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Advice on How Not to Get Short-Changed When Getting Foreign Currency

Advice on How Not to Get Short-Changed When Getting Foreign Currency

Advice on How Not to Get Short-Changed When Getting Foreign Currency

Let’s start with a little quiz:

When traveling abroad, it’s best to get the foreign currency you need:

A. From your bank before you leave.
B. From an airport currency exchange kiosk using cash you brought with you.
C. From an ATM in the foreign destination using your credit card.
D. Never pay in cash abroad, only use a credit card.

Not sure? We asked three in-the-know experts what their take on how not to get short-changed when traveling internationally. (Spoiler: they all agreed the answer is C.)

Former Intel engineer, touring musician and current stand-up comedian, Dan Nainan has traveled to more than 50 countries and handled his fair share of rupees, Euros, dollars and yuan. His recommendations?

  1. One thing – never, ever exchange currency at a place like Thomas Cook, etc. that you
 see at the airport. Always, always get money from the ATM when you land at 
the airport in your destination country. That gives you the best rate.
  2. Also, ask around (or before, online) 
whether one can use dollars. The dollar can be used practically anywhere and has 
a tremendous amount of power. For example, I just did six shows in Pakistan 
last month, and everybody wanted me to pay them in dollars as much as 
possible.
  3. Download an app such as XE for your phone and use the built-in
 calculator [while abroad].
  4. As far as converting foreign currencies into dollars after the trip, that’s a tough one. Banks give you the absolute worst rate - you should check with them, it's jaw-dropping what they charge. Airport kiosks aren’t much better. Better yet, find someone who is going to the country you just got back from, and sell them the foreign currency at the current rate, with no commission either way - that way you both win. Also, it's kind of nice to have the currencies to hold, because they make a great souvenir because you look at the bills and think of the countries, and the experiences you had.

 

Budget travel expert, Barry Choi runs the financial info website MooneyWeHave.com and has appeared numerous times on HuffpostLive. He suggests:

  1. There's a good chance that your home bank will charge you a fee when using a foreign ATM but this fee is usually waived for premium account holders. If the fee can't be avoided, just max out your daily withdrawal limit so you won't need to make too many trips to the ATM.
  2. With ATMs, you're only withdrawing money as you need it; this makes travel safer since you'll never be carrying large amounts of cash.
  3. Before you depart make sure both your debit and credit cards are set to a 4-digit PIN. This is the international standard, the last thing you want is for your cards to be rejected.
  4. Traveler's checks aren't as convenient as they used to be since they're no longer widely accepted. With traveler's checks, you're paying a spread on the exchange, plus a commission when you cash them in, so essentially you're paying a fee twice just to use them. Sure some checks are commission free, but there are just better and cheaper options available these days.
  5. However, travelers should do their due diligence and pick the method that best suits them.

 

Stefanie Connell, author of The Broke and Beautiful Life, a blog (and book) that offers practical strategies for making smart financial decisions, advises:

  1. The best way to get your hands on local currency abroad is not through currency exchange companies - while convenient, they charge huge transaction fees and inflated exchange rates - but through ATMs.
  2. While ATMs are known for giving the best exchange rates, they can also come with hefty fees if you don’t use the right bank. Chase for example, charges a $5 withdrawal fee at ATMs outside the U.S. That’s a high price to pay for accessing your own money. Instead try Charles Schwab High Yield Investor Checking that reimburses ATM fees worldwide with its Visa Platinum debit card, or Ally Interest Checking that charges a nominal fee of 1 percent at foreign ATMs.
  3. While roughly 90 percent of credit cards charge foreign transaction fees, there are some fee-free alternatives. (Not having to pay an additional two
  4. to four percent per purchase can save you quite a bit over the course of a trip.) Notable fee free options: BankAmericard Travel Rewards Card has no annual fee and no foreign transaction fees. Likewise, CapitalOne Quicksilver has no annual fee nor foreign transaction fees, and you can earn unlimited 1.5% Cash Back.
  5. Be sure to notify your credit card company of the locations and dates of your travel. You don’t want your card to be flagged and deactivated, leaving you financially stranded.
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