Finding the best way to change money is an age-old problem for travelers, but the smartest methods for doing it have evolved dramatically in recent years.
Currency exchange used to be as simple as dropping by a money-changing kiosk in a train station or a tourism hub upon your arrival in a new country, but new digital tools have made those old methods inefficient and pitfall-prone by comparison. Whether it’s using an ATM affiliated with your home bank, or simply swiping your credit card, new methods offer better convenience and lower fees.
How much is at stake? Take dollars to euros. On a day when currency markets suggest $100 should buy you €93, a currency exchange desk might hand you just €81, while a more modern method would net you a rate closer to €92, assuming you can avoid other fees. Over the course of a week of spending, especially if you purchase clothes or an elegant restaurant meal, those differences can add up to hundreds of dollars.
Here are the best ways to get advantageous exchange rates, listed from best to worst, according to established personal finance experts from the banking, government, and consumer worlds.
Best: Use a debit card at an ATM
There are lots of options for converting your money to a foreign currency, but the easiest and most economical one is probably already in your wallet.
“Once you’re abroad, you’ll get a much more favorable rate using your bank’s ATM rather than at an airport exchange kiosk,” says Jim Edrington, chief member engagement officer of the American Bankers Association.
Your best chance to get money at a great exchange rate, with no extra fees, is to draw cash from your account through an ATM operated by your own bank or its partners. For example, Citibank allows customers fee-free use of its ATMs in 20 countries. Bank of America partners internationally in the Global ATM Alliance, which includes roughly 50,000 fee-free machines at various local banks, from Barclays in the U.K. to BNL D’Italia in Italy to Scotiabank throughout Canada and the Caribbean. Large banks that operate globally are more likely to extend no-fee courtesies to account holders worldwide than small regional banks are.
Other banks—often banks with fewer U.S. branches—simply waive or refund transaction fees, no matter which ATM you choose, even if there’s a fee charged by the ATM’s owner and instead of by a bank. Those include Charles Schwab Bank, Fidelity’s Cash Management account, and LendingClub, but there are others.
While you’re asking about your bank’s international partnerships, tell it about your dates of travel, too, “so a transaction isn’t flagged as potentially fraudulent,” says the ABA’s Edrington.
Don’t settle for the high default cash amounts suggested by the machine, either. ATMs recognize foreign cards and typically offer higher increments, often starting as high as €200, perhaps for your convenience, but also because fees they earn tend to be percentage-based. If you only want to withdraw, say, €100, you can typically enter a lower number.
Good: Use a credit card for purchases
If you have the right credit card, another great option can be to simply swipe your plastic, much like you do at home.
There is a big catch: First you need to find out if the credit card you use levies foreign transaction fees. A few big issuers—including Capital One and Discover—have eliminated these altogether. And most top travel credit cards also skip them. But cards that do carry the fees, can cost you—typically 1% to 3% for every transaction. And the worst offenders might even phrase the surcharge as something like “$1 or 3%, whichever is greater,” which could result in getting hit for an extra $1 every time you buy something as trivial as a candy bar.
If you can avoid foreign transaction fees, however, your credit card is likely to offer a competitive exchange rate. The big credit networks like Mastercard and Visa have the power to negotiate their own exchange rates that are almost always appealing enough to rely on. Unlike currency exchange kiosks, credit card companies do so much business that they can make profits through other mechanisms.
Sometimes when vendors swipe your card, they will ask you whether you’d like to make your purchase in the local currency or in your home currency. Always choose the local currency. This is because the rate assessed by the business at the point of sale is generated by Dynamic Currency Conversion, or DCC, an added service that is offered out of convenience but paid for by a less beneficial exchange rate.
If you stick to the local currency and allow your credit card to make the conversion instead, you’ll benefit from your issuer’s negotiated exchange rate, which is almost always better.
Good: Use a multicurrency banking app
A new crop of financial apps—Wise, Revolut, and N26 are among the most popular—can be a great alternative if you are frequently abroad, or an expat who doesn’t want to set up a bank account in your new home.
These apps can be used to store funds, transfer between currencies, and pay money directly to merchants. The exchange rate used is clearly displayed before the transaction is completed, and it’s usually acceptably close to market. Many of the new apps even make debit purchases at decent rates through digital payment services such as Apple Pay.
The downside: They come with monthly subscription fees or low monthly withdrawal limits, which makes them less attractive to travelers who may not use them frequently, and there’s still no single regulatory agency that licenses all of them, so they’re not a fail-safe solution yet.
For example, in the U.S., Wise caps ATM withdrawals at two a month, and after that, you’re hit for $1.50 per transaction and another 2% if you take more than $100 in a month.
Some fintech apps even have changing fee structures and might charge a higher fee on a weekday than on a weekend, so read the rules carefully before making any large transactions.
Bad: Use a credit card for a cash advance at an ATM
Just like at home, you can always use your credit card to withdraw cash from an ATM. But if you want to save money, that’s not a great idea.
Pulling money from an ATM with a credit card slams your finances with a one-two punch. First you get hit with a cash advance fee, which some cards set at high as 5%.
Second, credit card cash advances are financed at a much higher interest rate than standard purchases are. Depending on the card, you’ll wind up facing rates as high as 25% or 30%, and worse, those steep finance charges kick in the second the cash leaves the ATM, not at the end of your account’s monthly cycle. There’s usually no grace period for cash advances.
If you still want to have this option in your back pocket for emergencies, make sure you set up your card’s cash advance PIN before traveling. But fight the urge to use it.
Bad: Buying currency in advance from your home bank
Many consumer banks allow established account holders to order some of the most popular foreign currencies ahead of a trip, and they tend to use competitive rates since they want to keep you as a customer. But different banks use different exchange rates, so check ahead that yours has a decent one.
Even if your bank offers a rate that’s acceptably close to the market, however, you’ll also have to watch out for added fees that degrade the value, such as the $5 Citibank levies on transactions made through its WorldWallet exchange program (unless you’re a priority account holder) and shipping fees (Bank of America charges $7.50 for orders less than $1,000).
Another pitfall of obtaining large sums of foreign cash from your bank before travel—in addition to the risk of theft—is accidentally ordering too little and running out mid-trip or worse, ordering too much and getting hit again when you exchange the excess back to dollars.
The truth is that while obtaining advance cash from your bank was, like travelers checks, a common and effective strategy a generation ago, banks now offer better digital solutions, such as no-fee ATM partnerships, that already give travelers the ability to hit the ground running and instantly obtain cash at a good rate as soon as they land.
Worst: Use a currency exchange kiosk
Exchange desks were once the keystones of currency exchange, but not anymore. That old-fashioned cambio or wechsel you find at an airport or a tourist hub is notorious for high fees and poor rates.
Money-changing businesses typically operate with little or no regulation, and they’re notorious for capitalizing on cash-strapped tourists by offering the worst deals.
Janek Rubeš is a tourist finance advocate based in the Czech Republic who runs Honest Guide, a scam exposure channel with more than 1.2 million YouTube subscribers. His reporting resulted in a change to the Czech national law that allows tourists to seek refunds from a bad exchange within three hours of a transaction.
Complex math and lack of international consumer protections mean commercial kiosks should only be used only “if you’re desperate to get cash,” says Rubeš. “Always read the fine print, and always ask what will be the final amount you will get.”
And conversions by black market money changers come with even more risk, not least of which is an increased chance of being handed obsolete or counterfeit currency.
How to calculate exchange rates
To arm yourself for changing or spending money abroad, you have to know the market exchange rate to begin with.
To get the current exchange rate for any currency, simply enter your desired currency’s abbreviations in Google, which has a built-in conversion calculator based on market rates. For example, you can search for “1 EUR to 1 USD” to see today’s rate.
A quick check can help you make sure you aren’t getting taken to the cleaners. “Everyone has a smartphone,” says Rubeš. “Let’s use it for smart things, like finding out if you’re about to lose half of your money.”
Google’s default posted rates are aggregated from worldwide sources furnished by data company Morningstar, and that result will be followed by a graph of recent value activity (which isn’t that useful unless you’re an investor) and more results from other reliable financial sources. Similar searches on Microsoft Bing’s engine use conversion rates from financial data provider Refinitiv, which differ little from Morningstar’s results but can provide a solid second source.
Other free, app-based currency converters, which display midmarket rates culled from global currency markets, include XE.com, active since 1995, and OANDA, which went live in 1997.
Most of the rates you’ll find quoted by these sources are so-called middle rates or mid-rates, which are midway between the mean buying and selling (or bid and ask) rates for that currency. These reference rates are also considered wholesale or interbank exchange rates that banks and high-volume traders enjoy, so it’s best to take them as an approximate reference. Your goal as a consumer is to find a rate that comes the closest—and offered without transaction fees, of course.
If you need to send money internationally, Monito is a third-party comparison site where you plug in what you have and what you’d like to convert it to, and then the site aggregates results from the major currency transfer services and compares how you’d fare with each one of them after rates and fees are calculated. Monito may levy a small referral fee when you select a method.
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