How to Get the Best Exchange Rate when Traveling in a Foreign Country

Depending on where you travel, currency exchange rates can either help you get great bargains or make your trip surprisingly expensive. No matter how strong your home currency is relative to the local currency, however, you want to make sure you're getting the best exchange rate possible whenever you need to get cash or make a purchase.


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    Find out what your bank charges for foreign transactions. Most of the time, you'll get the best possible exchange rate when you use your credit or debit card, either to make purchases or to withdraw cash from an ATM. By doing so, you get the same exchange rates that the banks offer to each other, with no middleman adding extra fees for the exchange. Some banks and credit card companies, however, will charge you a fee of as much as 3 percent on foreign transactions, so you need to do some research before you leave home. Call your bank and ask them what they charge. If they charge a fee, call around and ask other banks what they're charging. You may be able to find a better deal, but you'll need to plan well ahead.
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    Know the currency exchange rate. Before you set off for your trip, find out what the current exchange rate is. You can easily find this in many newspapers or online. Knowing the exchange rate is your most powerful defense against getting a bad deal, so find it out before you go, and periodically check on it while you're traveling. When you are abroad, don't just trust the signs at street kiosks. Verify the exchange rate online if at all possible.
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    Use your credit or debit card as much as possible. As mentioned, you're likely to get the best rate this way. Use your card for purchases as much as possible to avoid ATM fees. When you do use an ATM, be sure to check how much it will charge you--some foreign ATMs charge $5 or more. If the fee is more than a couple dollars, try to find another ATM.
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    Plan your budget while traveling. You don't want to carry a ton of cash with you (see step 5), but you also should try to have enough cash so that you don't get stuck having to make a currency exchange at high rates. You're more likely to get a good rate in large cities than in small towns--in some countries, you won't even be able to exchange money outside the city.
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    Take out cash only as you need it, and try to plan your expenditures toward the end of your stay in any country. This will help you to minimize the risk of robbery or pickpockets and avoid getting stuck with excess cash when you leave.
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    Avoid the exchange companies and Cambio booths that you will see in most train stations and airports. They are convenient, and sometimes (especially in an emergency after banking hours) indispensable, but they frequently charge very high prices in return for the convenience. If you need to get cash, and you can't find an ATM, your best bet is to go to a large bank, post office or American Express office.
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    Haggle. While you won't be able to negotiate the rate at a bank, if you do get stuck changing money at a small vendor you may be able to haggle to get a better rate. It's critical to know the exchange rate before you do this, and sometimes it won't work, but it's worth a try, especially if there are many vendors in a small area.
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    Compare rates. It's especially important to shop around if you're using the exchange kiosks, but the rate you get can vary even from bank to bank. Try at least two or three different places before you settle on one.
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    Know the "real" rate. Sometimes the low rate posted will be the "sell" rate--you'll be charged the "buy" rate--or will only be applicable on very large or very small transactions. There may also be flat fees added to each transaction or extra commissions based on the amount of the exchange. You've got to watch out for these tricks and find out in advance the net amount you will receive from an exchange.


  • Buying American Express travellers cheques and cashing them in at an American Express office will cost you no service fees. However, finding an American Express office may be very difficult. Ask for a directory and make sure you know what cities have them. They are very difficult to cash anywhere else!
  • Depending on where you're traveling you may be able to use the U.S. dollar as easily as the local currency. If you do so, make sure you know the current exchange rate, and take the time to do the math before making a purchase.
  • Carry a calculator with you. Converting from one currency to another can be confusing, and if you're dealing with large sums or if you're traveling in a country with high inflation, a calculator is a valuable addition to your daypack.
  • Hotels and shops, especially in tourist areas, will often exchange money for you. Do the same due diligence you would with any other exchange vendor, as these places usually charge a higher rate than banks.
  • Sometimes, although rarely, smaller kiosks and independent vendors will provide a better rate than large banks. You're always better off if you compare a few places.


  • American Express sometimes may have worse exchange rates than MasterCard/Visa use. Even their fee rate is 2.7% and other banks' often charge 3%, it could still be more expensive.
  • Watch out for black market money-changers. You can fall victim to a variety of scams, from counterfeit money to short-changing to outright robbery, so be watchful and avoid suspicious exchange booths or people who approach you on the street or in the train station. Many countries require licensing for currency exchangers; look for certificates or government stamps of approval (and know what they should look like). In general, steer clear of anything that just doesn't look right. If a deal is too good to be true, it probably isn't true.

Things You'll Need

  • Internet or newspaper access to determine exchange rates
  • Calculator
  • Credit or debit card

Sources and Citations

Article Info

Categories: Reduce Travel Cost