Lois Larson
Currency exchange services at the airport are convenient, but they are also usually one of the most expensive places to exchange money. Airport currency exchange kiosks serve a captive market, so there is no real competition, leading to poor exchange rates and high fees. Ordering currency from your bank before you travel is almost always better than using the airport currency exchange. Many banks let customers order foreign currency in person, by phone, or online, though you'll need an account with the institution.
| Characteristics | Values |
|---|---|
| Currency exchange at the airport | Yes, currency exchange is available at some airports |
| Exchange rates | Airport currency exchange services are convenient but usually offer poor exchange rates and high fees |
| Alternatives | Ordering currency from your bank before travelling, using your bank's ATM network at your destination, or using a reputable company like Travelex |
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What You'll Learn
Currency exchange at airports is convenient but expensive
Currency exchange at the airport is convenient, but it can be expensive. Most international airports have currency exchange locations, which can be useful if you need to exchange money before your trip. However, the exchange rates at these airport kiosks are often poor and come with high fees, which can drive up the costs of currency exchange and leave you with less to spend on your trip.
Airport currency exchange kiosks serve a captive market, so there is little competition, and they can charge higher fees and offer less favourable exchange rates. These kiosks often have additional hidden fees, and you may pay up to 15% more than bank rates. You will also pay a currency conversion fee every time you exchange between two currencies, so you won't get the market rate for your currency.
It is generally recommended to order currency from your bank before you travel. Banks typically offer the most competitive rates and lowest fees, and you can usually get lower conversion fees than other options. Ordering currency in advance can help you secure better exchange rates and reduce stress upon arrival. You can also use your bank's ATM network at your destination to withdraw cash in the local currency with competitive exchange rates and low fees.
If you need to exchange money at the airport, it is recommended to use a reputable company, such as Travelex, which is known for fair exchange rates and low markups. Alternatively, you can consider opening a borderless account from Wise, which allows you to hold money in multiple currencies and make purchases or withdrawals with a linked debit card.
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Ordering currency from your bank is cheaper
Currency exchange counters at airports generally offer the worst exchange rates. Ordering foreign currency from your bank before you travel is almost always better. Bank of America's exchange rates, for example, average roughly 6% more than the IMF rates and are less than half of what airport currency exchanges charge. Citi's rates are also generally solid, although there is a $5 service fee for transactions under $1,000 (waived for premium account holders).
Most major banks make it easy to order currency online, by phone, or in person. Typically, you can access the currency exchange webpage through your bank's website or mobile app. From there, you enter the currency you need, the desired amount, select the pickup method, and place your order. Some banks, like Bank of America, allow you to order currency through online or mobile banking if you have a checking or savings account. If you only have a credit card, you may need to order currency at a financial center.
There are usually minimum and maximum amounts for foreign currency orders. For example, a common minimum is $100 or $200, and a common maximum is $10,000 within a 30-day period. Be sure to also understand all the fees involved, including shipping fees. Bank of America's standard shipping costs $7.50, but this fee is waived for Preferred Rewards program members.
If it's too late to order foreign currency from your bank, you can still curtail currency fees by using your bank's ATM network when you reach your destination. Withdrawing cash in the local currency from your bank's ATMs will often provide a decent exchange rate while eliminating out-of-network ATM fees.
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Airport currency exchange kiosks have poor exchange rates
Currency exchange kiosks at the airport are known to offer poor exchange rates. This is because they mark up the exchange rate to make a profit, knowing that travellers who have just gotten off a plane will need money right away.
For instance, if your bank offers an exchange rate of £72 per $100, an airport kiosk may only give you £67 per $100, costing you extra money in the form of fewer pounds for your dollars. If you had made the exchange at your home bank, you would have had an additional £5.
It is advisable to exchange your money through a bank or by withdrawing the local currency from an ATM, as you will likely get a better rate, even if there are ATM or credit card fees. Many foreign banks are happy to exchange your dollars for the local currency at a better rate than you would find at an airport kiosk.
If you are unable to exchange your money beforehand, it is still recommended to avoid exchanging large amounts of money at airport kiosks. Instead, you can withdraw smaller amounts of cash from an ATM or pay with your credit or debit card as much as possible.
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Banks offer the most competitive rates and lowest fees
Currency exchange at the airport is convenient, but it comes at a cost. Airport currency exchange counters generally offer the worst exchange rates and the highest fees.
Banks, on the other hand, offer the most competitive rates and the lowest fees. Major banks, such as Chase or Bank of America, often offer the added benefit of having ATMs overseas. Ordering currency from your bank before you travel is almost always better than using airport currency exchange. You can also use your bank's ATM network abroad, which is likely the best option for exchanging currency with minimal fees. You may be able to withdraw cash in the local currency with competitive exchange rates and low fees (1% to 3%).
If you have time before your trip, it's a good idea to compare rates from multiple banks and credit unions to find the best exchange rate. Local banks and credit unions usually offer the best rates. However, keep in mind that most banks and credit unions require you to be a customer to exchange currency. Some banks may also have minimum and maximum limits on the amount of foreign currency you can order. For example, a common minimum amount is $100 or $200, while a common maximum is $10,000 within a 30-day period.
When exchanging currency at a bank, you will typically be charged a transaction fee. This fee can be a flat fee or a variable fee, depending on the amount and type of currency. Some banks may also charge shipping fees for delivering the foreign currency to you. However, you may be able to avoid these fees by opting to pick up the cash at a local branch or by being a loyal customer. It's also a good idea to check if your bank will buy back any leftover foreign currency when you return.
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Using your credit or debit card abroad? Watch out for dynamic currency conversion (DCC)
When travelling abroad, it's important to be aware of dynamic currency conversion (DCC) and how it can affect your finances. DCC is a service that allows you to make purchases in a foreign country using your credit or debit card and have the transaction shown in your home currency. While this may seem convenient, it often comes with additional fees and poor exchange rates that can increase the total cost of your purchase.
Understand DCC Fees and Costs: DCC transactions typically include a markup to the merchant or service provider, resulting in a less favourable exchange rate than the market rate. Additionally, there may be other fees involved, such as a foreign transaction fee charged by your card provider. These fees can add up to 2-3% of the transaction amount.
Compare Exchange Rates: Before agreeing to a DCC transaction, take a moment to calculate the cost of the purchase in the local currency. You can use online exchange rate calculators or mobile apps to ensure you're getting a fair deal. By understanding the current exchange rates, you can make an informed decision and avoid paying more than necessary.
Use Cards Without Foreign Transaction Fees: Consider using credit or debit cards that do not charge foreign transaction fees. By choosing these cards, you can avoid additional costs associated with DCC transactions. Some card providers offer cards specifically designed for international travel, providing more favourable terms for currency conversions.
Be Mindful of ATM Withdrawals: When withdrawing cash from ATMs abroad, be cautious of DCC options. It is generally advisable to use a debit card at an ATM affiliated with your bank back home, as this can help you secure a better exchange rate. If you cannot avoid a DCC transaction at an ATM, try to find another ATM that offers withdrawals in the local currency.
Review Your Transactions: After making purchases or withdrawals with DCC, carefully review your card statements. Ensure that the amounts charged are correct and that there are no unexpected fees or charges. If you notice any discrepancies, contact your card provider immediately to dispute the transaction.
By being cautious and informed about dynamic currency conversion, you can make better financial decisions when using your credit or debit card abroad. Remember that DCC is optional, and you have the right to decline it if you believe you are getting an unfavourable exchange rate or incurring excessive fees.
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Frequently asked questions
Yes, currency exchange is available at most airports. However, the exchange rates are often poor and there may be high upfront or hidden fees.
Exchanging currency at the airport is convenient but expensive. It is recommended to order foreign currency from your bank before travelling, as they typically offer the most competitive rates and lowest fees.
Ordering currency in advance can help lower the cost of exchanging money and maximise the amount you receive. It also gives you peace of mind, as you won't need to worry about finding ATMs or foreign banks at your destination.
In addition to poor exchange rates and high fees, exchanging currency at the airport can make it challenging to keep track of your spending. You may be tempted to spend more to use up extra foreign cash, and you risk losing money if you don't use all of the foreign currency.
