How to get the best exchange rates overseas

Visitors punt on the Grand River at Cambridge, England.Catherine Ngai/MEDILL

Traveling can be a stressful undertaking. While journeying to a new location is exhilarating, the small details – flight information, car rentals, and hotel bookings – are often taxing. On top of that, travelers need reassurance that they’re getting the best rates for the local currency to maximize the power of their money.

As an avid traveler, I’ve used credit cards, traveler’s cheques, debit cards and currency exchange booths when trying to get my hands on foreign currency. While it’s gotten easier in general to get hold of foreign currency, there are subtle differences to the different methods.

A few years ago, my family and I visited Aruba. We decided to use traveler’s cheques, and ended up with nothing but headaches. Not only were the exchange rates high, but it was difficult to find merchants who would accept these cheques as cash. On top of that, there were plenty of additional fees – the fee to cash them out, and the fee to convert them.

“If travelers need to exchange cash or travelers checks, it’s best to do so at a bank or post office instead of at the change bureaus you see at train stations or airports,” wrote Jennifer Gaines, a contributing editor at Travelocity, in an email.

According to Gaines, debit cards for ATM cash withdrawals are the best bet. One thing to look for is the back of the card, where logos like Cirrus or PLUS will let users know which branches they can use overseas. If the ATM machine matches one of the symbols on the back of your card, users can access their accounts there.

However, each card is a little different in terms of hidden fees. A survey by ING Direct in 2009 found that one in five ATM users pays an “out-of-network” fee at least once a month, paying an average of $2 per withdrawal.

According to a representative at Chase, ATM withdrawals outside of the U.S. cost $3.00 each, with a 3 percent combined international transaction fee.  There are some exceptions, such as having a Chase Premiere Platinum account, that allows users to save that ATM fee.

At Bank of America, ATM withdrawals outside the U.S. are $5 each, with a 1 percent currency exchange fee, and a 3 percent international transaction fee. The hidden cost is how much the overseas branch charges you for taking out money.

Even though there are transaction fees, banks ensure low fees, and carrying around cash is more convenient.

“The bottom line is that travelers should use their ATM cards and credit cards whenever possible. It’s your best bet for getting a fair exchange rate without being whacked with added fees and commissions,” Gaines said.

Credit cards are also a good option for larger purchases. While terms for credit card fees vary according to the type of account, there is typically a 1 percent to 3 percent international transaction fee.

According to, a travel website for savvy tourists, doing your homework before you go is the most important aspect.

“Nowadays, most worldwide travelers tend to use plastic: debit/bank cards for ATM cash withdrawals, and credit cards for purchases and cash advances. Don’t go forth without some preliminary research into your cards, though, as each bank has a host of fees, restrictions, and individual policies that could take a big chunk out of your budget.”

SmarterTravel recommends calling your bank ahead of time to let them know you’ll be overseas, and also to get information about affiliated banks in your destination and any extra fees you may incur by using your bank card.

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