How to Beat Currency Exchange Rates


NEW YORK (MainStreet) - People go on vacation to escape the worries and stresses of daily life. But the pleasures of winding down on a sunny beach or exploring the hidden treasures of some ancient city can quickly give way to the worries of finding the best exchange rate.

Part of the hidden costs of travel is the exchange rates and fees you pay every time you change money or use your credit card abroad. There should be no need to let bad rates affect your plans.

Thankfully, MainStreet has compiled some tips from travel experts on how to beat exchange rates and keep some more dough in your pocket, which means more cocktails by the pool.

Start at Home
Jason Clampet, a senior online editor at Frommers travel guides, says that, “You should never assume that it’s easy to get cash when you arrive.” He recommends that travelers have some local currency with them on hand, at least enough to get them from the airport to the hotel.

Of course, it also depends on where you’re going. If your destination is in western Europe, it is more likely that you can use credit cards regularly whereas in southeast Asia and the Caribbean, for example, paper money is essential.

Clampet says that if you are going to a place that relies on cash then you might want to consider having enough to cover a few days of expenses.

Use an ATM
The kiosks that you see at airports and popular tourist spots may look convenient with their board of numbers and flags in front, but nine times out of 10 they offer the worst rates in the city, says Amelie Hurst, a spokesperson for TripAdvisor.

They are just part of a retail business, explains Ed Perkins, a contributing editor at SmarterTravel magazine. “Retail charges [from exchange booths] often border on deceptions in the way that they present their rates,” Perkins says. “They pile on some fees.”

Often these extra fees include agents’ commissions, and they vary just like the prices at any other retail business. Plus they are rarely regulated by the local government. Always ask for the exchange rate and commission that may be tacked on before making your transaction.

Clampet says that the general rule of thumb is to get local currency through an ATM as opposed to changing money face-to-face with a teller. “Any time you’re handing money to a human behind a glass wall, you’re better to get a rate from your home bank or through an ATM card,” he says.

Perkins agrees that bringing your bank card is smarter than bringing an envelope of dollars to change when you travel. “If you want to minimize your losses, you do not want to change paper currency to foreign currency,” he says.

Use the Right Credit Card

In some cases, a credit card is the best way to avoid extra charges from exchange rates – that is, if you choose the right one.

Hilary Stockton, a travel expert from, advises that travelers check with credit card issuers to determine if they tack on foreign transaction fees, as some cards can charge up to 3%-4% for each transaction.

At the same time, some banks or credit card issuers will waive those fees altogether. Stockton recommends a few:

  • American Express (Stock Quote: AMX): AMEX Platinum and Centurion cards
  • Chase (Stock Quote: JPM): British Airways Visa Signature Card, Chase Priority Club Select Visa Card, Chase Sapphire Preferred, Continental Airlines Presidential Plus Card, Hyatt Gold Passport Card, Marriott Rewards Premier Credit Card, United Mileage Plus Club Visa Card
  • Citibank (Stock Quote: C): ThankYou Premier Card and ThankYou Prestige Card
  • Capital One (Stock Quote: COF) credit cards (see website)

One caveat, though: Do not withdraw money from your credit card, Perkins warns. Not only will you pay a premium, but cash advances come with exorbitant interest rates for the privilege. If you have the cash in your account, Perkins advises that you use an ATM card with the Mastercard or Visa logo, as it will be accepted wherever a credit card would.

Fall Back on Your ATM Card
If you don’t have a no-fee credit card and want to avoid a large bill later on, the best alternative is your ATM card. While ATM cards offers the next best rates, according to Stockton, banks will often charge a withdrawal fee to use a foreign ATM. This can be avoided by using an international bank that has branches around the world or has made partnerships with foreign banks, Stockton says.

First Republic Bank offers a rebate for all ATM fees charged by other banks outside of its network, for example. Bank of America is part of the Global ATM Alliance, a group of financial institutions that allows customers to avoid ATM fees, though international transaction fees will still apply. Big banks like the U.K.’s Barclays, Germany’s Deutsche Bank, Canada’s Scotia Bank and France’s BNP Paribas are also partners, as well as some others.

Make sure that you check in with your bank before your trip and inform them of your travel dates. This will ensure that you avoid your account being frozen due to “unusual activity” while you’re using your card abroad.

One other way to avoid ATM fees is to know where you’ll be able to get cash in your bank’s network on the ground. Clampet says that he carries a map with him from his financial institution to find where the nearest ATM in his bank’s network is. These can be printed out from most bank websites.

Fewer Transactions, Larger Withdrawals
The tradeoff between how often you should go to the ATM and how much cash you should carry on you will depend on your plan and your budget. In general it’s best to withdraw in big amounts and limit the amount of transactions that you make to minimize your per-transaction fees.

Taking out the equivalent of $20 every time you go to the bank is not advisable. Be mindful, though, that you shouldn’t withdraw more than what you’re going to use depending on your credit card situation and local cash practices.

Unless you’re an extensive traveler who can pocket the spare money for the next time you travel, withdrawing too much and converting your foreign money back into U.S. dollars will just cost you more in fees.

Perkins suggests that you pay for big-ticket items like hotels and restaurants on your credit card, they often carry built-in protections that debit cards don’t have, Clampet says. For small purchases, he suggests using cash.

“Avoid paying multiple fees by planning a few days out,” Hurst says, adding that you should stash your lump sum in a hotel security box. Presley says that you may want to withdraw a lot of money at once to avoid more ATM fees but adds that you should not carry all of that money all at once.

Knowing Is Half the Battle

Travelers should also be aware of what the local currency is and how much things tend to cost in the local currency. Most smartphones have currency converter apps that give updated exchange rates, and Clampet also says that getting a good idea of what 1,000 Yen or 10 Euros will buy will help you keep to your travel budget.

He warns that people should not make assumptions about the exchange rates. “Most people aren’t George Soros and you can’t hedge against it,” he says. That’s why he says that waiting to buy money at a local bank is still contentious.

Avoid Scams

One of the most important ways to avoid overspending on your trip is to avoid doing things that you would not normally do at home. If someone on the street or public transport offers to make change with your money, you probably shouldn’t do it. Trust a more reputable institution, since many people will take advantage of tourists’ lack of familiarity with local exchange rates, Stockton warns.

“Although you’re on vacation, your money isn’t on vacation,” Clampet says. Be diligent and vigilant with your money.

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