How to exchange currency while travelling?

Let’s approach one of the most complicated traveler’s tasks – exchange money while travelling. In this post I will describe several options of exchanging currency and some advantages and disadvantages of each.

Exchange rate vs. commissions

First let’s have a look on what an exchange rate is. For example, imagine that you’re traveling from Portugal to the United States. Your currency is Euros and you will need to get (this means buy) the local currency – U.S. dollars. A quick check on google tells me that, today, 1€ = 1.04$. This means that the best exchange rate that you can get to buy dollars will be 1.04$. So if you exchange 10€ you will get 10.40$. The point is that you will never find a bank or an exchange currency office that will give you the rate that you see on google for one very simple reason, it’s a business and they have to make money on it. Nonetheless, you now know that before you exchange any currency you should check the exchange rate online. I recommend xe currency converter or google finance converter.

The second thing that you should know about are commissions. That’s a fee that banks or exchange currency offices can charge you for the transaction. Most of the times, especially in exchange currency offices, they will try to delude you with the “zero commission” story but at the end they will give you a terrible exchange rate and you will probably lose money. Now you know that a big merchandising sign saying “zero commissions” is not enough to get a good deal.

Considering this you should always take into account the applied commission, if any, and the exchange rate.

Let’s move on to the different possibilities of exchanging currency:

1.Withdrawal – ATM

This option is probably the simplest. Here you have to check the commissions and exchange rates given by your bank but take in mind that a “no commission” withdrawal may not mean a good deal. I heard my friends so many times saying “My bank doesn’t charge me any commission for withdrawing abroad”, thinking that for this reason the best way is to withdrawal money. It’s wrong. In fact, your bank may not charge you any fee for withdrawal but they will give you a terrible exchange rate. For example, for 1€ they will give you a rate of 0.70$, which means that with 10€ you will get only 7.00$ (remember that according to google the rate was 1€=1.04$). I know that withdrawing at ATMs is sometimes the only option but if that’s the case, at least make sure you ask your bank about the commissions and exchange rates before you leave (take in mind that exchange rates change daily but still, it’s not expected to find big differences in a few days only).

2. Card payment – Automatic Payment Terminals (APTs)

Some people prefer to pay with card than with cash. In fact this option is the safest, once you don’t have to carry cash with you, but maybe not the cheapest option. Most Automatic Payment Terminals (APTs) in shops and restaurants give you the option to choose the currency in which you would like to pay – the local currency or your own currency. I read some articles about this and the conclusion is that it depends a lot on you own currency and on your bank. The best way to guarantee that you pick the best option is to check in advance with your bank the exchange rates and then compare them with the ones that the APT is offering you. Nevertheless here a description of both options:

Pay with local currency

You will pay with the local currency and the exchange rate will be later done by your bank. So if your bank gives you a good exchange rate plus no commission for the card payment, that’s the option you should choose.

Pay with your own currency

In this case you are giving the possibility to pay with your own currency with an exchange rate provided by the APT. If you decide to pick this option, the “value-in-your-own-currency” given by the APT will be the exact value discounted from your bank account (considering that no commissions will be applied for the card payment). From my experience, this is most of the times the best deal but, as I said previously, you should always check with your bank the exchange rates that they give you, maybe you will find some better deals.

Note: Some ATMs are already using the same system, giving you the possibility to choose between your own currency or local currency. The theory is similar that in APT.

3. Exchange Currency Offices

This option is, from my experience, the cheapest but can also be the trickiest. First rule here is to avoid the exchange currency offices at the airports, those will give you the worst rate ever.  And that’s the reason why I think this option can be tricky, because exchanges rates can vary a lot depending on the location of the exchange office. Take in mind that the ones located at the airport are usually the worst ones and the ones located in the non touristic areas of city, the cheapest ones. Another important thing – don’t bite the “no commission fee”. No commission doesn’t mean a good exchange rate. Always look for both: zero commissions and a good exchange rate.

Negotiate, ALWAYS.

The secret about this option is to negotiate, always! I ALWAYS got a better deal than the first one that they first offered me. Take in mind that you will get a better exchange rate for bigger amounts of money, so exchanging big amounts of money should be considered. The minus about this option is that you will have to bring your own currency with you, in cash, which is not the safest option but you can always bring some cash to exchange and manage the rest with cards and ATMs.

4. Order money at your bank

Another option, even if not so common, is to order and buy the currency at your bank before your travel. For common currencies like euros, dollars, pounds, etc. I do not recommend this option, it doesn’t usually offer great deals, but, once again, check what are the commissions and exchange rates that your bank has to offer you. Nonetheless you know this option exists and it may me useful for currencies that are not so common, like Tanzanian shillings.

Have a nice trip (and deal),


One Comment Add yours

  1. Manolo says:

    Hello, thank you for writting this!

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