Where to convert your currencies: the best travel tips
If you plan to travel abroad or want to send money to family or friends in another country, you will definitely need to exchange currencies. However, the different exchange rates offered by banks, ATMs and currency exchange services can make it difficult to know where to convert your currencies to get the best price without too much hassle.
Which option is right for you will depend on where you are, what currencies you want to exchange, and how soon you need the money.
Let's find out the best time for you to exchange currencies, where to exchange currencies and some alternatives to traditional currency exchange services.
Why would you trade currencies?
For those who use mobile apps and mobile wallets in their country, currency exchange can be a little-known process. However, mobile wallets generally don't let you send money to foreign countries, and you'll need access to the local currency of your destination.
Credit cards and debit cards make it easy to travel abroad without cash, but using your card abroad may incur additional fees or be associated with other difficulties. Here are three good reasons to exchange cash before your next trip.
- Make sure you benefit from the best exchange rate.
Exchange rates continually fluctuate based on market conditions and other changing factors. International travelers can save money by converting currencies in advance when the exchange rate is in their favor.
The main exception is currencies pegged to the value of a foreign currency. For example, the West African CFA franc is pegged to the Euro (EUR), meaning you will always get the same amount of CFA francs (655.957) in exchange for 1 EUR.
- Some sellers may not accept card payments.
While more and more providers accept Visa and Mastercard around the world, this is not the case everywhere. Some countries still have a cash-based economy , where ATMs are rare and most merchants prefer coins and banknotes.
In some cases, you will need small amounts of money shortly after your arrival, such as to tip your taxi driver.
- Cards may be subject to high fees.
While using your credit or debit card can be convenient, it can come with hefty fees. Depending on your card, you may pay currency conversion fees and foreign transaction fees, which can be between 1% and 3% of the purchase price.
Additionally, your bank may view international transactions as suspicious, requiring you to call to reactivate your card before you can use it again.
Where to convert your currencies?
The currency conversion options you have will depend on the currency in question. Some of them are available worldwide, but others have restrictions on where you can buy and sell them. For example, you cannot bring kip into Laos, nor can you take it out of the country. You will need to find a place to exchange your currencies once you get there.
However, for many currencies you will have no problem. Here are the places where you can exchange currency for your next trip.
Banks and credit unions
One of the best ways to exchange currency is to visit your local bank or credit union. While it's a good idea to always keep an eye on the exchange rate, financial institutions are more likely to offer a more competitive exchange rate than other companies.
Some banks even allow you to order cash and have it delivered to your home. Bank of America charges a $7.50 delivery fee for orders under $1,000 and promises to deliver within 1-3 business days.
However, this option is only available to existing customers. You'll need to pay with your checking or savings account, and if you're a new customer, you'll need to collect the money in person at a financial center instead.
ATMs
If you don't want to convert your money in advance and carry large sums of cash abroad, withdrawing money from an ATM can be a good option. The ideal is to find an ATM from your own bank, but if it does not have bank branches or an ATM network in the country you are visiting, you can use a foreign bank's ATM instead.
Let's assume you are a U.S. resident visiting Mexico. You can simply withdraw money from your US bank account, but instead of receiving US dollars, you will get pesos. Always choose the “pay in local currency” option to get the best conversion rates.
What we should especially fear is card skimming . These are scammers who steal your credit or debit card details when you make a purchase. Choose ATMs located in secure buildings, rather than private ATMs in high-traffic tourist areas. Also consider fees incurred for using the ATM and withdrawal limits.
Airport kiosks and exchange offices
When you land in a new country, it can be tempting to head straight to the airport ATM or currency exchange. While it's okay to use it as a last resort, it's usually not your best option. If you can, wait until you arrive at your destination and head to a foreign bank or currency exchange.
Shops like these, like a bureau de change in France or a casa de cambio in Latin America , make money on the "spread", or the difference between the buying and selling price of two different currencies. Even though you won't get as good a price as you would at a bank, you can still shop around for the best exchange rate on offer.
Depending on where you are exchanging currency, you may be required to show identification, especially for large amounts, due to anti-money laundering regulations.