When traveling internationally, one of the first things most travelers do upon landing is find a way to convert their home currency into local cash. While currency exchange booths at airports or bus stations seem like the most convenient option, they often come with significant downsides. Here’s why it’s best to avoid them and explore better alternatives.
Higher Exchange Rates
Currency exchange shops at airports or bus stations typically offer less favorable exchange rates compared to other methods. These exchange services know that travelers are often in a hurry and may not have the chance to shop around for better rates, so they charge a higher rate to maximize their profit. The exchange rates can sometimes be 5-10% worse than the market rate, meaning you lose a significant amount of money just by converting currency at these places.
Hidden Fees and Commissions
In addition to bad exchange rates, many currency exchange shops also charge hidden fees or commissions. They may not always be transparent about the full cost of your transaction, and you might not realize how much you’re actually losing until it’s too late. The total cost of converting your money can add up quickly if you aren't careful, sometimes leading to an effective exchange rate that’s far worse than expected.
Limited Options
Exchange shops at airports or bus stations are often the only visible option, making it harder to compare rates. This lack of competition allows them to set higher fees since travelers feel like they have no other choice. In contrast, if you head into the city, you can often find banks or licensed exchange offices with much better rates.
So what’s a girl to do? I have to say it physically pains me when I see people using these currency exchanges at the airport. And while that may sound dramatic, there are better alternatives to changing your cash than this way.
Use ATMs
One of the best ways to access local currency is by withdrawing directly from ATMs using a debit card. This method typically offers more favorable exchange rates because the conversion is done by your home bank, which uses the interbank rate. Although your bank may charge a small foreign transaction or ATM fee, this is usually still cheaper than the fees charged by currency exchange shops. Some banks even waive foreign ATM fees, so it's worth checking with your bank before you travel.
If you bank at a large domestic institution, see if they have international banking partners. Bank of America, for example, has several overseas relationships that allow you to utilize their ATMS while abroad with less or no transaction fee. Charles Schwab also offers a free checking account with no foreign transaction fees; they will even reimburse ATM fees while traveling! Since opening my Schwab Investor Checking Account, I have received $372.84 in ATM fee reimbursements. That I just turn back into more travel! 😊
Check out my post on the best debit cards for travel to learn more!
Use a Travel-Friendly Credit Card
Many travel credit cards offer no foreign transaction fees and use favorable exchange rates. This means you can often use your card for purchases abroad without losing money to unfavorable rates or fees. Bonus if you can find one that racks up travel reward points for future trips! Chase and American Express offer great options, some with lounge access and airline fee credits. Just be sure to pay off your balance in full to avoid interest charges.
While it’s tempting to exchange currency at an airport or bus station for convenience, the higher fees and unfavorable rates can quickly eat into your travel budget. By using ATMs or credit cards, or even on occasion exchanging money at better rates in the city, you can save a substantial amount of money over the course of your travels. It’s all about planning ahead and choosing the most cost-effective methods to access local currency.
If you are looking for other common travel mistakes, take a look at our other "Don't be an Idiot Abroad" posts!
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