I take several overseas trips each year and have never bothered to really figure out how to pay for things in countries where US Dollar is not accepted everywhere. You will invariably incur additional costs in exchanging US Dollar into local currency. During a recent vacation, I decided to read the fine print ahead of time, did some research, and then crunched the numbers, and here are my findings:
- The worst exchange rates were given by currency exchange companies. I used Thomas Cook in the airport and they truly ripped me off.
- The best exchange rate was offered by my bank when I used an ATM (even though I was charged an additional $5 for using another bank’s ATM). Before you travel, make sure that your bank’s card can be used at an ATM overseas, and even better, use the one that the bank suggests. Not all ATMs will accept your card. And do NOT use your credit card to get cash out from an ATM; it is the worst way to get cash, even at home.
- A credit card that I do not like all that much — Chase British Airways card — actually offered a very good rate and unlike other banks that tag a foreign transaction fee, this card does not do that.
So what are my recommendations?
- Estimate your total requirements of local currency ahead of time by doing some research and budgeting.
- Use an ATM in the airport itself, if available, to get as much cash as you are likely to need. Do not use an ATM over and over again to withdraw small amounts because the ATM fees will add up.
- If you cannot find an ATM in the airport and need some cash to get to your hotel and other small expenses, exchange a very small sum of money using a currency exchange counter in the airport or outside.
- Pay for small expenses in cash and large expenses can be paid with a credit card but call the bank before leaving or read the fine print to make sure that the bank will not charge foreign transaction fees.