Currency Exchange: Available At Airports?

Currency exchange services at the airport are convenient but they often come with poor exchange rates and high fees. The exchange rate at the airport currency exchange kiosks is significantly lower than the rate you would get by simply withdrawing money from an ATM abroad. For example, you might see an exchange rate as low as 65% when converting USD to Euros, whereas the current exchange rate is around 85%. On top of these unfavourable exchange rates, there is typically a service fee added when you exchange money at an airport kiosk. However, exchanging currency at the airport is better than exchanging currency at an unauthorised dealer.

Currency exchange at the airport is expensive

Currency exchange kiosks at the airport are convenient, but they are also costly. The exchange rates are typically much less favourable than those offered by your bank at home.

For example, if your bank offered you an exchange rate of £72 per $100, the airport kiosk may give you only £67 per $100, costing you extra money in the form of fewer pounds for your dollars. If you had made that exchange at your home bank, you’d have an additional £5 in your pocket.

Airport kiosks may also charge higher fees, which are sometimes hidden within the poorer exchange rates they offer for converting your dollars to another currency. These fees are often very small but can add up if you’re converting larger sums of money. These fees can range from 1% to 3% depending on the kiosk and how much money you’re converting.

If you can, it's best to exchange your money before you get to the airport. You can do this by ordering currency from your bank, which is usually available to pick up within a couple of days. They may even deliver it to you, and though you might still pay a fee, the exchange rate will be much better than at the airport.

Alternatives to exchanging currency at the airport

Exchanging currency at the airport is often an expensive option, with many airport exchanges charging fees or service charges of $5 to $15, and their exchange rates can be seven to 15 percent worse than the standard bank rate. Here are some alternatives to exchanging currency at the airport:

Use a Credit or Debit Card

Using a credit or debit card is a popular method of spending money overseas. Banks use the current exchange rate, and many waive foreign currency and transaction fees. Picking a card with no foreign transaction fees can save you a significant amount of money. However, it is important to note that some countries, especially less developed ones, may not accept card payments, so carrying some cash is still advisable.

Withdraw from a Local ATM

ATMs use the current bank rate and can give you the best deal. Many banks have global ATM networks, offering cards with no foreign debit or ATM fees. However, foreign ATMs may charge fees, so it is advisable to withdraw larger sums of money at once to minimise the fees paid.

Exchange with Your Bank Before You Go

Ordering foreign currency from your bank before your trip will usually take a couple of days, but the exchange rate will be much better than at the airport. They may even deliver it to you. Although you may still pay a fee, it will likely be lower than the airport markup.

Exchange Money at Your Destination

Most cities have currency houses, and hotels, train stations, and bus stations often have currency exchange services. However, these spots may have less favourable exchange rates and charge fees, so it is important to shop around. Alternatively, you can opt for a pre-paid travel card, which allows you to load foreign currency onto a card, although these typically carry an annual fee and a fee to purchase.

Using a credit or debit card overseas

Currency exchange kiosks at the airport are known to charge a markup on the international spot rate to make a profit. They take advantage of travellers' need for local currency and offer unfavourable exchange rates. Therefore, it is advisable to get currency in advance from a local bank or use an in-airport bank or ATM.

Understand Card Fees and Charges:

Before your trip, review the terms and conditions of your credit and debit cards to identify any fees or charges associated with international transactions. Some cards may charge foreign transaction fees, which can range from 2% to 5% of the purchase amount. Additionally, ATM withdrawals abroad may incur extra charges. Look for cards that waive these fees to save money.

Notify Your Card Issuer:

Inform your credit card issuer about your travel plans in advance. This will help prevent your card from being suspended due to suspicious activity. It is also recommended to ask for a phone number that you can call collect for assistance while overseas. Keep your contact information updated with the issuer, as they may need to reach you during your travels.

Avoid Dynamic Currency Conversion:

Dynamic currency conversion is a feature that allows you to make purchases in a foreign country using your home currency. However, merchants often use uncompetitive exchange rates for this service, resulting in unnecessary costs. Refuse to sign any receipts or checks that are not in the local currency to avoid these charges. Instead, brush up on conversion rates or use a mobile app to calculate the costs accurately.

Memorise Your PIN:

In some countries, particularly in Europe, credit card terminals may require you to enter a Personal Identification Number (PIN). Make sure you have a PIN set up and memorised before your trip. Additionally, carry your passport as identification to verify your authorisation for using the card.

Be Wary of Transaction Costs:

When using your credit or debit card, be mindful of transaction fees charged by shops, banks, and card issuers. These fees may be in the form of conversion fees or temporary holds on your account. Inquire about any charges before making a purchase, and always opt to pay in the local currency to avoid unnecessary markups.

Carry Multiple Payment Methods:

It is advisable to carry more than one payment method when travelling, including a mix of cash, credit, and debit cards. This provides flexibility and a backup option in case one payment method is not accepted or experiences issues. Additionally, having multiple cards can help you manage your expenses and maintain a good credit score.

Be Mindful of Security:

Exchanging currency before your trip

Exchanging currency is an essential part of travelling abroad. While it may be convenient to exchange currency at the airport, it is not always the best option. Here are some things to consider when planning your next trip:

Airport Currency Exchange

Airport currency exchange services are convenient, especially for travellers who need local currency immediately upon arrival. However, they usually offer poor exchange rates and charge high fees, either upfront or hidden within the exchange rate. These kiosks serve a captive market with little competition, which results in higher costs for travellers.

Local Bank or Credit Union

Before your trip, consider exchanging currency at your local bank or credit union. Many financial institutions offer currency exchange services for their customers, although the process may vary. For example, Bank of America checking account holders can order foreign currency online for collection or delivery, while credit card holders must visit a financial centre to place their order. It is important to plan ahead, as your bank may not have the desired currency readily available.

Specialist Foreign Exchange Service

Another option is to use a specialist foreign exchange service, such as Travelex, which offers online ordering and home delivery or collection from one of their locations. However, be sure to check for any fees, including service charges and exchange rate markups, as these can add up.

Borderless Multi-Currency Account

If you travel frequently or for extended periods, consider opening a borderless multi-currency account, such as Wise. This type of account allows you to hold multiple currencies and use a linked debit card to make purchases and withdrawals while travelling. There are no fees for opening or maintaining the account, and you'll get the mid-market rate on currency conversions, avoiding the markup typically charged by banks and money exchange services.

Credit and Debit Cards

Using credit and debit cards while travelling can be convenient, as you'll typically get a fair exchange rate. Many travel credit cards also offer benefits like reward points and no foreign transaction fees. However, be cautious of dynamic currency conversion (DCC), where you are given the option to pay in your home currency instead of the local currency. Choosing to pay in your home currency often comes with a markup that serves as a transaction fee. It is usually more cost-effective to pay in the local currency and let your bank handle the conversion.

Additionally, be mindful of ATM withdrawal fees when using debit cards abroad. These fees can be charged by both your home bank and the ATM operator, and they can quickly add up. If possible, take out larger sums of money at once to minimise the number of transactions and associated fees.

In summary, while exchanging currency at the airport may be tempting due to its convenience, it is often not the most cost-effective option. Planning ahead and exploring alternative methods, such as those mentioned above, can help you get a better deal on your currency exchange and save money for your trip.

Dynamic Currency Conversion (DCC)

DCC makes it easier for travellers to understand the price they are paying, as they don't have to calculate the currency conversion themselves. However, this convenience comes at a cost. The exchange rate will include a markup for the merchant and/or service provider, making the rate much less attractive than the market rate at the time. There may also be additional fees, and the customer will still be subject to any foreign transaction fees levied by their credit card provider.

One of the main advantages of DCC is that the exchange rate is locked in at the point of sale. Normally, credit card exchange rates aren't locked in until the transaction is processed, which may be several days later. However, this can also be a disadvantage if the DCC exchange rate is higher than the rate available through your credit card, as your foreign transaction fee will also be higher.

DCC is an Dynamic Currency Conversion (DCC) is a service that allows travellers to make purchases in a foreign country using their home currency. It is also known as cardholder preferred currency (CPC).

When using DCC, you will be charged a currency conversion fee, which is usually levied by the merchant through a service provider. This fee is typically higher than those charged on regular credit card transactions. The exchange rate will include a markup to the merchant and/or service provider, making the rate less attractive than the market rate. There may also be additional fees.

DCC is an optional service and you have the right to decline it. However, if you agree to DCC, the transaction will also be subject to any foreign transaction fees levied by your card issuer. This could result in fees of up to 7% or more.

Advantages

• The exchange rate is locked in at the point of sale.
• You see the exchange rate in real time.
• It can make price comparison easier, as you can compare prices in your home currency.

Disadvantages

• The markup is unknown, so you may not know how much above the market rate you are paying.
• Transaction fees will still apply.
• The foreign transaction fee may be higher.
• There will most likely be additional fees.
• Merchants are not always required to reveal additional fees.
• Your purchase could end up being more expensive due to the extra fees.

Frequently asked questions