As a result of the pandemic-related pent-up consumer demand, Americans are preparing to travel once more. If your upcoming trip involves travel abroad, you might be interested in learning how to obtain foreign money without incurring additional costs.
Undoubtedly, it’s crucial to be aware of additional expenditures when traveling abroad, such as currency conversion fees and foreign transaction fees. The complex and volatile nature of currency exchange rates is a result of the ongoing flurry of international trade. Based only on the daily ups and downs of the markets, one bank, merchant, or currency exchange outlet may offer you a marginally better deal on exchange rates.
When you’re ready to take your next overseas trip, there are often some ways to get cash and other ways to shop that will provide you a better price than others. Here are some advice and suggestions on how to take pleasure in your overseas vacations while reducing currency exchange fees.
1. Before leaving the United States, get cash at your bank.
Getting some cash from your U.S. bank or credit union before your trip is one of the best strategies to reduce currency exchange expenses. Most significant U.S. banks will have foreign currency accessible for you to buy, depending on which nation (or countries) you’re travelling. For instance, Bank of America trades currencies for more than 100 countries, while Wells Fargo offers 70 currencies for use in more than 100 nations.
At your neighborhood bank, you might be able to purchase money in cash, or you can acquire currency online or over the phone and have it delivered to your house. Some currencies might be exchangeable the same day, depending on your bank, where you live, and which country’s currency you require. Other less frequently used currencies could need a few days or longer of notice.
By negotiating directly with your bank in the U.S. before your trip, there’s a high chance you can receive cash at a more advantageous exchange rate if you can prepare ahead.
According to John Sellers, rewards executive at Bank of America, “customers who order currency through their own bank can confirm the money they get is legitimate and that they have obtained the best, legal rate.” Bank of America uses a range of factors, such as market circumstances and rates paid by other financial institutions, to set its exchange rate because these prices are always changing, according to the author.
You might be eligible for exclusive benefits or incentives on currency exchange, depending on where you conduct your banking and your overall connection with them.
You can be eligible for additional perks or privileges by ordering your currency in advance through your bank, according to Sellers. For instance, he explains, “Bank of America Preferred Rewards members get a discount of up to 2 percent and free standard shipping on online and mobile foreign currency orders.
2. Steer clear of airport currency exchange kiosks
It can be tempting to purchase foreign currency at an airport kiosk or currency exchange counter if you don’t have enough time to withdraw cash from the bank before your trip. Although these locations are convenient, their conversion rates are often substantially worse than those offered by your bank at home.
For instance, the airport kiosk can offer you a lower exchange rate of £67 per $100 if you are traveling to the UK whereas your bank would have offered you a rate of £72 per $100. This would cost you more money since you will get less pounds for your dollar. You would have an extra £5 in your pocket if you had done that trade at your home bank.
Additionally, airport kiosks may impose extra costs that are occasionally concealed by the worse exchange rates they provide when you convert your dollars to euros, pounds, pesos, or another currency. It can be worth paying the additional fees for the convenience if you have a last-minute trip and require foreign currency in cash at the airport. Avoid airport kiosks and other exchange desks in busy tourist places if you can, as their business model relies on charging more because they are a quick and easy option.
3. Use a credit card, but be aware of foreign transaction fees
You may decide to save your foreign currency cash once you get to your location and make as many purchases with your credit or debit card as you can.
Foreign transaction fees, however, may present an additional issue. Your credit card or debit card may levy a foreign transaction fee of up to 3% on each purchase you make abroad, depending on your bank and the cards you carry.
This implies that your bank or card issuer will tack on an extra $3 fee to the price of your meal if you go out to dine in London, Paris, or Tokyo and spend the equivalent of $100 at the restaurant. If you spend $5,000 on a vacation in total and are charged a 3 percent international transaction fee on each purchase, you would incur an additional $150 in costs.
How can international transaction costs be avoided? Before you go on a trip, do your homework and review the terms and conditions of your bank and credit card accounts. Ask your bank over the phone if there are any foreign transaction costs.
Especially if it’s an excellent travel rewards credit card, you might wish to open a new account with a credit card that doesn’t charge international transaction fees if you have time before your trip.