Sachin Walls
When travelling to a new country, it is always a good idea to have some local currency on hand. While it is possible to purchase euros at the airport, it is not recommended due to the high fees and poor exchange rates. It is best to plan ahead and order foreign currency from your bank before travelling, or use a travel money card or credit card to withdraw cash from an ATM when you arrive at your destination.
| Characteristics | Values |
|---|---|
| Purchasing euros at the airport | Convenient |
| Inconvenient if the ATM is not working | |
| Expensive due to high currency exchange fees | |
| May be the only option in some countries | |
| Purchasing euros before travelling | Can get a better exchange rate |
| Can avoid paying ATM transaction costs | |
| Can avoid exchanging currency at unfavourable rates | |
| Can avoid the hassle of exchanging currency at the airport |
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What You'll Learn
It's convenient, but is it worth the cost?
While it may be tempting to exchange your money at the airport, it is almost always a bad idea. Airport currency exchanges rarely offer the mid-market rates that banks do, and their rates are usually worse than those offered by exchanges outside of airports. On top of that, they often charge fees that are higher than those charged by banks or other exchanges. For example, airport exchanges have been found to charge up to 17% more than the current International Monetary Fund (IMF) exchange rate, whereas banks tend to charge around 6% more.
That being said, exchanging money at the airport is convenient, and in some situations, it may be necessary. If you're in a hurry or have forgotten to exchange money beforehand, an airport exchange can be a quick and easy solution. Additionally, if you're travelling to a country with poor infrastructure or limited access to ATMs, it might be a good idea to have some local currency on hand when you arrive.
To get the best exchange rates and avoid unnecessary fees, it's generally recommended to exchange money before you travel. Most banks offer currency exchange services, and some will even ship the currency to you. Credit cards are another good option, as many offer no foreign transaction fees, allowing you to withdraw cash from ATMs abroad without incurring additional charges.
If you do need to exchange money while travelling, it's best to avoid touristy areas, as exchanges in these locations also tend to charge higher fees and offer less favourable rates. Instead, look for exchanges in local areas, or use an ATM to withdraw cash directly in the local currency.
Overall, while exchanging money at the airport may be convenient, it's rarely worth the cost. With a little planning, you can easily avoid the high fees and unfavourable rates that are common at airport currency exchanges.
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Airports vs. banks
Airports and banks are two of the most common places to exchange currency. However, they differ significantly in terms of convenience, exchange rates, fees, and other factors. Here is a detailed comparison of the two options:
Airports:
- Convenience and Accessibility: Airports are easily accessible and convenient, especially for travellers who want to exchange currency on the go. They usually have foreign exchange kiosks or desks located within the terminal, making it easy for travellers to access these services.
- Exchange Rates: Airport exchange rates tend to be less favourable than those offered by banks. They often charge a higher percentage above the current International Monetary Fund (IMF) exchange rate, with premiums sometimes exceeding 14-17%additional fees and commissions. These fees can add up, making the overall cost of exchanging currency at the airport even higher.
- Last-Minute Option: Airports provide a last-minute option for travellers who may have forgotten to exchange currency beforehand or need some local cash upon arrival for immediate expenses, such as transportation or tipping.
Banks:
- Exchange Rates: Banks typically offer better exchange rates than airports. They usually follow the mid-market exchange rate, which is the standardized rate between two currencies on a given day. This means you'll get more value for your money when exchanging currency at a bank.
- Fees: While banks may charge fees for currency exchange, these fees are generally lower than those at airport exchanges. Some banks may even offer free exchanges up to a certain limit. Additionally, by exchanging currency at a bank, you can avoid the dynamic currency conversion fees that may be applied at airport ATMs.
- Planning and Timing: Exchanging currency at a bank usually requires some planning and time. You may need to call ahead to ensure they have the foreign currency you need and allow for processing time, especially if you intend to order the currency for pickup or delivery.
- Account Requirements: Some banks may require you to have an account with them to exchange currency. This can be a limitation if you don't have an account with a bank that offers currency exchange services.
- Convenience: Exchanging currency at a bank before your trip can save you the hassle of doing so at your destination. It also allows you to compare rates and choose the most favourable option without the time pressure of being at the airport.
In summary, while airports offer the convenience of last-minute currency exchange, banks typically provide better exchange rates and lower fees. To make an informed decision, consider factors such as timing, accessibility, exchange rates, fees, and your personal preferences. Additionally, it is worth exploring other options, such as using travel money cards or credit cards with no foreign transaction fees, which can offer flexibility and favourable rates when travelling abroad.
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Withdrawing from an ATM
When withdrawing from an ATM, it is recommended to have a basic understanding of the local currency and its denominations. Local currencies typically follow a decimal system, similar to the one you are accustomed to. For example, there are 100 "little ones" (cents) in every "big one" (euro). Familiarising yourself with the currency can help you make informed decisions when exchanging money or making purchases. It is also beneficial to be aware of the approximate exchange rates to ensure you get a fair deal.
To minimise fees, it is advisable to withdraw larger amounts of cash at once rather than making frequent small withdrawals. However, it is essential to balance this with your safety and comfort in carrying larger sums of money. Additionally, consider using a no-foreign-transaction-fee credit card for purchases, as this can save you money on foreign transaction fees, typically ranging from 1% to 3%.
It is worth noting that while ATMs are widely available in many European countries, the availability may vary depending on your destination. For example, Macau has the highest number of ATMs per capita, while countries like Kenya and Nepal have significantly fewer. Therefore, it is beneficial to research the ATM availability at your specific destination in advance.
Lastly, it is always a good idea to have some local currency on hand when travelling. Carrying a small amount of cash, such as €100 to €200, can be useful for small purchases, emergencies, or situations where cards may not be widely accepted. However, it is essential to strike a balance between having enough cash and not carrying excessive amounts, as it increases the risk of loss or theft.
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Exchanging before you travel
Exchanging currency before you travel can be a good option, as it allows you to avoid the often unfavourable rates and fees of airport exchanges. While it may be tempting to simply exchange money at the airport for convenience, you will likely end up paying a lot more than you need to.
Banks
One option is to exchange your currency at a bank before you depart. Most banks offer currency exchange services, but it is always a good idea to call ahead and check. Banks will usually offer better rates than airport exchanges, and some may even provide this service for free up to a certain limit. However, you may need to have an account with the bank to exchange currency, and there may be limits on the amount of cash you can withdraw. Additionally, some banks may not offer exchanges for certain currencies.
Credit Cards
Using a credit card is another way to avoid the high fees associated with airport exchanges. Many credit cards offer no foreign transaction fees, meaning you can simply withdraw cash from an ATM at the mid-market rate when you reach your destination. This can be a good option for those who want to avoid carrying large amounts of cash, but it is important to be aware of any potential cash advance fees or foreign ATM fees. Additionally, credit cards may not be accepted everywhere, so having some local currency is always a good idea.
Other Options
There are also several other ways to obtain foreign currency before you travel. You can order currency online from some banks and have it shipped to you, or use a travel money card, which allows you to withdraw cash from ATMs without the need for a credit card. Exchanging currency at a foreign exchange bureau in a city can also be a good option, as they often offer better rates than airport exchanges. However, it is important to be cautious when using mobile apps or country-specific financial services, as these may come with additional risks.
Overall, by exchanging currency before you travel, you can avoid the high fees and unfavourable rates of airport exchanges and ensure that you have the local currency you need for your trip.
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Credit cards
Choosing the Right Credit Card
Not all credit cards are created equal when it comes to foreign transactions. It's important to check the terms and conditions of your credit card agreement to understand any potential fees or charges associated with international usage. Look for credit cards that offer no foreign transaction fees, as these will provide you with the best value. Many airline cards fall into this category. If your current card charges foreign transaction fees, consider applying for a new card that waives these fees.
Understanding Exchange Rates
When using your credit card for purchases in a foreign currency, such as euros, pay attention to the exchange rate offered by your credit card company. In most cases, the exchange rate provided by your bank or credit card company will be more favourable than the rates offered by merchants or currency exchange vendors. When given the option, it is usually recommended to choose to be charged in the local currency (euros) rather than your home currency, as your credit card issuer will typically provide a better conversion rate.
Advantages of Credit Cards
- Avoiding Exchange Fees: Using a credit card with no foreign transaction fees helps you avoid the extra charges often associated with currency exchanges, especially at airports or tourist areas.
- Convenience and Safety: Credit cards eliminate the need to carry large amounts of cash, reducing the risk of loss or theft.
- Purchase Protection: Credit cards often provide additional benefits such as purchase protection, allowing you to claim a refund if services are not provided or in case of cancellations.
- Emergency Funds: In unexpected emergencies or when facing internet outages, having a credit card as a backup payment option can be invaluable.
Considerations and Limitations
While credit cards are widely accepted, it's important to recognize that some places may still rely predominantly on cash. This is particularly true for taxis, certain restaurants, and markets where cash is preferred or negotiation is possible. Additionally, some credit cards may not have a PIN, which can be an issue when using them at ATMs or for specific transactions, such as train ticket purchases. Therefore, it is always a good idea to carry some local currency as well.
Pre-Trip Preparations
Before embarking on your trip, take the following steps:
- Notify your credit card company: Inform your credit card issuer about your travel plans to avoid any unexpected blocks or security holds on your card due to foreign transactions.
- Understand your card's benefits: Familiarize yourself with the perks and protections offered by your credit card, such as rental car insurance or travel insurance.
- Set up automatic payments: Ensure your credit card payments are up to date and consider setting up automatic payments to avoid late fees or penalties while you're away.
- Carry multiple payment options: In addition to your credit card, consider having a debit card and some local currency as a backup.
In summary, credit cards can be a convenient and cost-effective way to pay for purchases and services when travelling to Europe. By choosing the right credit card, understanding exchange rates, and being mindful of the advantages and limitations, you can make the most of your credit card while exploring new destinations.
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Frequently asked questions
Yes, you can purchase euros at the airport. Most airports have foreign currency exchanges, but they rarely offer mid-market rates and usually charge higher fees than banks or other foreign currency exchanges outside the airport.
It is generally not recommended to exchange currency at the airport due to unfavourable rates and high fees.
You can purchase euros at your local bank, although it is wise to call ahead to ensure they can accommodate the exchange. You can also order foreign currency from your bank to pick up at a local branch or have it shipped to you.
You can use your debit or credit card at ATMs in Europe to withdraw euros. Many major banks, such as Chase, US Bank, Wells Fargo, and Bank of America, have ATMs across Europe that offer low exchange rates. Alternatively, you can use a travel money card or a no-foreign-transaction-fee credit card to avoid exchange fees.
Having local currency before arriving at your destination can be useful for small purchases or emergencies, such as when the internet is down or when cards are not accepted, like in some taxis or restaurants.
