Lois Larson
When travelling, it is important to consider the most cost-effective way to exchange currency. While airport currency exchange kiosks are convenient, they often offer poor exchange rates and high fees. It is recommended to use a debit card with no foreign transaction fees, or a credit card that offers a good exchange rate and no fees, to withdraw cash from an ATM when you arrive at your destination. However, it is important to do your research, as some ATMs may charge additional fees for international withdrawals, and foreign ATMs may have lower cash withdrawal limits.
| Characteristics | Values |
|---|---|
| Currency exchange at the airport | Typically a poor money move due to long lines and unfavourable exchange rates. |
| Using ATMs at the airport | Can be a good option if it's a bank ATM and not Travelex. Dynamic currency conversion may be offered, which may not be beneficial. |
| Using a credit/debit card | Cards are becoming more widely accepted internationally, and some merchants may prefer being paid in US dollars. |
| Exchanging currency before the trip | Ordering currency from your bank before travelling is usually better than using the airport currency exchange. |
| ATM fees | Using a foreign ATM will usually incur fees. These could include flat rates, a percentage of the total withdrawal, conversion fees, and surcharges. |
| ATM withdrawal limits | Foreign ATMs may have lower withdrawal limits than your bank allows. |
| Currency exchange rates | Exchange rates fluctuate constantly but tend to hover around the same figure for months. |
| Currency exchange stores | May be an option if your bank doesn't accept the foreign currency you want to exchange, but the rates may not be the best. |
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What You'll Learn
Airport ATM vs. bank exchange rates
Airport ATMs and bank exchange rates are two options available to travellers who need to exchange currency. However, the rates and fees associated with these options can vary significantly. Here is a detailed comparison between the two:
Airport ATM Exchange Rates
Airport ATMs can be a convenient option for travellers who need local currency upon arrival. These ATMs are typically located in or near the airport and offer a quick way to access cash in the local currency. However, it's important to note that airport ATMs may charge higher fees and offer less favourable exchange rates compared to other options.
When using an airport ATM, it is essential to understand the fees involved. In addition to a flat withdrawal fee, there may also be a conversion fee or dynamic currency conversion fee if you choose to be charged in your home currency. These fees can add up, resulting in a higher overall cost for the transaction.
To find the most cost-effective airport ATM, it is recommended to use your bank's ATM network if they have branches or partnerships in the country you are visiting. Your bank's app or website may provide information on in-network ATMs at your destination, helping you locate options with lower fees.
Bank Exchange Rates
Exchanging currency at your bank before travelling is often recommended as it can provide better rates and lower fees compared to airport exchanges. Many banks offer foreign currency exchange services, allowing you to order the desired currency and pick it up at a local branch or have it shipped to your home.
While banks generally offer more competitive rates than airport kiosks, it is still important to compare rates and fees before initiating the transaction. Banks may advertise no-fee exchanges but offer unfavourable exchange rates. Therefore, it is advisable to check the current exchange rate provided by your bank against a trusted source, such as the International Monetary Fund (IMF) rate, to ensure you are getting a fair deal.
Additionally, consider ordering a multicurrency account or a travel credit card with no foreign transaction fees before your trip. These options can provide increased flexibility and security when making payments in different currencies during your travels.
In conclusion, while airport ATMs offer convenience, they may come with higher fees and unfavourable exchange rates. On the other hand, exchanging currency at your bank or through their ATM network abroad can often provide better rates and lower fees, making it a more cost-effective option for travellers. Comparing rates, understanding fees, and planning ahead can help travellers make informed decisions and maximise their purchasing power while abroad.
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Foreign transaction fees
When withdrawing money from an international ATM, you may be charged a flat rate fee, often between $1 and $5, in addition to a percentage-based fee. For example, Bank of America charges a $5 fee for most global withdrawals, plus a 3% charge on all withdrawals. Even if your bank does not charge a specific ATM fee, you may still be subject to a 'conversion fee' or 'dynamic currency conversion (DCC) fee', which is typically between 1% and 3% of the transaction. This is a hidden surcharge that banks often charge for foreign ATM withdrawals and card transactions abroad.
To avoid foreign transaction fees, consider the following options:
- Use a debit or credit card that does not charge foreign transaction fees. Cards from Capital One, Charles Schwab, Discover, and HSBC are known for waiving these fees.
- Open a checking account that doesn't charge foreign transaction fees or reimburses you for them. For example, the Capital One 360 Checking Account and the Schwab Bank Investor Checking Account.
- Use a Global ATM Alliance bank, such as Barclays, Scotiabank, or Bank of America, which allows customers to use ATMs of other alliance banks worldwide without paying out-of-network fees.
- Withdraw larger amounts of cash less frequently to reduce the impact of flat-rate fees.
- Decline dynamic currency conversion when given the option, as the exchange rate offered may include significant hidden fees. Instead, use a card with no foreign transaction fees or carry out the currency exchange through your bank before your trip.
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Dynamic currency conversion
When using DCC, the currency conversion takes place at the point of sale, and the DCC operator must disclose the exchange rate used for conversion at the time of the transaction. This exchange rate must be based on a wholesale interbank rate, to which any additional markup is then applied. The customer, therefore, has full transparency, including conversion fees, and can make an informed choice about whether or not to use DCC.
Visa and Mastercard now require the customer's consent for DCC, although some travellers have reported that this is not always the case. If you do not see the required details or feel pressured to choose one currency over another, Visa recommends declining the currency conversion offer and reporting the incident to your card issuer. Opting to accept or decline DCC will not impact your ability to make purchases or withdraw cash internationally.
It is worth noting that some ATMs may offer you the choice of paying in your home currency, but this option is called dynamic currency conversion. ATM exchange rates are tied to the interbank currency rates traded on the global financial market. These rates fluctuate constantly but will likely hover around the same figure for months at a time.
When travelling abroad, it is generally recommended to order foreign currency from your bank before you go, as airport currency exchange rates are typically unfavourable.
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ATM withdrawal limits
While ATMs at the airport can be convenient, they may not be the best option for exchanging money. Airport currency exchange rates are often poor and come with additional fees. For example, NerdWallet found that some airport exchanges charge up to 17% more than the current International Monetary Fund (IMF) exchange rate.
If you do decide to use an ATM at the airport, be aware that there are withdrawal limits. These limits are set by your bank and can vary depending on the institution and your account type. Basic accounts, for instance, may have lower limits than premium accounts. Daily ATM withdrawal limits are usually between $300 and $1,500, but they can be higher or lower. Some ATMs may also have per-transaction withdrawal limits, which are separate from your debit card purchase limits.
To find out your daily withdrawal limit, check your bank's website, review your account agreement, or contact customer service. If you need to withdraw a larger amount of cash, you may be able to request a higher limit from your bank, either temporarily or permanently. However, there may still be a maximum cap set by the bank.
To avoid ATM withdrawal limits, you can split your withdrawals over several days or withdraw cash in person at a bank branch. Another option is to use a peer-to-peer (P2P) payment platform, such as Zelle or Venmo, to transfer money instead of taking it out from an ATM.
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Currency exchange stores
However, if you need cash immediately upon arrival, exchanging a small amount of money at the airport might be your best option. This will allow you to pay for immediate expenses such as transportation or tipping, while you find a better exchange rate elsewhere.
To get a better exchange rate, you can order foreign currency from your bank before you travel. Most major banks allow you to order foreign currency online, by phone, or through a mobile app. You can then pick up the cash at a local branch or have it shipped to you. Banks typically offer better exchange rates than airport currency exchange stores, and in some cases, they may not even charge for postage.
Alternatively, you can withdraw money from an ATM when you arrive at your destination. ATMs can offer some of the best currency exchange rates, but you may need to pay international ATM fees and additional conversion fees. To reduce these costs, you can check with your bank in advance to find out which ATMs to use. Using a debit card with no foreign transaction fees can also help you avoid extra charges.
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Frequently asked questions
Yes, you can change international money at the airport from an ATM. However, it is recommended to exchange money at your bank before your trip, as airport currency exchange rates are usually poor and come with additional fees.
Exchanging money at an airport ATM is convenient, as ATMs are always open and easily accessible.
Airport ATMs often charge higher fees for international withdrawals. You may be charged a flat rate or a percentage of your total withdrawal, as well as a 'conversion fee'.
You can order foreign currency from your bank before your trip, or use your financial institution's ATMs when abroad to withdraw local currency with competitive exchange rates and low fees.
