If you plan on traveling to a country with a different currency, you'll have to figure out the most efficient way to convert your U.S. dollars into the local currency. You should expect to pay at least something for the conversion. However, as with most things, some methods of conversion will cost you more than others. Click through to find out the best ways to convert your money — and keep stress and fees to a minimum.
Avoid Money Changers at the Airport
The first thing you might notice when you land in a foreign airport is the money changer. Airport-based currency brokers are certainly convenient, but they will add to the many hidden expenses when you travel overseas.
For example, in the UK, airport currency exchange costs as much as 30 percent more than if you exchanged it elsewhere in advance. And the variance between terminals within one airport was as much as 25 percent, according to a 2016 study by international payment service FairFX.
Research Rates Before You Leave
Before you leave home, check the exchange rates for the countries you'll visit. If you won't have access to the internet to verify updated rates on your trip, write them down beforehand.
Identify the local currencies of countries you'll be traveling to, and be ready for currency surprises. For example, if you plan to visit Ireland, you'll have to use British pounds in Northern Ireland and the euro in the Republic of Ireland, according to tourism agency Travel Ireland.
Use an ATM or Your Credit Card
The best place to convert your money overseas is often at an automated teller machine, reported DealNews. An ATM will usually give you the best exchange rate because you're cutting out the middleman and dealing directly with the bank. Although overseas ATMs might charge usage fees, you can try asking your bank to reduce them or fully credit them back.
Using a credit card operates under the same principle — you're dealing directly with your bank, so it'll process your transaction at a rate very close to the daily exchange rate, according to Alliant Credit Union. You will face an international service assessment (ISA) of 1 percent on your transaction, but that's likely much better than giving a chunk of profit to a dealer that stands between you and your bank.
Watch Out for Foreign Currency Conversion Fees
If you have a U.S. dollar-based credit card and make a charge in a foreign currency, you might incur a foreign currency conversion fee. Also known as a foreign transaction fee, cards that carry this fee typically charge as much as 3 percent of your purchase to convert your purchase into foreign currency, according to Capital One. This is on top of any other fees, such as the 1 percent ISA fee.
The good news is several credit cards don't have a foreign transaction fee. Be sure to check the fine print on your credit cards and use a card that doesn't levy that fee overseas.
Keep Your Money Safe
When traveling, keep your money safe in a money belt. You can keep this zippered pouch hidden from view under your clothing. Upon arrival, you can transfer the bulk of your money to a hotel safe, either in-room or at the front desk.
If you want to be creative, you can use fake items that conceal money, such as a false shaving cream canister, Travel & Leisure suggested. As in America, be aware of your surroundings when using ATMs or money changers overseas.
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Get the Real-Time Conversion Rate
The rate posted at money changers will give you a good approximation of the current exchange rate. However, you can get real-time updates from various websites or currency conversion apps, such as XE.com, according to DealNews. Although you're not likely to get that exact rate, you'll be able to tell if you are getting ripped off on a transaction if you know the current rate.
Bring Enough Cash for 24 Hours
Even if you prefer paying with a credit card, Travel & Leisure suggested bringing at least 24 hours worth of cash overseas. Sometimes, you might not be able to find an ATM or money changer in that time period.
Some places, such as some African nations or smaller towns across South America, aren't yet a part of the global ATM and credit network. So do your homework as to how much cash you might need for your whole trip. Just remember, if you are planning on bringing a lot of cash, you might need to declare amounts over $10,000 to customs when you arrive.
Scope Out the Best Exchange Points
Of course, the easiest place to find foreign currency overseas is usually at the airport. Although the airport money changer is typically not your cheapest choice, you might have to choose that if you have no other convenient options. However, most airports should also have an ATM, and some larger airports will also have actual bank branches and tellers.
If you arrive in a foreign city by another means of transport, you can usually find both money changers and ATMs if you're in a tourist area. Otherwise, you might have to ask your local hotelier for the best option. Larger hotels might offer to change your money, but the rate usually isn't great, according to Travel & Leisure.
Send Money in Advance
The number of online money-transfer services is rapidly growing. PayPal, Xoom and others can send money anywhere in the world relatively quickly. But plan ahead, as the time frame for your funds to become available varies by location.
If you have a foreign bank account or a friend or relative whom you trust, you can send money abroad and have it waiting for you when you get there. These services do charge fees, so check to see if the combination of price and convenience is acceptable to you.
Take Small Bills With You
You should always have small bills when you travel so you're ready to tip anyone who helps you — such as porters or taxi drivers, suggested RoughGuides.com.
Additionally, in more inexpensive foreign countries, you might run into trouble if you're trying to break a larger bill. For example, if a taxi ride or a meal is only a few dollars, a driver or merchant might not be able to break the equivalent of a $20 bill or higher.
See If Your Destination Accepts U.S. Money
Some foreign countries actually use the U.S. dollar as their official currency. If you find yourself in El Salvador, Palau, the Federated States of Micronesia or the islands of the Caribbean Netherlands, among others, according to The Atlantic, you won't have to worry about converting your U.S. dollars to a foreign currency.
Some other countries have an unofficial acceptance of the U.S. dollar. Even though these countries, including Vietnam and Cambodia, have their own currencies, you can usually use U.S. dollars for your purchases, according to SmarterTravel.com.
Check Your Cruise Line Policy
One of the major conveniences of being onboard a cruise is that you might not need cash at all. Usually, your room key is your "onboard credit card," and everything is charged to your actual credit card at the end of the trip.
However, if you get off the ship in any ports, local currency rules will apply. As with other trips, you'll have to be aware of what the local currency is and where to get it. Some cruise lines might allow you to exchange currency onboard.
Bring a Variety of Payment Options
It's usually a good idea to have both cash and credit when traveling overseas. Sometimes, U.S. credit cards don't work overseas. In smaller towns, some merchants might accept cash only, according to USA Today. On the other hand, credit cards often provide purchase and fraud protection, and they can be replaced if stolen.
Travel expert Rick Steves wrote in a blog post that he saves his credit cards for big expenses, like hotels and car rentals, and uses cash for the smaller expenses. In any case, be aware of the impact your payment method might have on the exchange rate and any fees that might result.
Pay in Local Currency When Using a Credit Card
When you incur a charge in foreign currency on your credit card, you might be given the choice of paying in local currency or U.S. dollars. Converting the purchase to U.S. dollars is known as dynamic currency conversion (DCC) and is billed as a convenient way to pay in a foreign currency.
Unfortunately, the problem with DCC is the cost, which is usually much higher than the current exchange rate. And although the common belief is that DCC can help you avoid your credit card's foreign transaction fee, that's not always the case, according to a blog post by Steves. If given the option, you're likely better off being billed in the local currency.
Keep Some Currency When You Leave
If you think you'll be heading back to your destination, you can keep your leftover foreign currency for a future trip. You can also convert it back into U.S. dollars. Some airlines accept loose bills and change for the UNICEF Change for Good program. Of course, many travelers use the last of their foreign currency buying souvenirs and other items at the airport on their way home.