How to Exchange Currency Before and During Your Trip

Where and when to exchange money

You can exchange currency at banks, airport kiosks, hotels, and currency exchange shops — but the rate and fees vary sharply between them. Banks usually offer the best exchange rate but may require advance notice or a minimum amount. Airport kiosks are open when you land but charge higher fees and give worse rates. Currency exchange shops (often called "forex" or "money exchange" businesses) fall somewhere in the middle and are scattered through city centers and tourist areas.

The timing matters more than you might think. Exchanging money before you leave home locks in a rate and gives you cash on arrival, but you pay for that convenience through worse rates. Exchanging at your destination after you land lets you shop around for the best rate, but you have limited options in the first hours. Many travelers split the difference: exchange a small amount before departure for immediate needs, then find a better rate once they arrive and have time to compare.

Online currency services and international money transfer apps let you lock in a rate days ahead and pick up cash at a partner location abroad, or load money onto a card. These work well if you know your exchange date in advance and your destination has pickup locations. They do not work if you need cash immediately or are traveling to a small town.

Key Takeaways

• Banks offer the best exchange rates but may need advance notice; airport kiosks are convenient but charge higher fees and give worse rates.
• Your credit card or debit card often has a better exchange rate than any physical exchange location, though your bank may charge a foreign transaction fee.
• Exchanging a small amount before you leave and the rest after you arrive usually costs less than exchanging everything at the airport.
• Currency exchange shops in city centers typically offer better rates than hotels or tourist-area kiosks, but rates still vary — compare two or three before you commit.
• Avoid exchanging money at your hotel unless you have no other option; hotels almost always charge the worst rates and highest markups.

How exchange rates and fees work

An exchange rate is the amount of foreign currency you receive for one unit of your home currency. The "real" rate — called the mid-market rate — changes constantly based on global currency markets. When you exchange money, you never get the mid-market rate. Instead, you get a rate that is worse for you, and the difference is how the exchange business makes money.

That difference comes in two forms: the markup (a percentage added to the rate) and the flat fee (a fixed dollar or euro amount charged per transaction). A bank might charge 2 percent markup plus a $5 flat fee. A currency exchange shop might charge 4 percent markup with no flat fee. An airport kiosk might charge 6 percent markup plus a $10 fee. The total cost depends on how much you are exchanging — a $10 flat fee matters less on a $1,000 exchange than on a $100 one.

To compare, ask each location for the rate they will give you on a specific amount before you hand over money. Write down the mid-market rate (you can find it free on Google, XE.com, or OANDA) and calculate what you should receive. Then subtract what they are actually offering. That difference is your cost.

Using cards instead of cash

Your debit card or credit card often gives you a better exchange rate than any physical exchange location — usually within 1 to 2 percent of the mid-market rate. When you use a card abroad, your bank converts the currency automatically using their rate. The catch is that many banks charge a foreign transaction fee of 1 to 3 percent on top of that rate, which can wipe out the advantage.

Before you travel, call your bank and ask: (1) what is your foreign transaction fee, if any, (2) will the card work abroad or do you need to notify them, and (3) do they charge ATM fees when you withdraw cash from a foreign ATM. Some banks waive foreign transaction fees for certain account types or credit cards. Some charge nothing for ATM withdrawals but charge 3 percent for purchases. The answers matter because they change which method costs least.

If your bank charges high foreign transaction fees, a no-fee checking account at a different bank, or a credit card marketed for travelers, might save you money over the course of a trip. If you are traveling for only a few days and exchanging a small amount, the savings may not be worth the effort of opening a new account.

ATMs and cash withdrawals abroad

Using an ATM in your destination country to withdraw local currency is often cheaper than exchanging cash before you leave or at an exchange shop. Your bank's exchange rate is usually close to the mid-market rate, and you avoid the high markups that exchange shops charge. The downside is that you may pay an ATM fee from your bank, a fee from the ATM operator, or both.

Before you travel, ask your bank whether they reimburse ATM fees charged by foreign banks, or whether they charge you a fee for using a foreign ATM. Some banks reimburse all fees; some reimburse fees above a certain amount; some charge you a flat fee per withdrawal. If your bank charges $3 per foreign ATM withdrawal and you plan to withdraw cash five times, that is $15 in fees — which might be more than you would pay at an exchange shop for a single large withdrawal.

Withdrawing larger amounts fewer times usually costs less than withdrawing small amounts many times, because you pay the fee once instead of repeatedly. However, carrying large amounts of cash creates safety and loss risk. Most travelers find a middle ground: withdraw enough cash to cover a few days, then withdraw again when that runs low.

What to do if you need cash in an emergency

If you run out of money or your card stops working, you have limited options and they all cost more than planning ahead. Your bank can wire money to you, but the wire goes to a bank branch in your destination country, not directly to you — you have to travel to that branch, open an account or present ID, and wait for the transfer to clear. Wire fees run $15 to $50 depending on the amount and the banks involved.

Money transfer services like Western Union and MoneyGram let someone send you cash that you can pick up at a local agent within hours. The sender pays the fee (usually $10 to $50 depending on amount), and you receive cash in local currency. This works only if someone at home can send money quickly, and only if there is a pickup location near you. In small towns, there may not be one.

If you have a credit card that still works, you can use it to get a cash advance at an ATM or bank, though this usually costs more than a regular ATM withdrawal — expect a fee plus a higher interest rate. Using a credit card to buy things is almost always cheaper than a cash advance.

Exchanging money when you return home

If you have leftover foreign currency when your trip ends, you can exchange it back to your home currency at most banks and currency exchange shops. The rate will be worse than when you exchanged it the first time, because you are paying the markup twice. For small amounts — under $50 — the fee often costs more than the currency is worth, so many travelers keep leftover bills as souvenirs or donate them.

If you have a significant amount left over, compare rates at your bank and at currency exchange shops before you exchange. Some banks offer better rates on larger amounts. Some currency exchange shops will exchange foreign currency by mail if you do not want to travel to a physical location, though this takes longer and may have a minimum amount.

Credit cards and debit cards loaded with foreign currency (sometimes called travel cards or prepaid currency cards) let you avoid exchanging leftover cash, because you can spend the balance on your next trip or transfer it back to your bank account. However, these cards usually charge monthly fees or inactivity fees, so they only make sense if you travel frequently to the same country.

How to avoid common exchange mistakes

Do not exchange money at your hotel unless you have no other option. Hotels charge the worst rates and highest markups because they know you are trapped and need cash. The same applies to exchange kiosks in tourist areas or at major attractions — they charge premium rates because foot traffic is high and customers have no time to compare.

Do not exchange large amounts at once unless you are certain you will spend it all. Leftover currency loses value when you exchange it back, so exchanging $500 when you might only spend $300 costs you money twice over. Exchange in stages: a small amount before you leave, then more after you arrive and know your spending pattern.

Do not assume the exchange rate you see advertised is the rate you will receive. That rate is often the mid-market rate, which no customer actually gets. Ask what rate you will receive on your specific amount before you commit. Some exchange shops advertise a good rate but charge a high flat fee that makes the total cost worse than a competitor with a higher percentage markup.

Do not carry all your money in one form. If your card is lost or stolen, or stops working, you have no backup. Carry some cash, one credit card, and one debit card in separate locations. If one fails, you have options.

Frequently Asked Questions

What is the best time to exchange currency before a trip?

Exchange a small amount (enough for a few days) one or two days before you leave, so you have cash on arrival. Exchange the rest after you land, when you can compare rates at different locations and know your actual spending needs. Exchanging everything weeks in advance locks in a rate but costs you money if the exchange rate moves in your favor.

Should I exchange money before I leave or after I arrive?

A mix of both usually costs least. Before you leave: exchange a small amount at your bank for immediate needs. After you arrive: use an ATM or currency exchange shop to get the rest, because you can compare rates and you know how much you actually need. Airport exchanges are convenient but expensive — use them only if you have no time to reach a better option.

Is it cheaper to use my credit card or exchange cash?

It depends on your bank's foreign transaction fee. If your bank charges no foreign transaction fee, your card usually beats cash exchange by 1 to 2 percent. If your bank charges 3 percent, the difference is smaller. Call your bank before you travel and ask the fee, then compare it to the markup at a local exchange shop in your destination.

Can I exchange currency at any bank, or only my own bank?

Most banks will exchange currency for non-customers, but they may charge a higher fee or require advance notice for large amounts. Your own bank usually offers the best rate for customers. Currency exchange shops do not require you to be a customer and are often faster, but rates vary widely — compare two or three before you exchange.

What should I do with leftover foreign currency after my trip?

For small amounts under $50, the exchange fee usually costs more than the currency is worth — keep it as a souvenir or donate it. For larger amounts, exchange it at your bank or a currency exchange shop, but expect a worse rate than when you exchanged it the first time. Some banks accept foreign currency by mail if you do not want to visit in person.