Lois Larson
Airports are designed to cater to the needs of holidaymakers and international travellers, including providing them with a place to exchange their currency before their travels. Currency exchange kiosks and counters are conveniently located within terminals, making it easy to access them just before departure, or immediately after landing. However, exchanging currency at the airport is not always the best option. While it offers convenience and quick access, it often comes with higher fees and poor exchange rates compared to other options.
| Characteristics | Values |
|---|---|
| Convenience | Currency exchange kiosks and counters are conveniently located within terminals, making them easily accessible just before departure or immediately after landing. |
| Wide range of currencies | Airport exchange counters typically offer a wide range of currencies, which can be useful when traveling to multiple countries or less common destinations. |
| Higher fees and poor exchange rates | Airport currency exchange services often charge a premium for the convenience they provide, resulting in higher fees and poor exchange rates compared to other options. |
| Security concerns | Carrying large amounts of cash in a busy airport can pose security risks, making travelers targets for theft, especially when traveling alone or in unfamiliar surroundings. |
| Time constraints | Airports are typically busy, and travelers are often pressed for time, making it difficult to compare rates and fees between different exchange kiosks, leading to less favorable deals. |
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What You'll Learn
Pros and cons of exchanging currency at the airport
Pros
Currency exchange services at the airport offer unparalleled convenience to travellers. They are easily accessible, with kiosks and counters located within terminals, allowing travellers to exchange money just before departure or immediately after landing. This eliminates the need to look for currency exchange services in an unfamiliar city.
Airport currency exchange services also save travellers the effort of having to find a currency exchange elsewhere, especially if they haven't had the time or opportunity to do so before their trip.
Cons
The biggest downside of exchanging currency at the airport is the unfavourable exchange rates. Airport currency exchange services often charge a premium for the convenience they offer, and these higher rates can significantly reduce the amount of foreign currency received, especially when converting large sums of money. Exchange rates at airports can be 10-15% higher than market rates.
In addition to higher exchange rates, many airport currency exchange services also impose service fees or transaction charges, further eroding the value of your money. Airports are busy environments, and travellers are often pressed for time, making it difficult to compare rates and fees between different exchange kiosks, leading to less favourable deals.
Exchanging a significant sum of money at the airport could also make you a target for theft, especially if travelling alone or in unfamiliar surroundings.
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Currency exchange kiosks and counters
The high exchange rates at airport kiosks can lead to unnecessary financial losses. While it may be worth paying the extra cost for the sake of convenience if you're in a hurry, it is recommended to plan ahead and avoid these kiosks and counters if possible. You will likely find better rates at a dedicated currency exchange, local bank, or bank ATM.
Exchanging a small amount of money at the airport may not seem like a big deal due to the minimal difference in rates. However, when exchanging larger amounts, you will notice a significant difference, resulting in higher charges. Therefore, it is advisable to shop around for a reasonable rate and compare rates with various dealers and on different portals.
Additionally, keep in mind that airport currency exchange rates are fixed and non-negotiable. You will usually need to present a valid ID, such as a passport, when exchanging currency at these kiosks and counters. While some services may accept debit and credit cards, be mindful of potential foreign transaction fees charged by your bank.
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Foreign transaction fees
When travelling, it's always a good idea to carry a mix of cash and cards. However, using your credit or debit card abroad can result in foreign transaction fees, also known as FX fees or international transaction fees. These fees are typically around 1% to 3% of the transaction value, although they can add up over an extended trip. For example, a 3% fee on $5000 spent in Europe would result in an extra $150 in fees.
It's important to note that foreign transaction fees differ from currency conversion fees, which are "hidden" fees charged when you choose to have your transactions presented in your home currency. While a foreign transaction fee is typically around 1-3%, a currency conversion fee tends to be about 1% of the purchase amount. To avoid confusion, always ask that your transactions be paid in the local currency.
To minimise foreign transaction fees, consider applying for a new account with a card that has no foreign transaction fees a few months before your trip. Some popular travel credit cards that offer no international transaction fees include the Chase Sapphire Preferred® Card, Bank of America® Travel Rewards credit card, and the Capital One Venture Rewards Credit Card. Additionally, some financial institutions, such as Discover, Charles Schwab Checking, and Capital One 360, do not charge foreign transaction fees for debit or credit card purchases.
By being mindful of foreign transaction fees and choosing the right credit or debit card, you can save money when travelling abroad and avoid unnecessary expenses.
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How much currency to carry
When travelling, it is important to carry some amount of cash, but it is also a good idea to carry cards. A recommended ratio of cash to cards is 30:70. This will help you manage your finances better and avoid unnecessary convenience fees and transaction fees that can add to the interest rate you pay as exchange rates may fluctuate anytime.
If you are entering the US, you must declare the currency you are carrying on a CBP Form 6059B. If you are carrying more than $10,000, you must also fill out a Currency Reporting Form (FinCen 105) online or on paper, and present it to a CBP officer. Failing to do so may result in confiscation of your currency.
It is recommended that you order foreign currency from your bank before you travel, as airport currency exchange rates are among the worst you'll find. It is not uncommon to see airport exchanges charging 14% more than the current International Monetary Fund (IMF) exchange rate, with some premiums exceeding 17%. Ordering currency from your bank before you travel is almost always better than using the airport currency exchange. Many banks will ship the currency to you, sometimes without charging extra for postage.
If you are travelling to a country that has few ATMs, it is wise to carry a no-foreign-transaction-fee credit card.
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Alternatives to exchanging currency at the airport
While exchanging currency at the airport is convenient, it can be costly. Here are some alternatives to consider:
Order Currency from Your Bank:
Ordering currency from your bank before your trip is often a better option than using airport exchanges. Many banks allow you to order foreign currency and pick it up at a local branch or have it shipped to you. The exchange rates offered by banks are usually more favourable than those at the airport. For example, Bank of America's exchange rates in January 2024 were roughly 6% more than the International Monetary Fund (IMF) rates, compared to airport exchanges, which can charge 14-17% more.
Use a Credit Card with No Foreign Transaction Fee:
Using a credit card that doesn't charge foreign transaction fees can be a cost-effective way to make purchases abroad. Check your cardholder agreement, and if your current card does charge these fees, consider applying for one that doesn't.
Use ATMs:
If you don't want to carry large amounts of cash, using ATMs overseas is a convenient option. Your own bank's overseas ATMs or foreign bank ATMs can provide local currency with a credit or ATM card. Major banks often have branches abroad or partner with other banks, so using those ATMs can provide decent exchange rates and eliminate out-of-network fees. Airport ATMs can also be used as soon as you arrive at your destination.
Spend Down Cash and Use Cards:
Try to spend as much cash as possible before returning home. You can use the remaining cash to settle your hotel bill or for last-minute expenses at the airport. Then, use a credit or debit card for any remaining purchases. This minimizes the need for currency exchange on leftover cash.
Save for the Next Trip or Exchange Elsewhere:
If you have leftover foreign currency, you can save it for your next trip, especially if it's a commonly used currency like Euros. Alternatively, you can exchange it at your local bank, which may offer better rates than the airport. Some travellers also mentioned exchanging small amounts of foreign currency at supermarkets or stores that allow paying part in cash and part by card.
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Frequently asked questions
Yes, currency exchange kiosks and counters are conveniently located within airport terminals, making it easy to access them just before departure or immediately after landing.
Yes, airport currency exchange services often charge a premium for the convenience they provide. These higher rates can significantly reduce the foreign currency you receive, especially when converting large sums of money. In addition to higher exchange rates, many airport currency exchange services impose service fees or transaction charges.
Yes, banks, credit unions, and online currency exchange bureaus and converters provide convenient and often inexpensive currency exchange services. Your own bank's overseas ATM or a foreign bank's ATM are also ways to get local currency with a credit card or ATM card once you arrive.
While currency exchange booths can be easily spotted at the airport, you may end up losing about 15% of the cash you need. As such, it is recommended to use a no-foreign-transaction-fee credit card or a no-foreign-fee debit card at the airport instead.
