You’re traveling outside the country. Unless you’re sticking close to the United States borders (Canada, Mexico, and the Caribbean Islands), you will have to know how to exchange currency. Exchanging currency can be strange for anyone who hasn’t done it before, so here are some tips.
- Do some exchange rate research
- Always exchange some before you leave the U.S.
- Avoid the convenient money changers
- Make larger and fewer exchanges or ATM withdrawals to avoid fees
- Get a receipt
What You Need to Know about Exchange Rates
The first thing you need to know about how to exchange currency is what exchange rates are. An exchange rate tells you how much of a foreign currency your money can buy.
Think about it like a store. Imagine there’s Euros on a shelf. You don’t just trade them one Dollar for one Euro. Instead, your dollar might only buy 80% of a Euro if the USD/EUR (US Dollar to Euro) exchange rate is 0.80.
If you need five hundred Euros, it will cost about $625. These rates change like stock prices, so when you convert your money will determine how much foreign currency you can buy.
It’s a good idea to keep an eye on the exchange rates for a few weeks before you leave the country, and to familiarize yourself with how to convert currency. The financial section of most papers will have this information and there are cell phone apps and websites that can do this automatically. You might try currencyratecalculator.com.
Knowing the currency rates will help ensure that no one can take advantage of you at the moneychanger’s desk.
Exchange a Little Money Before You Leave
You don’t want to leave you home country without at least a little foreign currency. Imagine getting to the airport in a country you haven’t been to before, tired and hungry after flying across an ocean, arriving after all of the banks have closed for the day and not having money to get a taxi to your hotel, or something to eat. It’s worth having between fifty and a hundred dollars in local funds before you arrive.
You can do this either at a bank with a currency exchange desk, or at the currency exchange desk of at the airport. International airports will almost always have a place to exchange currency. If you are unsure about what local currency exchange options are available, contact your financial institution or look in the phone book under “Financial Services” or “Currency Exchange”.
Where to Go When You’re Out of the Country
One of the most important things you need to know about how to exchange currency is where to do it when you’re out of the country. Fortunately, there are many options, but you need to know what the best ones are.
You should typically avoid the convenient options. Airports and hotels will often have currency exchange desks, but you won’t get the best rates and you will pay for the convenience with additional fees. If the exchange rate isn’t comparable to the going rate, or if the fees seem too high, walk away.
If you have an ATM card that works overseas, and most of them do now, you can make cash withdrawals at the current exchange rate directly from your bank account. You’ll want to check the financial networks listed on your card before using it in a machine to make sure it is compatible before you use it, though.
You will also want to check with your bank ahead of time to see if there are any fees associated with overseas ATM withdrawals. There may be fees from the bank that provides the ATM machine as well, but there should be warnings to advise you of what these will be.
Banks and dedicated money exchange facilities will give you the best and most current exchange rate, so these types of facilities should be your first choice. Use your hotel desk only in cases of emergency and rely for most of your transactions of reputable banking establishments.
Make Larger Withdrawals
Part of learning how to exchange currency is knowing how much to exchange. Most of the expense in exchanging money will come from transaction fees. This means it’s better to make a single large withdrawal rather than numerous small ones. You will, of course want to balance this against how much money you want to carry with you. Still the little charges can add up, so you’ll want to be careful.
You can use your credit cards directly for large expenditures, and thereby limit the amount of cash you need to have with you, and you can also use the safe or vault services offered by your hotel to store currency.
Get a Receipt
You probably won’t need it, but it’s a good idea to have a receipt for your financial transactions. Not only it is helpful for your own records, but also if for some reason you have to explain to a customs officer why you have a large amount of foreign currency, it helps to have a receipt to show where it came from.
Any time you are traveling outside the country, it’s pays to be safe. Keep careful records and pay attention to details and there should be no problem.
You will want to get rid of as much of your foreign currency before returning home, though you can exchange it locally if needed, especially since you now know how to exchange currency like a pro. If you estimate your needs properly, you won’t wind up with too much left over. Besides, a little foreign money makes an excellent souvenir. If you are desperate to get rid of it, though, you can spend it on items at the duty free shop.
This covers the basics of what you need to know about how to exchange currency. The specifics will vary depending on where you are traveling and what services are available to you
This is part of the fun of traveling, though, so bon voyage.