How to Get the Best Exchange Rate When Traveling Abroad
Every time you spend money abroad, there’s a chance you’re losing some of it without realizing. Banks, ATMs, and merchants all add hidden fees or offer poor exchange rates. These small losses can add up fast, especially on longer trips. Still, there are ways to keep more of your money.
The key is to choose the right cards and avoid common traps. This guide provides practical, easy-to-follow tips to help you avoid inflated currency exchange costs and stretch your travel budget further.
Pay in the Local Currency
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Always decline offers to pay in U.S. dollars when using a card or ATM overseas. This practice—known as dynamic currency conversion—allows merchants or ATM operators to set the exchange rate, which is often 3–10% worse than the bank rate. Choosing the local currency ensures your bank or card issuer uses the actual market rate.
Use a Card That Waives Foreign Transaction Fees
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Some credit cards add a small percentage to every purchase made outside your home country, usually around 2 to 3 percent. Other cards skip this charge. Options like the Capital One Venture or Chase Sapphire Preferred are known for waiving these fees, and even a few no-annual-fee cards offer the same benefit. Checking your card’s terms before traveling helps you avoid extra costs on each purchase.
Avoid Airport Exchange Counters
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Currency kiosks in airports typically offer inflated exchange rates and add service fees. The markup can exceed 15%. Ordering currency in advance from your bank or withdrawing cash from a bank ATM at your destination usually results in a better rate.
Select ‘Without Conversion’ at ATMs
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You’ll often see a screen asking whether you want to convert your withdrawal now. Always select “no.” That way, your own bank sets the exchange rate. ATM operators often offer inflated rates under the guise of helping you understand the cost upfront. It’s a costly shortcut that’s easy to decline.
Use Bank-Affiliated ATMs
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ATMs at hotels or tourist shops may be convenient, but they’re often operated by private companies that charge higher fees and offer worse rates. Machines from well-known banks, such as Santander or HSBC, are usually more transparent, and the odds of encountering technical issues or scams are lower.
Choose a Debit Card That Reimburses ATM Fees
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A few U.S. banks refund foreign ATM fees entirely. The Charles Schwab debit card is a well-known option. Not only do these cards skip foreign transaction fees, but they also reimburse the extra charges from ATM providers. This makes them ideal for frequent or long-term travelers.
Withdraw Only What You Need
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Large withdrawals might seem efficient, but it’s risky if you don’t end up using it all. U.S. banks typically do not accept foreign coins, and converting leftover bills can incur additional fees. If your card refunds ATM charges, you’re better off pulling out smaller amounts when needed.
Check Mobile Payment Availability for Transit
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Cities like London, Stockholm, and Toronto now let you tap in using Apple Pay or Google Pay, without needing any local currency. Transit agencies automatically convert your fare using your card’s network rate. This can be more convenient than fumbling for unfamiliar coins or waiting in line to buy a paper pass.
Use a Currency Exchange Rate App
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Apps like XE and OANDA offer live currency rates. Having one installed helps you spot unfair exchange offers and compare them to actual market prices. It’s also helpful when reviewing conversion charges on a receipt to confirm whether a rate looks reasonable or padded with markup.
Understand the Payment Culture of Your Destination
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Payment norms differ widely. In Sweden, tap-and-go cards work almost everywhere. In places like Morocco, cash is still king. Doing a little research before your trip can help avoid over- or under-exchanging, and that also means fewer fees when trying to get rid of extra currency later.