Airport Exchange Rates: Good Or Bad Deal?

Airports are a convenient place to exchange currency, but they rarely offer good exchange rates. Airport exchange services primarily make their money by offering poor exchange rates. The exchange rate at airport kiosks is often significantly lower than the rate you would get by withdrawing money from an ATM in a foreign country. In addition, there is usually a service fee added when exchanging money at an airport kiosk.

It is generally recommended to exchange currency at your local bank before your trip or to use a credit or debit card that does not charge international transaction fees.

Why airport exchange rates are bad

Exchanging currency at the airport is a costly option for travellers. Here are several reasons why airport exchange rates are unfavourable and should be avoided:

High Fees and Service Charges

Airport exchange kiosks often charge a fee or service charge ranging from $5 to $15 per transaction. These fees can add up quickly, especially for larger currency conversions.

Poor Exchange Rates

The exchange rates offered at airport kiosks are typically much worse than the standard bank rates. The rates can be up to 15% lower than the mid-market rate, resulting in travellers receiving significantly less foreign currency for their money.

Captive Market and Lack of Options

Airports are often considered a captive market, as travellers who need local currency urgently before their trip may not have many other convenient options. This lack of alternatives allows airport exchange services to charge higher fees and offer unfavourable exchange rates, knowing that travellers may feel they have no other choice.

Dynamic Currency Conversion (DCC)

When using a debit or credit card at an airport ATM, you may be given the option to be charged in your home currency instead of the local currency. This practice, known as Dynamic Currency Conversion (DCC), often results in a poor exchange rate and additional fees, increasing the overall cost of the transaction.

Alternative Options

There are several alternative options available that offer better exchange rates and lower fees. These include:

• Ordering foreign currency from your bank before your trip
• Using a travel money card or prepaid card loaded with the desired currency
• Withdrawing cash from a local ATM at your destination, which will typically offer a better exchange rate than airport kiosks
• Using a credit or debit card for purchases and avoiding foreign exchange transactions altogether

Alternatives to exchanging currency at the airport

Exchanging currency at the airport is convenient, but it's not the best option if you want to get a good exchange rate. Here are some alternatives to consider:

Exchange Currency at Your Local Bank Before Your Trip:

Before your trip, visit your local bank branch and exchange your currency there. They usually have common foreign currencies available, and the fees will be much lower than at airport exchange kiosks. It's best to call ahead and order the foreign currency you need, as banks may not have it readily available.

Use Your Debit/Credit Card at ATMs:

Using your debit or credit card at ATMs is a convenient way to access cash in the local currency. Withdraw cash from an ATM at the airport or your destination, but be sure to check the exchange rate and any associated fees. Using your card at ATMs often provides a better exchange rate than airport exchanges.

Use Your Credit Card for Purchases:

Using a credit card for purchases while travelling can be a great option, as many travel credit cards offer no foreign transaction fees, and you can earn rewards or points. Just be sure to let your bank know you'll be travelling to avoid any issues with foreign transactions.

Prepaid Travel Cards:

Consider getting a prepaid travel card, which allows you to load foreign currency onto it before your trip. This option gives you easy access to the local currency without the need for exchanging cash. However, prepaid travel cards typically carry annual fees and other charges.

Exchange Money at Your Destination:

If you don't want to carry large amounts of cash, you can exchange money at your destination. Look for currency exchange houses, hotels, train stations, or bus stations. However, be aware that these places may offer varying exchange rates, and the rates may not be as favourable as exchanging before your trip.

Send Money in Advance with Online Services:

If you have a trusted contact at your destination, you can use online money transfer services to send money in advance. This way, your contact can withdraw the funds in the local currency from an ATM, avoiding unfavourable exchange rates.

How to get the best exchange rates

Avoid Airport Exchanges

It is almost always a bad idea to exchange currency at the airport. Airport exchange services tend to offer poor exchange rates and add extra fees, counting on the fact that travellers are a captive market with few other options.

Plan Ahead

If possible, it is best to exchange currency before you go. Exchange a small amount of money at your local bank, enough to cover immediate costs like transportation from the airport, and then find a better exchange rate once you arrive at your destination.

Shop Around

If you are exchanging currency with your bank, be sure to compare exchange rates. Banks are rarely the cheapest option for common currencies, and you may find a better deal with a different supplier.

Use a Credit or Debit Card

Using a credit or debit card is a popular method for spending money overseas. Banks use the current exchange rate, and many waive foreign currency and transaction fees. However, be wary of businesses that offer to ring up your transactions in your home currency, as this often includes a markup that serves as a transaction fee. Always opt to pay in the local currency.

Withdraw from an ATM

ATMs use the current bank rate and will give you the best deal. If you are using a US bank, check if they have a global ATM network that offers cards with no foreign debit or ATM fees.

Use a Prepaid Travel Card

Prepaid travel cards allow you to load foreign currency onto what is essentially a travel gift card. While these cards often carry an annual fee, they can be a good option for avoiding poor exchange rates and excessive fees.

Exchange Money at Your Destination

Most cities have currency houses where you can exchange money, as well as hotels and train or bus stations. While these spots are convenient, they all offer different exchange rates, and you may find yourself wasting time shopping around to save a small amount of money.

Send Money in Advance

If you are travelling to a place where you have a trusted friend or family member, you can exchange money ahead of time and have them withdraw it from an ATM as a domestic transaction.

Buy Foreign Currency Online

Buying foreign currency online is becoming an increasingly popular option. Online exchange rates are often better than in-store, and you can now get your money delivered to your home or office. However, buying foreign currency with a credit card can incur more bank fees, so it is recommended to pay via bank transfer to avoid these charges.

The cost of exchanging currency at the airport

Exchanging currency at the airport is generally not a good idea. While it may be convenient, you will almost certainly get a poor deal.

The Exchange Rate

Airport exchange services make their money by offering poor exchange rates. The exchange rate at airport kiosks is significantly lower than the rate you would get by simply withdrawing money from an ATM in a foreign country. For example, you might see an exchange rate as low as 65% when converting USD to Euros, whereas the current exchange rate is around 85%. On top of this, there is usually a service fee of anywhere from $5 to $15, which means you could walk away with as much as 30% less money than you expected.

The Captive Market

Airport exchange services know that their customers have very few other options, so they can get away with charging inferior rates. This is the same reason that food is more expensive on a train or at the cinema.

The Alternatives

• Exchange currency at your local bank before your trip.
• Withdraw cash from an ATM at the airport.
• Use your credit card as much as possible, especially if it has no foreign transaction fees.
• Order cash pickup in advance.
• Exchange money at your destination, either at a currency exchange in the city or at your hotel.
• Send money in advance with a money transfer service.

How to exchange currency after a trip

It is unlikely that you will get a good exchange rate at the airport, so it is best to avoid exchanging any leftover currency there. Here are some alternative options for exchanging currency after a trip:

Exchange with your bank

Although your bank may not have the currency you need readily available, you can call ahead and order it from them. This is usually available to pick up within a few days, and while you might pay a fee, the exchange rate will be much better than at the airport.

Exchange at a specialist money exchanger

If you are exchanging larger amounts of common currencies such as US dollars, Euros, or British pounds, then a specialist money exchanger in the city is likely to be the cheapest option. These outlets compete against each other and can often provide the best rates if you shop around.

Exchange at the post office

Some post offices have an American Express Currency Exchange centre, which can be useful if you need to buy or sell currency in a hurry.

Exchange at a hotel

Larger hotels may offer their own currency exchange services, but be sure to check that they are offering a decent exchange rate before using this option.

Exchange at an ATM

Using an ATM at the airport or in the city may give you a better deal than exchanging cash at the airport. However, you will need to check the exchange rate and be aware of any foreign transaction fees that may be charged.

Exchange online

You can also exchange currency online, either by ordering foreign currency to be delivered to your home or office, or by using a travel money card. Travel money cards allow you to add a balance in your home currency and then convert it to the currency you need when you are ready to make a payment or withdrawal. These cards often offer better exchange rates and lower fees compared to physical currency exchange stores.

Frequently asked questions