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Americans are preparing to travel again amid pent-up consumer demand from the pandemic. If your next vacation is going to take you to another country, you might want to know how to get foreign currency without paying extra fees.
Undeniably, when traveling abroad, it is important to pay attention to currency conversion fees, foreign transaction fees and other costs. Exchange rates are complicated and fluctuate constantly as part of the daily rush of global trade. A bank, merchant, or currency exchange might give you a slightly better deal on exchange rates, just based on the daily highs and lows of the markets.
Of course, it can be easy to overspend in a foreign country. At least in part, this is because spending money in foreign currency can feel different. Prices in stores and restaurant menus may not seem as real as in US dollars. It can also be exciting to see and use the colorful foreign banknotes and interesting coins that you may not come across in your daily life. But, if you’re not careful, you could end up paying more than expected.
In general, some methods of getting money and making purchases will land you a better deal than others when you’re ready to make your next international trip. Here are some tips and ideas on how to enjoy your international travels while minimizing foreign exchange fees.
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1. Get money from your bank before leaving the United States
One of the best ways to minimize currency exchange fees is to obtain cash from your bank or credit union in the United States before you depart on your trip. Depending on the country (or countries) you are visiting, most major US banks will have foreign currencies available to you. For example, Wells Fargo offers 70 currencies for use in over 100 countries, and Bank of America exchanges currencies for over 100 countries.
You may be able to get currency in cash at your local bank branch or order currency online or over the phone for delivery to your home. Depending on your bank, where you live, and the currency of the country you need, some currencies may be available for same-day exchange. Other less frequently requested currencies may require a few days notice or more.
If you can plan ahead, chances are you can get money at a more favorable exchange rate by dealing directly with your bank in the US before you travel.
“Customers who order currency through their own bank can be assured that the money they receive is genuine and that they received the best legal rate,” says John Sellers, head of rewards at Bank of America. “Because these rates are constantly changing, Bank of America uses a variety of factors to determine its exchange rate, including market conditions and rates charged by other financial institutions,” he says.
Depending on where you bank and your overall relationship with them, you may be eligible for special foreign currency exchange rewards or benefits.
“By ordering your currency in advance through your bank, you may also receive additional perks or perks,” Sellers says. “For example, Bank of America Preferred Rewards members get up to 2% cash back on foreign currency online and mobile orders, plus free standard shipping,” he says.
2. Avoid currency exchange kiosks at airports
If you don’t have time to withdraw cash from the bank before your trip, it may be tempting to get foreign currency at an airport kiosk or exchange office. These places offer convenience, but their exchange rates are usually much less favorable than your bank at home.
For example, if you are traveling to the UK and your bank would have given you an exchange rate of £72 for $100, the airport kiosk may only give you £67 for $100, which will cost you extra cash in the form of fewer pounds for your dollar. If you had made this exchange at your home bank, you would have an extra £5 in your pocket.
Airport kiosks can also charge higher fees, which are sometimes hidden in the lower exchange rates they offer to convert your dollars into euros, pounds, pesos or another currency. If you are traveling on short notice and need foreign currency in cash at the airport, it might be worth paying the extra fee for convenience. If you can plan ahead, try to avoid airport kiosks and other currency exchange counters in heavily touristy areas – their business is to charge extra to be a convenient last minute option.
3. Pay by card, but watch out for foreign transaction fees
Once you arrive in your destination country, you can choose to keep your cash in foreign currencies and try to make payments with your credit or debit card whenever possible.
But that can pose another problem: foreign transaction fees. Depending on your bank and the card you have in your wallet, your credit or debit card may charge a foreign transaction fee of up to 3% on every purchase in other countries.
This means that if you go out to dinner in London, Paris or Tokyo and spend the equivalent of $100 in a restaurant, your bank or card issuer will add an additional $3 to the cost of your meal. If you spend a total of $5,000 on a trip and you’re charged a 3% foreign transaction fee on every purchase, that would equal an additional $150 in fees.
How to avoid foreign transaction fees? Do your research and read the fine print of your bank and credit card accounts before you travel. Call your bank and ask if they charge foreign transaction fees.
If you have time before your trip, you may want to open a new account with a credit card that does not charge foreign transaction fees, especially if it is a good credit card. with travel rewards.
4. Pay in local currency to avoid currency conversion fees
Some merchants allow you to choose whether you want to pay for your purchase in local currency or in US dollars.
This does not happen with every purchase. But sometimes, after swiping your card, the merchant will present you with a screen giving you an option: You can either pay the amount in US dollar equivalent or pay the amount in local currency.
If you ever find yourself in this situation, you should always choose to pay in the local currency. If you choose to pay in dollars, you will be charged an additional currency conversion fee. You will also likely get a poor exchange rate. The merchant’s POS system may make it seem like a convenient choice to pay in dollars instead of local currency, but it will end up costing you more. Simply pay in local currency when using your card.
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5. Know your ATM fees and limits
If you want to withdraw money from an ATM in another country, check if your bank has ATMs in your destination city. You may be able to avoid costly ATM fees. Keep in mind that your bank may charge you a fee for using an out-of-network ATM. This is in addition to the local fees charged by the foreign ATM. The exchange rate you get from a foreign ATM is probably a better deal overall than what you’d get from an airport kiosk, but ATM fees can add up, so be sure to withdraw enough money to be worth it. .
Check with your bank before you travel for the daily ATM withdrawal limits on your account. If your daily withdrawal limit is currently too low, consider asking your bank to increase this limit so that you can withdraw what you need during your trip.
Keep in mind that some international ATMs limit you to less cash withdrawals than your bank allows. Even if your daily withdrawal limit is $500, the ATM network or foreign bank may only allow you to withdraw $300 or $400. Plan ahead to make sure you have enough cash on your trip.
“Do a little research before you travel and see if your US bank offers free or discounted international withdrawals,” says Sellers. “This way you minimize your ATM fees while maximizing your withdrawals. This is also where ordering your foreign currency in advance can be beneficial, as it means reducing visits to ATMs, which could also reduce the fees incurred,” he says.
6. Use international banking apps
If you’re a frequent international traveler, consider using an international banking app to manage your money, like TransferWise (now known as Wise), Revolut, or others. These apps make it easy to transfer money between countries and maintain accounts in multiple currencies.
For example, with a multi-currency account, you can hold money in different currencies. This is useful if, for example, you travel frequently to Canada or Mexico, or if you like to go on vacation to Spain every summer. This allows you to avoid exchange rate volatility, since you will always have money ready for your next trip.
Before planning your next exciting international trip, think about how you’re going to get money and how you want to pay for your everyday shopping. Understanding foreign exchange fees, foreign transaction fees, ATM withdrawal limits and other aspects of foreign currency payments can help you save money, save time and get the most out of of your travels.