europe, you also have some options such as Revolut, N26, or Monzo.
And, of course, there’s also Wise, formerly TransferWise, a multi-currency account for travelers, expats, and freelancers.
Regardless of the card, always make sure you stay informed on what you’ll get charged abroad. Go over your bank agreement or chat with a bank representative, and make sure you know exactly how much you get charged on foreign transactions. The goal is to find the best deal possible, but you have to do this before you set out on your trip.
If you can’t avoid the ATM fees, keep in mind the ATM fees are per each transaction so often you can save money by making a larger withdrawal rather than multiple smaller ones.
Another tip to keep in mind is that some ATMs will offer to do the conversion for you. What that means is they will charge your card in your home currency (for example, USD if you’re from the United States or GBP if you’re from the United Kingdom) instead of the local currency.
The first time I encountered this was in Porto, Portugal. Letting the ATM charge me in US dollars rather than euros would have meant losing about $20 on a $200 withdrawal. As you can see, that’s an atrocious charge. Please do not fall for it.
4 – Pay for Purchases in the Local Currency
Along those same lines, many merchants now offer to charge your card not in the local currency but in your home currency. A lot of tourists fall into this trap. Don’t agree to this offer, as they often add fees to the already poor exchange rate.
At the pay terminal, choose to pay for the purchase in the local currency and allow your credit card company to do the conversion at a better exchange rate.
5 – Avoid Airport Exchange Rate Kiosks
You’ve probably already seen many money exchange kiosks at airports. They may promise “zero commission,” but in return, they have a poor exchange rate. Even though their airport location means it’s convenient, you pay a very high price for this ‘convenience’ – a price that can be as high as 15%.
Although airport exchange rate kiosks are a terrible option, there are occasionally legitimate exchange rate kiosks that offer good rates once you’re at your destination. For example, in Moldova, Eastern Europe, there is practically an exchange kiosk at every corner.
If you have USD, you can often get better rates at the exchange kiosk than by withdrawing money from the ATM.
How to Get the Best Exchange Rate While Traveling Summary
These are just a few tips for how to get the best exchange rates when traveling. To recap:
- Know the Currency Exchange Rate
- Use a Credit Card with No Foreign Transaction Fees
- Use a Debit Card with Low or No Foreign Transaction Fees and No ATM Fees
- Pay for Purchases in the Local Currency
- Avoid Airport Exchange Rate Kiosks
Save and Pin for Later
Traveling internationally soon? Save this article to your “International Travel Tips” or “Travel Hacks” Pinterest boards, so that you can revisit these top tips at a later date.
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