Exchanging currency can be costly if done incorrectly, so here are the best ways to get favorable rates and avoid unnecessary fees:

1. Use Your Bank or Credit Union Before You Travel

• Why it’s effective: Banks and credit unions often offer better exchange rates than currency exchange kiosks at airports or tourist areas.
• How it works: Visit your bank a few days before your trip to order the currency you need. Some banks offer free or low-cost currency exchange for their customers.
• Tip: If possible, order currencies that are less common, as these may not be readily available at ATMs abroad.

2. Withdraw from ATMs in Your Destination Country

• Why it’s effective: Withdrawing local currency from ATMs often provides the best exchange rates, as they’re typically linked to interbank exchange rates.
• How it works: Use a debit card with low or no foreign transaction fees. Avoid ATMs in heavily touristy areas to reduce the risk of extra fees.
• Tip: Make larger withdrawals to avoid multiple transaction fees, and check with your bank about any international ATM fees.

3. Use a Credit Card with No Foreign Transaction Fees

• Why it’s effective: Cards with no foreign transaction fees allow you to make purchases at near-market exchange rates without additional charges.
• How it works: Choose a credit card with no foreign transaction fees to use for most purchases abroad. Major credit cards, like Visa or Mastercard, tend to offer favorable rates.
• Tip: Decline any option for “dynamic currency conversion” (paying in your home currency), as it often involves hidden fees and poor exchange rates.

4. Order Currency Online for Pickup

• Why it’s effective: Services like Travelex or some major banks allow you to order foreign currency online at competitive rates and pick it up at a convenient location, such as an airport or local branch.
• How it works: Order your currency online to lock in a favorable rate, and then pick it up before your trip.
• Tip: Compare exchange rates online before finalizing the transaction and avoid paying additional delivery fees if pickup options are available.

5. Avoid Airport and Hotel Currency Exchange Services

• Why to avoid them: Airport and hotel exchange services generally have poor rates and high fees.
• Alternative: Instead, plan ahead to withdraw local currency from an ATM upon arrival if you couldn’t get it in advance.

6. Consider Prepaid Travel Cards as a Last Resort

• Why it’s a mixed option: Prepaid travel cards let you load money in foreign currencies and lock in exchange rates, but they often come with fees and restrictions.
• When to use: They can be useful if you want to budget your spending or avoid fluctuating rates, but they’re not the most cost-effective.
• Tip: Compare any associated fees carefully, as some cards charge for activation, withdrawals, or reloads.

7. Exchange Currency at Your Destination’s Local Bank (If Necessary)

• Why it’s effective: Banks in some countries, especially in Europe and Asia, can offer decent exchange rates with lower fees than tourist kiosks.
• How it works: If you need to exchange cash, look for a local bank in the city center or a non-touristy area for better rates.
• Tip: Bring a passport, as some banks may require identification for currency exchange.

General Tips

• Always check rates and fees before exchanging. Currency apps like XE or OANDA can help you keep track of live exchange rates and plan your currency exchanges accordingly.
• Avoid dynamic currency conversion. Paying in the local currency is almost always cheaper than choosing to pay in your home currency.

Planning in advance and using smart methods like ATMs, no-fee cards, and banks can help you save on currency exchange fees while maximizing the value of your travel funds.