Handling money abroad can be intimidating the first few times you travel. It is a complex process where you can find yourself paying a large amount in fees you didn't account for in your travel budget. To avoid going over your travel budget in currency exchange fees, it is important to do your research before you travel abroad.
Things like avoiding airport kiosks and change stations can help as well as using your bank card with little or no foreign transaction fees. For more trips on exchanging currency abroad, keep reading below.
Before You Go
1. Know U.S. and International Bank Holidays
I made this mistake the first time I visited Belize. Prior to travel, I took steps to ensure my cards would work abroad, but the bank representative forgot to place a note on my account about my travel status. My card was frozen as a theft protection as soon as I made a purchase close to the Belizean and Guatemalan borders. At this point in trip, I had been traveling in areas where cash wasn't always needed and I had just enough on me to get the things I needed when it was.
By the time I ran out of cash, it was both a weekend and a bank holiday in the U.S. It took three days to unfreeze my card and have cash flow. Had I been a little more aware, I would have had enough emergency cash to get me through the holiday. I would have been more diligent about my spending as well.
2. Be Aware of A Country's Cash/Credit Preferences
Prior to heading to Belize, I looked up their cash and credit preferences. It was important to know how they handled transactions. Dealing with cash is Belize is very simple because they accept USD throughout the country, the conversion rate is 1:2, and a lot of businesses accept major credit cards. I knew I would be fine if I ran out of cash and were in a pinch.
If you know you are traveling to a country where they mainly deal in cash you'll know you need to take care of the exchange prior to travel. It will allow you to set up ample time with your bank.
3. Exchanging At A U.S. Bank
Your home bank or credit union may have the best rates when offering currency exchange. You may even be able to order the currency by phone or online for pickup at a branch location that is most convenient for you. But be careful of any fees this service may have.
Another option is to shop around major banks like Bank of America or U.S. Bank. There's a small chance their exchange rates are less expensive than your current banks, but be diligent and compare before making any final decisions.
Pro Traveler Tip: Rick Steves recommends you avoid purchasing currency prior to visiting Europe, while TripSavvy says it might be easier to purchase currency ahead of time when headed to Africa. What this might tell you is the best option could vary for every destination.
4. Download A Currency Exchange App
It stores all of the world's currency rates, can text them to you, and even stores the most recent rate. That way, if you aren't connected to the internet, you can at least see the most recent currency rates for comparison.
This is great to have in case you need to exchange money abroad but aren't sure whether or not the services you are using are accurate or can be trusted. This way you have less of a chance of being short-changed.
When You're There
1. Airport Kiosks
Most travelers recommend against using airport kiosks. Rates are reported at up to 15% higher than banks or local ATMs. It is better you keep looking than to spend your travel budget on services fees and exchange rates.
2. Change Stations
This is often another poor option due to high service charges and fees. They are usually conveniently located and offer a variety of exchange rates at each location. Many travelers waste hours upon hours hunting down the location with the best rate, which is a waste of valuable vacation time. You are better off making an ATM withdrawal or exchanging cash before you go.
3. Using Plastic
Nowadays, many banks use the current exchange rate and waive foreign currency and transaction fees. For example, my credit union doesn't charge for ATM withdrawals abroad but they charge a 1% foreign transaction fee. Using this card in Central America was the best option for my trip, and I can say I'd use it again overseas to avoid carrying large sums of cash and carrying too many credit cards.
However, there were parts of rural Belize and the Guatemalan border where cash was my only option. Had I not made ATM withdrawals prior to that portion of the trip, I would not have been able to buy gas and food at a few locations.
4. Withdrawing At Local ATMs
The downside of using Belizean ATMs on my trip were the foreign fees of 3USD per transaction. This is the case for many foreign machines, and as a matter of fact, you can find yourself paying anywhere from $1-$6. If your bank charges fees in addition to the foreign ATM fee you'll be even further out of pocket, so it's best to take out large enough sums of money that you limit the amount of fees you pay.