Airports: Good Place For Exchange Rates?

Exchanging currency at the airport is convenient, but is it cost-effective? Currency exchange kiosks at airports tend to offer less favourable exchange rates and higher fees compared to banks and ATMs. These merchants often take advantage of travellers' last-minute transactions or immediate need for local currency, offering poor exchange rates that result in significant losses for travellers. However, airport exchanges remain a popular choice due to their convenience and the assurance of having foreign currency readily available.

Airport exchange rates are often poor

Airport exchange desks set their own rates, which are typically higher than what you would find elsewhere. They also charge fees, sometimes a fixed amount, and other times a percentage of the amount being exchanged. These high rates and fees are to cover their operating costs, salaries, and the high rent of the physical space. This means that you get less money back, and the convenience comes at a cost, with less competitive rates than those you might find in the city or online.

It is advisable to exchange your currency in advance in your home country or to use an in-airport bank or ATM, as these will offer better rates than airport exchange desks. Local banks, online currency exchanges, foreign ATMs, and credit cards without foreign transaction fees are all good options for getting better exchange rates and avoiding unnecessary costs.

Local banks or ATMs offer better rates

When it comes to exchanging currency, it's important to shop around for the best rates to ensure you don't get ripped off. While it may be tempting to use airport kiosks or currency exchange counters, these often offer poor rates and hidden fees.

Local Banks

Local banks are a great option for exchanging currency, often offering better rates than airport exchanges. They are happy to exchange your dollars for local currency, and you can also open a forex account, which allows you to save money in a foreign currency.

ATMs

Using an ATM is another good option for exchanging currency, as they often offer competitive rates. However, it's important to use an ATM from a legitimate bank, as independent ATMs may charge high fees and offer poor conversion rates.

Credit Cards

Using a credit card that doesn't charge foreign transaction fees is also a good option, as you'll get your bank's exchange rate. Additionally, some credit cards offer incentives for travelling and spending money with the card.

Planning Ahead

If you have time before your trip, it's a good idea to research the different options and compare rates. Exchanging currency at your local bank before your trip can often get you a better rate, and it's also worth checking if your bank offers foreign ATM fee refunds for using foreign ATMs.

Other Tips

• Avoid currency exchange kiosks at airports, as they typically offer unfavourable rates and hidden fees.
• Pay in the local currency to avoid currency conversion fees.
• Know your ATM fees and limits before withdrawing cash abroad.
• Use international banking apps to manage your money in multiple currencies.
• Be aware that some banks may refuse to exchange currency if you don't have an account with them.

Avoid currency exchange stores and kiosks

Currency exchange kiosks and stores at airports are known to charge some of the highest fees and offer the worst exchange rates. They are aware that travellers who have just got off a plane will need money right away and take advantage of this by marking up the exchange rate to make a profit.

It is best to avoid currency exchange kiosks and stores at the airport by getting currency in advance from a local bank or going to an in-airport bank or ATM.

If you are unable to do this, it is still better to use your credit or debit card instead of exchanging currency at the airport. Credit and debit cards can be a safer option than cash as they offer fraud protection and safety features such as the option to freeze them if they are lost or stolen.

If you do need to exchange currency at the airport, it is likely that your bank or credit union will buy back any leftover foreign currency in exchange for dollars when you return.

Compare rates online and in advance

Comparing exchange rates online and in advance is a great way to ensure you get the best deal when exchanging currency. Here are some tips to help you compare rates and make informed decisions:

• Compare Rates Online: Use online tools and platforms such as Monito, Wise, or OANDA to compare exchange rates offered by different providers. These platforms allow you to input your transfer amount, country, and beneficiary country to get up-to-the-minute exchange rates from top money transfer services. This helps you identify the most competitive rates and save on fees.
• Understand the Mid-Market Rate: The mid-market rate, also known as the interbank rate, is the exchange rate used by banks when trading currencies among themselves. It is the real exchange rate that you can find on Google or XE.com. Knowing this rate will help you identify how much markup a currency exchange service is charging.
• Compare Different Providers: Don't just settle for the first provider you find. Compare rates from different banks, money transfer services, and foreign exchange brokers. Traditional banks often offer poor exchange rates with high fees, so consider using online money transfer services or neobanks, which typically offer more competitive rates.
• Consider Transfer Methods: The exchange rate may vary depending on the transfer method. Bank transfers are usually cheaper, while cash pick-ups tend to have higher fixed fees and sometimes poorer exchange rates. Choose the transfer method that suits your needs and offers the best overall value.
• Plan Ahead: Don't wait until the last minute to exchange currency. By planning ahead, you can take the time to compare rates and choose the best option. Exchanging currency at the airport, for example, is often more expensive due to higher fees and unfavourable exchange rates.
• Be Aware of Dynamic Currency Conversion (DCC): When travelling abroad, always pay in the local currency at points of sale. If you pay in your home currency, you may be charged a DCC fee, which is often a very poor exchange rate.
• Compare Exchange Rate Calculators: Many websites offer exchange rate calculators or converters. These tools allow you to calculate the exchange rate for a specific amount and currency. By using these calculators, you can get a sense of the rates offered by different providers and make a more informed decision.

By following these tips and comparing rates online in advance, you can maximise the value of your currency exchange and avoid paying unnecessary fees or unfavourable rates.

Use a currency card

Using a currency card is a great alternative to exchanging currency at the airport or with your bank. A currency card, also known as a forex card, is a prepaid card that you load with money and can use to make purchases in a foreign currency. Here are some reasons why using a currency card can be beneficial:

Competitive Exchange Rates

Currency cards often offer competitive exchange rates, which means you'll get more for your money when travelling abroad. These cards are specifically designed for travellers and are a safe and convenient way to access your funds.

No Transaction Fees

One of the biggest benefits of using a currency card is that there are typically no transaction fees. Unlike with credit or debit cards, you won't be charged a fee every time you make a purchase. This can save you a significant amount of money, especially if you're planning on making multiple transactions during your trip.

Security

Currency cards are also a secure option for travellers. If your card is lost or stolen, you can easily cancel it and get a replacement, minimising the risk of fraud or theft. Additionally, some cards offer an emergency cash service, providing you with access to cash if needed.

Easy to Use

These cards are widely accepted and can be used at ATMs, shops, and restaurants, making them a convenient choice for travellers. You can also easily reload your card if you need additional funds during your trip.

Budgeting

Currency cards can also help you budget for your trip. You can load the card with your desired amount and track your spending, ensuring you don't overspend. This can give you peace of mind and help you stay within your travel budget.

Protection

In some cases, currency cards also offer purchase protection. This means that if you buy something with your card and it gets lost, stolen, or damaged, you may be reimbursed for the cost. This added layer of protection can give you extra peace of mind when travelling.

Using a currency card is a safe, convenient, and cost-effective way to access your funds when travelling abroad. With competitive exchange rates and no transaction fees, you can make the most of your money and focus on enjoying your trip. Be sure to shop around and compare different currency cards to find the one that best suits your needs.

Frequently asked questions