Sachin Walls
Airports are a convenient place to exchange currency, but they rarely offer the mid-market rates that banks do. Their rates are usually worse than those offered by foreign currency exchanges outside airports. On top of that, airport foreign currency exchanges will charge fees higher than banks or other foreign currency exchanges. Banks and credit unions are generally the best places to exchange currency, with reasonable exchange rates and the lowest fees. If you're in a pinch, you can exchange dollars for euros at American airports, but you'll likely get a better deal if you plan ahead and exchange currency at your bank before you leave.
| Characteristics | Values |
|---|---|
| Convenience | Currency exchange at the airport is convenient and easily accessible. |
| Cost | Airport currency exchanges rarely offer mid-market rates, and their rates are usually worse than those outside airports. They also charge higher fees. |
| Alternatives | Banks and credit unions are generally the best places to exchange currency, with reasonable exchange rates and the lowest fees. ATMs in foreign countries can also be a good option. |
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What You'll Learn
Airport currency exchange rates are often poor
The most convenient and easily accessible spots to exchange money include train stations, airports, hotels, and tourist areas, but they also tend to be the most expensive. Airport currency exchange counters generally offer the worst exchange rates you'll find. For instance, at Bank of America, the exchange rates in January 2024 averaged roughly 6% more than the IMF rates and were less than half of what the airport currency exchanges were charging.
It is cheaper to exchange money at a bank or by using an ATM than at an airport. Many foreign banks are happy to exchange your dollars for local currency for a better rate than you would find elsewhere. Your bank's ATM network is likely the best option when you reach your destination. You may be able to withdraw cash in the local currency with competitive exchange rates and low fees (1% to 3%).
Before you travel, it is a good idea to order foreign currency from your bank. If it is too late to do that, you can use your bank's ATM network to withdraw local currency. Exchanging currency near you before you leave for your trip abroad can be the cheapest way to get foreign cash.
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Order currency from your bank before travelling
Ordering currency from your bank before travelling is a good idea for several reasons. Firstly, it can save you money. Airport kiosks are known to charge premium rates, and their exchange rates are often unfavourable. Banks, on the other hand, generally offer reasonable exchange rates and lower fees. Even with processing fees, ordering currency from your bank will usually work out cheaper than exchanging cash at the airport.
Secondly, it is convenient. Ordering currency in advance means you'll have cash on hand for immediate expenses such as taxis and tips when you arrive at your destination, and you won't have to waste time queuing at the airport exchange desk.
Thirdly, you are likely to get a better exchange rate. By ordering currency in advance, you can lock in a favourable exchange rate and avoid the high fees often associated with airport exchanges. It's worth checking your bank's exchange rate to ensure it's optimal before placing your order. You can do this by checking online or by contacting your bank directly. It's also a good idea to compare the exchange rates offered by different banks to make sure you're getting a fair deal.
Most major banks allow you to order currency online, via their website or mobile app, or by phone. Simply enter the currency you need, the amount, and select the pickup method. Some banks may charge a shipping fee for delivery, but you may be able to avoid this by picking up the cash at a local branch. It's worth noting that there is usually a minimum and maximum amount of foreign currency you can order. For example, Bank of America charges $7.50 for standard shipping and $20 for overnight shipping, with a minimum order amount of $100 to $200 and a maximum of $10,000 within a 30-day period.
Ordering currency from your bank before travelling is a cost-effective and convenient way to ensure you have the cash you need for your trip. By ordering in advance, you can benefit from favourable exchange rates and avoid the high fees often associated with airport currency exchanges.
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Use your bank's ATM network abroad
Using your bank's ATM network abroad is a convenient way to access local currency. Here are some tips to help you use your bank's ATM network effectively when travelling:
- Contact your bank before your trip: It is important to check with your bank about the fees associated with international ATM withdrawals. Fees can vary significantly between banks, and some banks may waive certain charges. For example, some banks do not charge foreign transaction fees for international usage. Additionally, your bank may have partnerships with international banks, allowing you to use their ATMs without incurring additional fees.
- Understand exchange rates: Exchange rates fluctuate and can vary between institutions. Before your trip, it is helpful to familiarize yourself with approximate exchange rates to ensure you get a fair deal. You can use online currency converters or smartphone apps to track exchange rates for the countries you plan to visit. Remember that the exchange rate you receive will likely be slightly different from the market rate due to bank profit margins.
- Use bank-run ATMs: Whenever possible, withdraw cash from ATMs located outside bank branches. These ATMs typically do not charge usage fees and are generally more secure. Avoid "independent" ATMs, such as Travelex or Euronet, as they often have high fees and may offer unfavourable exchange rates through dynamic currency conversion.
- Opt for local currency: When using ATMs or making purchases abroad, always choose to pay in the local currency rather than your home currency. Dynamic Currency Conversion (DCC) often comes with hidden fees and poor exchange rates. By paying in the local currency, you allow your bank or credit card company to handle the conversion, usually at more competitive rates.
- Withdraw larger amounts: Consider making fewer, larger withdrawals instead of multiple small ones to minimize transaction fees. Additionally, if your bank charges ATM fees, withdrawing larger amounts at once can help reduce the overall impact of these fees. However, be mindful of your daily withdrawal limit and plan accordingly.
Using your bank's ATM network abroad can be a safe and efficient way to access local currency during your travels. By following these tips, you can make informed decisions and avoid unnecessary fees when using ATMs in foreign countries.
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Avoid foreign currency exchanges in touristy areas
While it is possible to exchange dollars for euros at American airports, it is not recommended. Airport kiosks and stores are known to charge some of the highest fees and offer the worst exchange rates. This is because they cater to tourists who may prioritize convenience over cost-effectiveness.
Therefore, it is best to avoid exchanging currency in touristy areas, as these locations typically offer poor exchange rates and high fees. Here are some tips to avoid foreign currency exchanges in touristy areas:
- Plan ahead: Exchanging currency before your trip can help you secure more favorable rates. Check the exchange rates offered by your bank or credit union, as they usually provide the best rates and lowest fees.
- Use ATMs: When you reach your destination, use your bank's ATM network to withdraw cash in the local currency. This will often give you competitive exchange rates and low fees (typically 1% to 3%).
- Compare exchange rates: Check key currency exchange websites or a trusted source like Reuters to determine what a fair exchange rate is for the country you are visiting. This will help you identify locations with unfavorable rates and high fees.
- Use credit cards: Credit cards that do not charge foreign transaction fees can be a safer and more cost-effective alternative to exchanging cash. However, be mindful of potential fees and interest rates when using a credit card at ATMs.
- Spend coins before leaving a currency zone: Spend or exchange your coins before traveling to a country with a different currency, as they may become worthless.
By following these tips, you can avoid exchanging currency in touristy areas and benefit from better exchange rates and lower fees.
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Use credit cards with no foreign transaction fees
When travelling, it is important to have a credit card that does not charge foreign transaction fees. Foreign transaction fees are usually 1% to 3% of the purchase amount, with 3% being common. This might not seem like a big deal, but these charges can quickly add up. For example, if you spent $3000 at a hotel, you could be looking at an additional $90 charge.
If you are travelling abroad, it is worth applying for a credit card with no foreign transaction fees. Bank of America offers a credit card with no foreign transaction fees, as well as a 25%—75% rewards bonus on all eligible Bank of America credit cards. Capital One also offers a credit card with no foreign transaction fees, which offers $0 Fraud Liability, so you won't be responsible for unauthorized charges.
When paying with a credit card abroad, stick to cards that don't charge foreign transaction fees. When making purchases, choose to pay in the local currency rather than in US dollars to avoid currency conversion fees.
Your bank or credit union is likely the best place to exchange currency, rather than airport kiosks or other exchange houses. You may be able to withdraw cash in the local currency with competitive exchange rates and low fees (1% to 3%). Use your bank's app to find an ATM near you.
If you are travelling to a country that has restrictions on its currency for political or economic issues, your bank may not be able to access the currency. Check with your bank online to see whether the currency you are seeking to exchange is available.
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Frequently asked questions
Yes, most airports will have foreign currency exchange kiosks. However, while convenient, these kiosks rarely offer the mid-market rates that banks do and often charge higher fees.
Your bank or credit union is likely the best place to exchange currency. Many banks and credit unions can exchange dollars for euros, but it is always wise to call ahead of time to ensure they can accommodate the exchange. Ordering currency from your bank before you travel is almost always better than using airport kiosks.
Foreign currency exchanges in major cities can be a reliable way to obtain euros. Major banks, such as Chase, US Bank, Wells Fargo, and Bank of America, have ATMs across Europe that offer low exchange rates. You can also use your credit card to get cash in emergencies, but you will likely pay a sizeable cash-advance fee.
Many credit cards offer no foreign transaction fees, meaning the local currency will be charged at the mid-market rate with no extra fees. Some debit cards also offer no foreign transaction fees and no foreign ATM fees.
