Best ways to exchange dollars for foreign currency when traveling

Cash is king when you travel. And if your journey takes you to another country, you’ll need to acquire cash in the proper currency upon arrival. Exchange rates and foreign transactions fees can take a big bite out of your money, so it’s important to think about this before you go.

You can often get the more common foreign currencies at U.S. banks, but it’s a good idea to check the exchange rate online before doing this. While it’s convenient for you, the bank may take an extra cut, meaning your dollars are worth less. If you do opt to travel with the currency of your destination already in your wallet, exchange just enough to get you by the couple of days.

Check on whether your credit cards still charge foreign transaction fees, which can be as high as three percent for charges made on the card. Fortunately, many cards, including those from major airlines like Delta and United, have eliminated these fees, so you save a bunch and still have the safety of using a credit card. Credit cards from hotel companies like Holiday Inn, Hilton, Marriott, Fairmont, IHG, and Hyatt are also free of foreign transaction fees. Discover, Capital One, and some Chase cards are usually good choices for travelers (check the small print). Many of these credit cards also offer different levels of travel insurance, which can be a bonus if something goes amiss on your trip.

Be sure to inform your bank or credit card company prior to travel that you’ll be charging items on the card in a foreign country (or just across the country, if you're in the U.S.). If unexplained charges suddenly appear, your next charge may be denied or the card could be frozen, and you wouldn’t be able to use it at all. Which brings up another point: I travel with two credit cards, so that one can always be accessed.

Another place to exchange money when traveling is at a foreign ATM, although check for fees here, too. Some banks require that you use specific ATMs, but if yours doesn’t charge a fee, this can be your best bet for withdrawing reasonable amounts of cash quickly and easily. Just be sure your bank account at home can cover the amount and your bank is aware that you’ll be using your debit card in another country for this purpose.

Airports generally have booths for currency exchange, but they charge high commissions, so avoid them unless you just have to have taxi fare in cash to get to your hotel. Exchanging currency for cash at the hotel will probably also hit you with high fees, although it’s certainly more convenient than searching for a local bank. Yet, that’s where you’re likely to find the most favorable rates.

So, when you’re settled in, find the nearest bank to exchange dollars for pesos, euros, pounds, francs, lira, or another exotic currency. Hopefully, you’ll get a rate that’s close to the actual exchange rate.

Photos from Bing