Lois Larson
Airports are designed to cater to the needs of holidaymakers and international travellers, including providing them with somewhere to exchange their currency before their travels. The benefits of exchanging currency at an airport include accessibility and convenience. However, airport currency exchange counters generally offer the worst exchange rates. 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. Ordering currency from your bank before you travel is almost always better than using the airport currency exchange.
| Characteristics | Values |
|---|---|
| Convenience | Currency exchange kiosks and counters are conveniently located within airport terminals, making them easily accessible just before departure or immediately after landing. |
| Cost | Airport currency exchanges generally offer the worst exchange rates. |
| Alternatives | Ordering currency from your bank before travelling is almost always better than using airport currency exchange. |
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What You'll Learn
Airport exchange rates
Airport currency exchange counters are known to offer the worst exchange rates. It is not uncommon for airport exchanges to charge 14% more than the current International Monetary Fund (IMF) exchange rate, with some premiums exceeding 17%. They also charge additional fees on top of the poor exchange rate.
If you need cash upon arrival, it is advisable to order foreign currency from your bank before you travel. Most major banks allow you to order foreign currencies online, by phone, or through their mobile app. You can then pick up the currency at a local branch before your trip, or some banks may offer to ship the currency to you.
Alternatively, if your bank has branches abroad or partnerships with other banks, you can use their ATMs to withdraw cash at a decent exchange rate and avoid out-of-network ATM fees. It is recommended to withdraw larger amounts to reduce the number of transactions and associated fees.
When exchanging currency, it is important to understand the difference between the buy rate and the sell rate, also known as the spread. The buy rate is the rate at which you can sell your foreign currency back to your local currency, while the sell rate is the rate at which you buy foreign currency.
Additionally, some foreign exchange providers charge a fee, known as a commission, for converting one currency to another. It is always a good idea to check current exchange rates with a trusted source, such as Reuters or the International Monetary Fund, to ensure you are getting a fair deal.
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Alternatives to exchanging currency
While exchanging currency at the airport is convenient, it is not the most cost-effective option. The exchange rates are often poor, and there may be additional fees.
Order Currency from Your Bank:
Ordering currency from your bank before your trip is a good option. Many banks allow you to order foreign currency online, by phone, or in-branch, and you can usually pick it up at a local branch. This way, you can compare rates and avoid the high fees associated with airport exchanges.
Use a Credit Card with No Foreign Transaction Fees:
Using a credit card with no foreign transaction fees can be a convenient and cost-effective way to pay for purchases abroad. Check your cardholder agreement, and if your current card charges these fees, consider applying for one that doesn't.
Use a Foreign ATM:
Using a foreign ATM, preferably one from your bank or its affiliates, can be a good way to get local currency upon arrival. This option may offer better exchange rates and lower fees than airport exchanges.
Exchange Currency at Your Destination:
If you don't want to carry large amounts of cash, you can exchange smaller amounts of currency at your destination. Look for national post offices or government banks, which often offer better exchange rates than private dealers.
Use a Reputable Exchange Rate App or Website:
Using a trusted online currency converter, such as XE Exchange, can help you compare rates and make informed decisions. This can be especially useful when combined with ordering currency from your bank or using a foreign ATM, ensuring you get a fair deal.
Plan and Carry a Mix of Cash and Cards:
It is generally recommended to carry a mix of cash and cards when travelling. This can help you manage your finances better and avoid relying solely on one payment method.
By considering these alternatives, you can often find better exchange rates and save on fees when travelling internationally.
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Convenience vs cost
Exchanging currency at the airport is convenient, but it can also be costly. Currency exchange kiosks and counters are usually located within airport terminals, making them easily accessible to travellers before departure or immediately after landing. However, airport currency exchange counters generally offer unfavourable exchange rates, and you may end up paying significantly more than the current market rate.
The convenience of exchanging money at the airport lies in its accessibility. Travellers can easily locate currency exchange kiosks and counters within the airport terminals. This accessibility is especially beneficial for those who need last-minute cash before their trip or upon arrival at their destination.
On the other hand, the cost of exchanging currency at the airport can be a significant drawback. Airport currency exchange counters often provide uncompetitive exchange rates, and you may find yourself paying much more than necessary. For example, at Bank of America, the exchange rates were found to be roughly 6% more than the IMF rates and significantly higher than what you would get elsewhere.
To avoid the high costs associated with airport currency exchange, it is advisable to explore other options. Ordering currency from your bank before travelling is often a better choice, as banks may offer more competitive exchange rates. Additionally, using a credit card or making small cash withdrawals from ATMs during your trip can help minimise the need for currency exchange altogether.
While exchanging money at the airport offers the convenience of accessibility, it is important to consider the potential costs involved. By exploring alternative options, travellers can make informed decisions to ensure they get the best value for their money.
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Exchanging leftover foreign currency
When returning home from a trip abroad, you may be wondering what to do with your leftover foreign currency. While it is possible to exchange foreign currency at the airport, you are unlikely to get a good exchange rate. Airport currency exchange counters generally offer the worst exchange rates you can find, often charging a premium of 14% or more on top of the current International Monetary Fund (IMF) exchange rate.
If you need to exchange a significant amount, it is recommended to shop around for a better rate. A good option is to visit your bank and see if they will exchange your foreign cash or deposit it directly into your account. Many banks offer currency exchange services for their clients, but some only do so for a limited number of currencies, so it is worth checking in advance. Some currency exchange services also offer "'buyback" programs, where you can sell back unused foreign currency that you purchased from them at a better rate or with lower fees.
If you are not in a rush to exchange your money, you could also wait until the currency exchange rate is favourable before visiting your bank. Alternatively, if you plan to return to the country, you could save the money for your next trip. Another option is to use your leftover cash to pay for part of your hotel bill, taxi fare, or duty-free shopping, or to give as a tip. Some sources suggest that it is worth keeping a small amount of foreign currency as a souvenir.
If you would prefer not to keep your leftover foreign currency, you could consider donating it to charity. UNICEF's Change for Good program accepts donations of foreign currency on several international airlines and via mail. Airports may also have similar initiatives and programs that raise money for different charities, where you can donate your spare change.
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Ordering currency before travel
Most banks allow you to order foreign currency, which you can typically pick up at a local branch before your trip. Some banks will even ship the currency to you, and some don't charge extra for postage if you order a certain amount. The exchange rates offered by banks are usually quite good, and you can check your bank's exchange rate before initiating the transaction. While the process varies by bank, most major banks make it easy to order online through their website or mobile app, or by phone.
When ordering currency, you usually enter the currency you need, add the desired amount, select the pickup method, and place your order. There is usually a minimum and maximum amount of foreign currency you can order. For example, a common minimum is $100 or $200, and a common maximum is $10,000 within a 30-day period.
In addition to ordering currency from your bank, you can also consider using a currency exchange service like Travelex, which offers fair exchange rates and low markups.
Ordering currency in advance can provide peace of mind, as you won't have to worry about finding ATMs or foreign banks in a new place. It also allows you to get familiar with the local currency before you land. However, it's important to consider your spending habits and goals while travelling, as there are benefits and drawbacks to ordering foreign currency ahead of your trip. For example, if you're only planning on using a credit card for purchases, you may not need to order cash in advance.
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Frequently asked questions
Exchanging money at the airport is convenient, but it often comes with poor exchange rates and additional fees. It is recommended to order currency from your bank or use a credit card instead.
Currency exchange kiosks and counters are conveniently located within airport terminals, making them easily accessible just before departure or immediately after landing. Some airports also offer a variety of major and exotic currencies.
Yes, you can order foreign currency from your bank before travelling, which usually offers better exchange rates and lower fees. Alternatively, you can use a credit card or make cash withdrawals from ATMs during your trip to avoid exchanging currency altogether.
Here are some tips to consider:
- Check the exchange rates offered by your bank or other trusted sources to ensure you're getting a fair deal.
- Try to use up any remaining cash before leaving the country, such as settling your hotel bill or making donations.
- If you have small bills left over, you can keep them as souvenirs or use them for small expenses like tipping.
