How to Get the Best Exchange Rate When Changing Money Abroad

Posted by No Comment

Depending on where you travel (and the currencies used of those countries), time abroad can lead to either an expensive trip or a suitcase full of bargains.

ATM charges, credit card charges and commission are some of the expenses you’ll incur when changing money from one currency to another.

Following these 5 tips should help you to minimise these expenses and ensure that you get the best exchange rate when traveling abroad:

1. Find Out How Much Your Bank Charges for Foreign Transactions
While traveler’s cheques are perhaps the safest way of taking money abroad, you’ll often get the best exchange rate when you use your credit or debit card (whether you’re withdrawing money from an ATM machine or making purchases).

Exchanging moneyThis is because you’re effectively cutting out the ‘middle-man’ (i.e. the person exchanging your traveler’s cheques), so you’re avoiding the extra fees associated.

Saying that, most banks and credit card companies will charge you a fee to use their card abroad (sometimes this is a flat fee or a percentage of the money withdrawn/spent), so it’s a good idea to do some research before you leave, and potentially join a new bank that doesn’t charge for such services.

2. Know Your Exchange Rates
It’s a good idea to know the exchange rate of the country you’re entering (you can check this on XE.com) so you can know if you’re getting a good deal when you change money over.

Opportunistic locals like to make the most out of unwise travelers by offering to change money for them (at a bad rate). Some even go as far as displaying incorrect exchange rates on signs to give the illusion of honesty.

3. Never Change Money at an Airport
Airports (as well as other transport terminals such as ferry ports) typically offer the absolute worst exchange rates possible. Instead, it is far better to wait until you get to the hotel/bank.

4. Budget Accordingly and Plan Your Expenditure in Advance
Along the way it’s a good idea to think about how much money you’re going to need and withdraw/exchange it when necessary.

This is especially important towards the end of your stay in a country, as you don’t want to have large amounts of excess cash when you leave (as you’ll have to change it over to another currency and lose more money on commission).

You want to try and strike a balance between having small amount on you (so if you’re robbed you won’t lose a lot) and having enough that you don’t have to continually withdraw money everyday (and face the wraith of ATM charges).

5. Using U.S. Dollars Overseas
U.S. dollars are accepted in lots of foreign countries (such as Vietnam and Barbados) as a substitute for the local currency.

A lot of the time it can be a good idea to pay in U.S. dollars (providing you have them before you get there), as you won’t be losing any money on ATM fees, commission, etc.

However, in some countries the price of something in the local currency might be less than the price of it in U.S. dollars, so you might be losing money there (see point number 2). Because of this it can be good to have a pocket calculator (or a phone that has one) on-hand for a quick check as to whether you’re getting a good deal or not.


Related posts:

  1. Cash, Credit Cards or Traveler’s Checks – A Guide to Handling Money Abroad
  2. Frugal Traveling – Top Ways to Save Money Abroad
  3. How Much Money Should I Take On My Trip?
  4. How to Save Money for Your Round the World Trip




Share this Article!