Roberta Aguirre
Currency exchange at the airport is a convenient option for travellers who need to exchange money before or after their trip. However, it is important to note that airport currency exchange often comes with significantly higher costs compared to banks or online platforms. Airports usually have limited currency exchange kiosks with fixed rates that may include additional fees and poor exchange rates. As a result, travellers are advised to compare rates and consider alternative options, such as exchanging smaller amounts at the airport, using online platforms, or opting for international travel cards or credit cards, to avoid high currency exchange rates.
| Characteristics | Values |
|---|---|
| Convenience | Airports have currency exchange kiosks, making them a common practice for exchanging currency. |
| Cost | Airport currency exchange rates are often higher than other providers, with extra fees and high exchange charges. |
| Competition | Airports typically have limited competition, with only one or two kiosks, so they set fixed, non-competitive rates. |
| Alternatives | Online platforms, banks, RBI-approved money changers, ATMs, and forex cards are recommended as cheaper alternatives. |
| Emergencies | Airports can be useful for exchanging small amounts of currency in emergencies, covering immediate expenses. |
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What You'll Learn
High airport exchange costs
Currency exchange counters at the airport are convenient, but they often come with high costs and limitations. Airport exchange rates can be significantly higher than the rates offered by banks or online platforms. These rates are influenced by market trends, demand, and service provider fees. Due to additional charges, airport currency exchange rates are often less favorable than other exchange options available in the open market.
Airport currency exchange services typically offer rates that are 10% to 15% higher than standard bank rates. These rates fluctuate due to several factors, including operational costs, service fees, market fluctuations, and additional fees and commissions. The high demand and limited competition at airports also contribute to higher markups. For example, while exchanging US$1000, you might pay ₹87,500 at the airport, whereas an online platform may offer the same amount for ₹86,380, resulting in a direct saving of ₹1,200.
The high costs of airport currency exchange are attributed to the steep rents and operational costs incurred by airport kiosks and currency exchange counters. These expenses are passed down to consumers through higher exchange fees. Additionally, inflation plays a crucial role in determining the airport currency exchange rate. When a country experiences high inflation, the purchasing power of its currency decreases, leading to a weaker exchange rate.
To avoid paying higher fees at airports, it is recommended to explore alternative options. Online platforms, such as ExTravelMoney, offer competitive rates by allowing users to compare rates from multiple authorized vendors. Planning ahead and exchanging currency before arriving at the airport can also help mitigate the high costs associated with airport currency exchange. Utilizing local ATMs, bank partnerships, and credit cards without foreign exchange fees are other cost-effective strategies to consider.
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Alternatives to airport exchange
Exchanging currency at the airport is often costly and comes with several limitations. Here are some smarter alternatives to consider:
Online Currency Exchange Platforms
Online platforms such as ExTravelMoney and MakeMyTrip offer competitive rates and cost-effective alternatives to airport exchanges. These platforms allow you to compare rates from multiple authorized vendors and avail of currency conversion at live rates, avoiding the hefty markups and additional fees charged at airport kiosks.
Banks and Credit Unions
Ordering currency from your bank or a credit union before your trip is a convenient and inexpensive option. Most banks allow you to order foreign currency through their website or mobile app, offering solid exchange rates. You can typically pick up the currency at a local branch or have it shipped to your address. Additionally, when travelling, you can use your bank's overseas ATMs or partner ATMs to withdraw local currency, avoiding high out-of-network ATM fees.
Foreign ATMs
Using foreign ATMs or your bank's ATMs overseas is a good option to obtain local currency upon arrival. This allows you to bypass the high fees and poor exchange rates of airport kiosks. However, it is essential to be mindful of any ATM fees, especially when using non-network ATMs.
Carry a Mix of Cash and Cards
It is advisable to carry a mix of cash and cards when travelling. Having a small amount of local currency for immediate expenses, such as transport or food, can be useful. Additionally, carrying cards provides flexibility and eliminates the need to carry large amounts of cash.
Government Institutions
When travelling internationally, consider exchanging currency at national post offices or government banks. These institutions typically offer better exchange rates than private dealers and can be a safe and reliable option.
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Forex cards
Currency exchange at the airport is not recommended due to high costs and limitations. Airport counters often charge hefty conversion fees, with markups ranging from 5% to 15% above market rates. For instance, while exchanging US$1000, one might pay ₹87,500 at the airport, whereas the same amount can be obtained for ₹86,380 through ExTravelMoney, resulting in a direct saving of ₹1,200.
As an alternative to exchanging currency at the airport, travellers can opt for a Forex card, which offers a safe, convenient, and cost-effective way to carry and spend money abroad. Forex cards are prepaid travel cards that can be loaded with foreign currency and used for purchases, withdrawals, and payments at most merchant stores and ATMs globally. Here are some benefits of using Forex cards:
- Safety and Security: Forex cards are a secure way to carry foreign currency, eliminating the need to carry large amounts of cash. They often come with robust security features, such as Chip and PIN protection, to safeguard your funds during your travels.
- Protection Against Fluctuating Exchange Rates: The exchange rate is fixed when you load the card, protecting you from unpredictable currency fluctuations. This feature ensures that you know exactly how much money you have to spend in the local currency.
- Multiple Currencies on a Single Card: Some Forex cards, such as the ICICI Bank Forex Prepaid Card, allow you to carry multiple currencies on a single card. This feature is especially convenient if you are visiting multiple countries with different currencies or want to avoid the hassle of exchanging cash in different countries.
- Competitive Exchange Rates: Forex cards offered by banks often provide competitive exchange rates, helping you save money on currency conversions. These rates can be more favourable than those offered at airport exchange counters.
- Easy Currency Loading and Reload Options: Forex cards can be easily loaded with currency online through internet banking or mobile applications. This convenience ensures that you can access and reload your funds flexibly while abroad.
- Lower Transaction Fees: Forex cards typically have lower transaction fees compared to regular cards, making them a more cost-effective option for international travellers.
- Student and Business Options: Forex cards are versatile and cater to various types of travellers. For example, there are student forex cards tailored specifically for students studying overseas, ensuring seamless financial management during their educational journey. Similarly, business professionals can benefit from using Forex cards for their international transactions.
Overall, Forex cards provide a safe, convenient, and cost-effective solution for travellers who want to avoid the high costs and limitations of exchanging currency at the airport. By offering multiple currencies, competitive exchange rates, and protection against fluctuations, Forex cards have become a popular choice for international travellers seeking a seamless financial experience abroad.
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Currency exchange in India
Currency exchange at the airport is a common practice in India, but it is not always the best option. Airport currency exchange rates are often 10-12% higher than market rates due to the high costs of operating at the airport, including salaries, rent, and other operational costs. These higher rates can result in travellers losing about 15% of their cash when exchanging money at the airport.
To avoid these unfavourable rates, it is recommended to plan ahead and exchange currency before travelling, either through banks, RBI-licensed money changers, or online forex platforms. Banks like Axis Bank offer foreign currency exchange at competitive rates, and RBI-licensed money changers can be easily accessed in major cities and towns across India without requiring a bank account. Online forex platforms, such as BookMyForex and Fly Finance, also offer convenient and cost-effective currency exchange services, allowing users to compare rates from various providers and get the best deals.
Additionally, travellers can consider using Forex cards or international debit cards like Niyo and Wise, which offer benefits such as no issuance or loading charges, interest on unspent balances, and avoidance of foreign transaction fees. These cards can be loaded with Indian Rupees and used to make purchases in any currency, eliminating the need to worry about exchange rates.
However, for those who prefer carrying cash, it is advisable to follow the 30/70 practice, carrying 30% cash and 70% cards to better manage finances and avoid the risks associated with carrying large amounts of cash. When declaring cash at Indian airports, travellers can use the ATITHI app to file a customs declaration in advance and avoid potential delays.
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Selling leftover currency
While airport currency exchange counters are convenient, they often come with high costs and limitations. Currency exchange at airports often comes with significantly higher costs compared to banks or online platforms. Airport exchanges charge hefty conversion fees, with markups ranging from 5% to 15% above market rates.
If you have leftover currency, one option is to switch it back to your home currency. Foreign exchanges, online websites, the post office, supermarkets, or financial institutions offer to buy your cash back from you. You can also check with your bank to see if they will exchange your foreign cash or deposit the funds directly into your account. It is worth noting that exchange rates are fluid, so you may receive less money than you paid for the currency.
Some currency exchange services offer "buyback" programs, allowing customers to sell back unused foreign currency at a better rate or with lower fees. However, this typically only applies to money that has been previously exchanged and not withdrawn from an ATM.
Another option is to ask friends or family if they would like to buy your leftover currency. This can save you both hassle and remove any commission or fees. You can also donate your leftover currency to charity. Many charities have schemes where you can donate foreign notes and coins, and some even accept out-of-date currency.
If you have rare or unique banknotes and coins, you might consider selling them on an online marketplace, such as eBay or a specialized currency exchange website. These can fetch a decent price from collectors.
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Frequently asked questions
Exchanging currency at the airport is convenient, especially if you need to make a last-minute exchange. However, it is not a good idea as airport counters often come with high costs and limitations. They charge hefty conversion fees, with markups ranging from 5% to 15% above market rates.
You can exchange currency at banks, RBI-approved money changers, ATMs, and forex service platforms. You can also exchange currency online beforehand through platforms like ExTravelMoney, MakeMyTrip, and BookMyForex.
A forex card is a popular alternative to airport exchange. It functions like a debit card and can be used at ATMs or stores worldwide. It is safer than carrying cash, as it requires an electronic signature and PIN to authorise transactions.
Exchanging currency at the airport is convenient and can be a lifesaver in emergencies, such as if you've forgotten to exchange currency before your trip. It is also ideal for exchanging small amounts of money to cover immediate expenses like transport or food.
