*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Dec 20, 2018. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Those who travel regularly outside the United States know that the best way to pay for items purchased abroad is via credit card, especially one that doesn’t charge a foreign transaction fee. Plus, a lost or stolen credit card can be replaced, while you’re out of luck if your cash is lifted by a thief.
Using a credit card throughout your travels allows you to earn miles or points that can be redeemed for future trips, merchandise, gift cards or statement credits. (Still, since credit cards aren’t accepted everywhere, it’s important to have some cash in your pocket when you travel, just in case.)
While there are a number of ways to convert U.S. dollars into foreign currencies, some are more expensive than others. With credit cards, check to see if yours charges a foreign transaction fee, usually between 2.7% and 3%, every time you swipe. And if a merchant gives you the option of paying in U.S. dollars using dynamic currency conversion (DCC), just say no. Let your card issuer convert the purchase for you.
While it may be tempting to choose dollars, it can cost nearly the same as a foreign transaction fee on top of what DCC rate merchants decide to charge. And you could still pay a foreign transaction fee on top of that, depending on your card.
In the end, you have to balance jumping through hoops to get the best exchange rate with taking a financial hit for the sake of convenience, both in and outside the country. We’ll walk through your options and help you choose the most cost-effective and convenient ways to get cash before you depart, once you arrive and when you get back from your trip.
Check out our Best No Foreign Transaction Fee Credit Cards review.
Before your trip
When it comes to currency exchange rates, banks are really hard to beat, said Matt Schulz, chief industry analyst at CompareCards.com. “That’s because your bank’s exchange rate is likely far better than any that you’d find from Travelex or a similar company. Just be mindful that you may end up paying a fee for each withdrawal,” he said.
Other options include online, AAA, currency exchange ATMs and kiosks. Questions you need to consider are how easy is it to convert your dollars and how much will it cost? Using a dollar-to-Euro conversion as an example, below are rates from different vendors at the time this story was written.
|Currency exchange||$US||Euros||Dollar to Euro conversion rate*||Fees|
|Travelex Online||$500.67||€409.45||0.8189||$9.99 for UPS standard delivery; $19.99 for next-day delivery. Free for orders more than $1,000.|
|AAA||$500.67||€409.45||0.8189||$9.99 for UPS standard delivery; $19.99 for next-day delivery. Free for orders more than $1,000.|
|Bank of America||$500.72||€467||0.9327||Delivery fee of $7.50 on orders less than $1,000; fee waived for orders of $1,000 or more.|
|Wells Fargo||$500||€414.35||0.8287||A fee of $7 for orders less than $1,000; none for orders more than $1,000.|
|ATMs||$499.51||€440||1.135||Within a global bank network, none; outside, $5 per withdrawal. Some banks charge international transaction or currency exchange fees of between 1% and 3% per transaction.|
*As of press time.
Online conversions. If you go with an online exchange such as Travelex, you have the choice of receiving cash or a reloadable card that can be used at foreign ATMs and shops. You can exchange a minimum of $50 and a maximum of $3,000. The company’s fee is built into the currency exchange rate you choose, which tends to be lower than other methods.
If you decide to have your cash or card shipped, you’ll pay $9.99 for UPS, and it will arrive in about two days. If you’re a United Airlines MileagePlus loyalty program member, you can earn 1,000 miles when you exchange currency online with Travelex.
Your local bank. The top U.S. banks — Bank of America, Chase, Citibank and Wells Fargo — all offer currency exchange, but be sure and check with your local branch since not all of them carry foreign currency. You typically need to have an account at these banks to take advantage of this service. You can elect to have your currency shipped or you can pick it up at a local branch. Shipping fees range from $7.50 to $20, but most don’t charge if you’re converting more than $1,000.
AAA. If you belong to AAA, you can order currency online or through a local store via its partnership with Travelex.
Currency-dispensing ATMs and kiosks. Usually located in airports and train stations, these currency exchange options — operated by companies such as Travelex or Currency Exchange International — should only be used as a last resort since conversion rates there tend to be among the worst, similar to online conversion sites.
Cash while abroad
Once you’ve left the country, you still need to carry some cash for merchants who that don’t accept credit or debit cards. That might include places like small cafes, public transportation, local markets and for tips. Here are your options for accessing cash while abroad:
Airport kiosks and storefronts. If you decide to get cash after you arrive, know that these two options are notorious for offering the worst exchange rates when it comes to changing dollars for local currency. You’ll not only be hit with lower exchange rates, but you’ll also pay commission charges and foreign transaction fees if your credit or debit card charges for them.
Local banks. Do your homework before you go, because like U.S. banks, foreign ones may not always be able to convert U.S. dollars. But they are your best option because like U.S. banks, they tend to have lower foreign currency conversion rates.
At an ATM. Exchange rates here also tend to be favorable, but remember to check with your bank before you depart. Some foreign banks charge for withdrawals and you may have to pay a fee each time you withdraw money from an out-of-network ATM. You also want to check if your card has daily withdrawal limits.
Your credit card. While you have the option of taking a cash advance from your card, it can be a really expensive choice because cash advance interest rates can be as high as 30% on top of any ATM fees. And you’ll pay even more if you have a card that also hits you with a foreign transaction fee each time you withdraw money or swipe it. If you have to go this route, which many travelers may have to resort to in an emergency, know that interest will start accruing immediately, so you may want to transfer funds to repay that balance as soon as possible.
When you get home
The trip is over, but you discover you still have foreign currency in your wallet. What’s the best way to get rid of it?
Keep it. If you travel outside the country regularly, you could put the currency away and use it for your next trip.
Spend it. Any international airport worth its salt has places to shop. You can use the last of your currency to buy last-minute gifts for friends and family.
Donate it. Airports like New York’s JFK have handy boxes where you can drop your currency, with all funds going to charitable organizations. Some airlines have donation envelopes that benefit charities, like American Airlines’s partnership with UNICEF.
Convert it back. How did you convert your dollars to your chosen foreign currency? You can use the same method to convert it back into dollars, with the same caveats and tips from above.
Now that we’ve unpacked all your options, you have the information you need to make the right decision on how to convert your currency before your next trip abroad. Some things to consider before taking off are:
- If your trip is planned well in advance, ordering currency online might be best, especially if you don’t have a bank nearby that offers an exchange service.
- Make time a week or two before your trip to go to your local bank. If it does currency exchanges where you can just pick up your money, it’s your best bet as banks offer the best exchange rates and you avoid paying any shipping fees.
- If your trip is a last-minute affair or you ran out of time before you could convert your dollars, you’ll be forced to use a currency exchange kiosk or ATM at the airport or train station, or have to find a bank as soon as you can — and you’ll pay for that convenience.
- Were you too rushed to convert your currency before you left or you didn’t bring your debit card? That means if you want money, you may need to do a cash advance, which is the most expensive way to do a conversion or find a foreign bank that partners with your financial institution.