Exchanging Money At The Airport: What You Need To Know

Exchanging money at the airport is convenient, but it comes at a cost. Currency exchange kiosks and shops at airports tend to offer poor exchange rates and charge high fees, which can eat into your budget before you've even left the airport. However, if you're in a pinch, you can minimise the cost by exchanging only small amounts of money needed for immediate expenses, such as transportation to your accommodation.

So, what are your alternatives? Well, you can exchange currency at your local bank before your trip, withdraw cash from an ATM at the airport, or simply use your credit or debit card for purchases and ATM withdrawals. These options often provide better exchange rates and lower fees, helping you stretch your money further.

Read on to learn more about these options and pick the best approach for your next trip!

Avoid exchanging money at the airport

Exchanging money at the airport is convenient, but it's not a good idea if you want to get a good deal. Here's why you should avoid it, and what to do instead.

The cons of exchanging currency at the airport

• High fees: Airport kiosks can charge up to 20% in fees, and you'll often get a much lower exchange rate compared to banks and private exchange companies.
• Bad exchange rates: Airport exchange services make most of their money by offering poor exchange rates. They might advertise "0% commission", but they'll still be making a profit by marking up the exchange rate.
• A captive market: Airport exchange services know that you might need local currency for transport, so they can charge higher fees and worse exchange rates because you don't have many other options.

What to do instead

• Exchange money at a local bank before you go: Call ahead and order the foreign currency you need from your bank. It's usually available to pick up within a couple of days, and the exchange rate will be much better than at the airport.
• Use your credit or debit card: Banks use the current exchange rate, and many waive foreign currency and transaction fees. Pick a card with no foreign transaction fees, and you could save upwards of 5%.
• Withdraw cash from an ATM: ATMs use the current bank rate and give you the best deal. If you use your debit or cash card to withdraw money from a foreign ATM, you'll get a competitive exchange rate. Just make sure you choose to pay in the local currency, not your home currency.

Use your credit or debit card

Using your credit or debit card is one of the best ways to get a good exchange rate when travelling abroad. While it may be convenient to exchange currency at the airport, you could end up paying extra fees and getting a poor exchange rate.

Using your credit or debit card is likely to be your safest bet for getting an exchange rate that's closest to the market rate. However, be aware that card issuers do set their own exchange rates for transactions, which can be updated daily based on market rates. Before your trip, ask your card issuer what rate they're using, then compare it with the market rate using a currency comparison website. Visa and Mastercard both have foreign exchange calculators online, so you can see what your total purchase price will be before you buy.

If your current card charges a foreign transaction fee, consider applying for a card with no foreign transaction fees. It's also worth noting that you will probably be charged a fee for using an ATM abroad, so it's a good idea to let your bank know where and when you'll be travelling in advance.

Using a credit or debit card is a safer option than carrying large amounts of cash, and you can replace lost or stolen cards. However, don't use your credit card for a cash advance to receive foreign currency, as you'll be charged a cash advance fee and a high interest rate.

Withdraw from a local ATM

Withdrawing from a local ATM is often the quickest and cheapest way to get cash while travelling abroad. ATM currency exchange tends to offer good rates, and you can avoid excessive ATM fees by doing your research and opting for a low-cost card.

Different types of foreign ATM fees include:

• International or transaction ATM fee: Many banks charge a flat rate (often between $1 and $5 USD) or a percentage of your total withdrawal (generally between 1-3%) for international withdrawals.
• Conversion fee: An additional 'conversion fee' of between 1-3% of the transaction is usually added when you use a bank-issued ATM card overseas.
• Surcharge: The ATM may add a surcharge as a fee for using the machine. You will be notified on the ATM screen and asked for your permission to proceed with the transaction.

To avoid these fees, consider the following:

• Use a non-bank alternative: Non-bank alternatives like the Wise account can be a good way to avoid fees. The Wise Account lets you get local details to receive money in 9 different currencies, spend like a local in over 150 countries with the Wise card, and more.
• Avoid dynamic currency conversion (DCC): Some ATMs may offer you the choice of paying in your home currency, but the exchange rate offered is likely to include significant hidden fees. Instead, always choose to pay in the local currency.
• Pick a bank in a global ATM network: US banks often work with banks and ATM operators overseas to reduce or waive international withdrawal fees. Check with your bank in advance to know which ATMs to use.
• Withdraw larger sums at once: Minimise your trips to the ATM by taking out larger amounts of cash at once. Just be sure to guard that cash carefully.
• Use an ATM at a major bank or post office: Smaller banks and independently owned ATMs carry a higher risk of surcharges.

Exchange with your bank before you go

Exchanging currency at the airport is expensive and should be avoided. If you want to save money, it is a good idea to exchange currency at your local bank before your trip. They will typically have common foreign currency on hand, and the fees you’ll pay will be much less than those charged by airport currency exchange outfits.

It is unlikely that your bank will have an abundance of foreign currency on hand the day before your trip, so walking in at the last minute and expecting to exchange your dollars for another currency is not realistic. Instead, call ahead and order foreign currency from your bank, which is usually available to pick up within a couple of days. They may even deliver it to you, and although you might still pay a fee, the exchange rate will be much better than at the airport.

Most banks allow you to order foreign currencies, which you can typically pick up at a local branch before your trip. Some banks offer to ship currencies to you, and sometimes they don't even charge extra for postage if you order a certain amount.

While you can generally expect a solid exchange rate, use a trusted source such as Reuters or the International Monetary Fund to find current exchange rates and ensure you get a fair deal.

Additionally, understand all the fees involved. For example, Citi charges a $5 service fee for transactions under $1,000, though it's waived for clients with premium bank accounts.

There’s also generally a minimum amount of foreign currency you can order ($100 or $200 is common) and a maximum ($10,000 within a 30-day period is common).

Exchange money at your destination

Exchanging money at your destination is a good option if you want to avoid the poor rates and high fees of airport exchanges. However, it does require a little more forward planning.

Firstly, it's a good idea to bring some US dollars with you, in case you encounter any issues with your bank account, debit card, or credit cards when you arrive.

If you know you will need to exchange a large amount of money, it's worth doing some research in advance. Most cities have currency houses or exchange bureaus, and you may also be able to exchange money at your hotel, a local bank, or at train or bus stations. These spots usually offer better rates than the airport, but they all offer different exchange rates, so it's worth shopping around to get the best deal.

Alternatively, you can send money ahead to your destination, to be picked up in the local currency. Western Union, for example, allows you to send money to one of their locations, and you can use their online currency converter to estimate how much you will receive, factoring in the exchange rate and any fees.

If you want to avoid carrying large amounts of cash, you could also consider a prepaid currency card, which can be loaded with local currency and used like a debit card.

Frequently asked questions