The best ways to exchange currency when travelling

Currency exchange plays a crucial role from the moment you land on foreign soil to packing your bags and getting on the plane. As much as we take this transaction for granted in our home country, globally speaking, it is a common occurrence. Left to their own devices, currency exchange providers set their own rates and rules. They typically set their rate based on a particular global market trend plus or minus fees and discounts. All of which begs the question: Where can you find the best rate of exchange for a specific currency? Why are some people so enamored of avoiding transaction fees? Why is one provider better over another? Some of these questions will be answered below. 

1. Cash Out Of ATM 

If you landed in a foreign country, it is more likely that you may need cash in the currency of that country for everything, from buying a latte to ordering a taxi or hotel. Airports are loaded with ATMs, so getting cash in the currency of your destination country will not be an issue. However, your bank may charge a hefty fee as a foreign transaction fee. Luckily, some banks offer a fee waiver. For example, Chase and Charles Schwab don't have this fee for certain customers. Ally Bank charges a reasonable 1%. Some banks may charge a fee but revert it after a certain period of time. 

It is typical for many banks to charge anywhere from 3 percent to 4 percent for ATM activities. This includes international cash withdrawal, using the debit card outside the U.S, and a transaction in another currency. Additionally, a few banks' charges may be hard to predict before actually making the transaction. 

It is a smart idea to learn about these charges long before hopping on the plane. Better yet, if you have to withdraw cash in a foreign currency, make it at once instead of in small chunks so you can avoid paying fees adding up with every transaction. Before you leave, let your bank know you will be traveling out of the country. This will ensure you will not be locked out of your account while abroad.

2. Currency From Banks And Credit Unions 

Banks and credit unions are the least expensive way to obtain another currency for a reasonable exchange rate. Additionally, you may feel confident when you are carrying currencies of your destination country, so you don't have to wander around looking for ATMs. The gap between the rate of exchange from banks versus airport kiosks is vast. For every dollar, your exchange rate for GBP or Euros would be around 0.71-0.75 with banks. In kiosks and other places, you may end up getting less than 0.70. 

We don't have to convince you that buying currency from banks is profitable than other venues in terms of a transaction fee. This is true whether you are exchanging money in the U.S. bank or some branch office in a different country. The place you get currency exchanged will define both the expense and rate of exchange. 

3. Currency Conversion Websites 

As Danielle Desir, an avid traveler and story writer notes, the best way to exchange money into foreign currency is through your own local bank or credit union long before the trip. Why the extra time between your travel and exchange? Because it takes time for the currency to arrive if they don't have it in stock. You can also place an order for cash through websites such as OFX and Travelex. For savvy travelers, these websites offer some attractive rates, although not on a par with banks. For example, as of 2018, Travelex has a rate of exchange of 0.68 GBP and a rate more competitive than kiosks but less than some banks. Websites tend to charge a hefty delivery fee, which is close to $10 for every 1,000 dollars delivered. You can, however, opt for in-store pickup if you want to save on this cost. 

There are other opportunities for people who want affordable access to currency exchange. With technology transforming rapidly, even the expensive form of exchange is being replaced with reasonable options. Banks and financial institutions have seized the moment to attract more customers by offering rates that are hard to resist. Compare these offers and choose the one with a low overall cost. Whatever option you choose, make sure to start the exchange process well ahead of the trip to avoid last-minute confusion. 

4. Airport Exchange Kiosk

This option should be your last resort to exchange currency notes. Not only are kiosks expensive to begin with, but the additional and unpredictable charges vary from one to another, which will eventually gobble up a big chunk of your savings. And if you are making withdrawals every time you buy a snack or drink, it can cost a lot. In other words, kiosks are helpful when you are left with no other choice and in need of cash right away. 

Kiosks at the airports are known to alter charges the way they like. Depending on the location of the kiosk and number of people accessing it daily, you can expect to pay anywhere from 5 to 10 percent or more as a transaction fee. These kiosk operators know their audience well, who are last-minute shoppers in a rush and who are less concerned above fees and fines. This analysis has paved the way for many kiosks operators to make it big when it comes to currency exchange on the go. That said, it is possible to locate these kiosks easily through the airport customer service desk. 

5. Bonus - Use Your Credit Card

Most credit cards will apply an extra charge to all transactions made outside the US. These fees are typically around 3% of the purchase. However, some cards do not charge this fee. Contact your credit card company to check whether your credit card does or does not apply foreign transaction fees. If it does, it might be worth looking into acquiring one that does not.

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So, if you are worried about high fees for currency exchange transactions while traveling abroad, plan thoroughly. Learn about various options available to you. This way, you will know whether or not a certain rate is fair. The odds are that one of your options will have a fee waiver.

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