Airport Exchange Rates: Costly Convenience Or Necessary Evil?

Airports are a convenient place to exchange currency, but they often offer poor exchange rates and high fees. Currency exchange shops at airports take advantage of travellers' need for local currency, offering unfavourable rates and charging excessive fees. While exchanging money at the airport is a quick option, travellers are likely to get a better deal by planning ahead and ordering foreign currency from their bank before travelling. Exchanging money through a bank or withdrawing local currency from an ATM typically provides a better exchange rate, even when accounting for ATM or credit card fees.

Airport exchange rates are often the worst you'll find

Currency exchange shops at the airport know that travellers may need local currency as soon as they arrive at the airport, so they offer poor exchange rates, charging high fees and making big profits. For example, the exchange rate at Sao Paulo GRU airport has been described as "extremely bad", with rates around 30-40% worse than the "official" rate.

It is generally recommended to get currency in advance from a local bank or a foreign bank's ATM, or to use a credit card for purchases. Many foreign banks are happy to exchange currency for a better rate than at the airport, and some U.S. banks offer foreign ATM fee refunds and charge no fees for using a foreign ATM. Credit cards often offer great exchange rates that are updated every minute, providing the most accurate exchange rate possible.

However, it is important to note that banks may have limits on the amount of currency they can exchange, and you may have to settle for an older exchange rate. Additionally, using a credit card overseas can incur foreign transaction fees, and it may be difficult to find ATMs that accept credit cards. Therefore, it is advisable to research the best options for currency exchange before travelling, including checking the exchange rates and service fees offered by different institutions.

It's best to exchange currency at a local bank or ATM

Airport currency exchange kiosks are known to offer poor exchange rates and charge high fees. They take advantage of travellers' need for local currency upon arrival in a new country, and make big profits by offering an unfavourable exchange rate.

It is best to exchange currency at a local bank or ATM. Many foreign banks are happy to exchange your domestic currency for local currency, often at a better rate than you would find at an airport kiosk. Some banks may need to order the cash for you, so it is worth contacting them in advance.

Using your debit card at a local bank ATM is another convenient option. While you may be charged a small ATM fee, this can be offset by withdrawing a larger amount of cash. Many U.S. banks offer foreign ATM fee refunds and do not charge for using a foreign ATM. It is worth checking with your bank to find out if they exchange foreign currency for free, and what the conditions are to avoid fees.

If you are travelling to a country with restrictions on its currency, your bank may not be able to access the currency. In this case, you may need to exchange currency once you arrive in the country. In this situation, it is still best to avoid airport kiosks and exchange your money at a local bank or ATM, where you are likely to get a better rate.

It is also worth noting that exchanging currency at your bank or credit union before you leave your home country is often the cheapest way to get foreign cash.

Credit cards are a good alternative to exchanging currency

Using a credit card can help you avoid these poor exchange rates and fees. However, you should be mindful of any foreign transaction fees that may be charged by your credit card company. If you plan ahead, you can apply for a credit card that does not charge foreign transaction fees. This will allow you to get an exchange rate that is closer to the market rate.

Additionally, credit cards offer fraud protection and safety features. For example, you can freeze your card if it is misplaced. This is not possible with cash, which cannot be recovered if lost or stolen.

If you are travelling to a country where credit cards are widely accepted, you may be able to rely solely on your credit card for purchases. This will save you the hassle of exchanging currency altogether.

However, it is important to note that some vendors may only accept cash. In this case, you can use your credit card at a local ATM to withdraw cash in the local currency. This will generally provide you with a better exchange rate than exchanging currency at the airport.

Avoid exchanging currency at hotels or tourist areas

While exchanging currency at hotels or in tourist areas may be convenient, it is generally best to avoid doing so. These locations often charge higher fees for currency exchange, taking advantage of tourists who prioritise convenience over cost-effectiveness.

Hotels and tourist-centric areas, like airports, may provide convenience, but they usually come with higher fees for currency exchange. For instance, locations such as Paris, Orlando, and Rome are known for catering to tourists who may value convenience over cost-effectiveness.

In addition, currency exchange shops in tourist areas try to operate where you will need them and take advantage of tourists to make a profit. While you may find better rates than at the airport, you are still likely to get a bad deal.

To avoid unexpected fees and save on your foreign travel budget, it is recommended to exchange currency at your local bank or credit union before your trip. Many foreign banks are happy to exchange your dollars for local currency at a better rate than you would find at a hotel or in a tourist area. Alternatively, you can withdraw local currency from an ATM, which often offers competitive exchange rates and low fees.

Overall, by exchanging currency at a bank or using a local ATM, you can typically get a better exchange rate and lower fees than at a hotel or in a tourist area.

Order currency from your bank before travelling

Ordering currency from your bank before travelling is a good idea if you want to avoid the poor exchange rates and high fees that are often associated with airport kiosks. While exchanging money at the airport is convenient, it is not cost-effective.

By ordering currency from your bank, you can take advantage of the competitive exchange rates that banks offer. Banks are also more likely to provide favourable rates to their customers, and many banks in the US do not charge a fee for exchanging currency. For example, Bank of America customers can exchange foreign currencies for free, but only on orders of $1,000 or more. TD Bank also offers free currency exchange for customers with a qualifying account type.

In addition to getting a better exchange rate, ordering currency from your bank before travelling can also help you avoid the stress of last-minute exchanges. The days leading up to an international trip can be busy, and exchanging money at the bank ensures that you don't have to rush around at the last minute.

It's important to note that banks may have limits on the amount of currency you can exchange, and you may need to settle for an older exchange rate. Additionally, some banks may charge a delivery fee for foreign currency orders, especially for smaller amounts. However, if you are a premium member or have a certain type of account, you may be eligible for discounted or waived fees. For example, Bank of America Preferred Rewards clients can receive a discount of up to 2% off the published exchange rate and have the standard shipping fee waived.

Overall, ordering currency from your bank before travelling can help you secure a better exchange rate and avoid unnecessary fees. By planning ahead, you can make the most of your money and ensure a more stress-free travel experience.

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