Traveling to a foreign country can require you to incur significant costs. Don’t make your budget more burdensome by incurring hefty currency exchange fees. Moreover, some institutions have restrictions and lengthy processes for exchanging currencies.
Make travel more pleasant by preparing your finances before the trip. If you have to exchange currencies abroad, you need to know the best places. Benzinga has covered all the angles by providing you with the best strategies, places and alternatives to exchanging currencies.
The Best Places to Exchange Currency
Several places have a history of being market leaders for currency exchange. Those institutions make exchanging currencies convenient, affordable and efficient. Knowing these places will help make your journey more pleasant.
Local Banks
Avoid the hassle of dealing with foreign currency outlets by exchanging money at your local bank. Exchanging currencies before you leave gives you peace of mind that you’ve taken care of one of the most important aspect of traveling — finances.
The benefit of dealing with your bank is that you have a client history. That could entitle you to discounts and enable you to avoid lengthy processes since the bank has your personal information. Your local bank usually provides reasonable exchange rates and the lowest fees.
Having an account at a local bank enables you to make an appointment online to ensure your desired currency is available on arrival. Local banks have several branches close to your home, allowing you convenient access to employees that speak your language.
Many local banks offer a large range of currencies. Bank of America exchanges more than 100 currencies and Wells Fargo quotes 70 currencies. Another benefit of many local banks is delivery. Some banks deliver foreign currency to your home to ensure security and convenience.
Ordering foreign currencies from your local bank significantly ahead of your trip may entitle you to special rewards such as members of Bank of America Preferred Rewards receiving a 2% discount and free shipping for online and mobile foreign currency orders.
Major banks such as Chase and Bank of America offer ATMs abroad. That enables you to withdraw local currency from your U.S. dollar account. The exchange rate at your bank can be easily accessed through their currency exchange service.
Credit Unions
Another convenient place to exchange currencies before you depart is at a credit union. Most credit unions offer over 100 foreign currencies. You’ll get much better rates and fees by exchanging at a credit union than at a foreign institution.
Most credit unions have no minimum or maximum dollar requirements, but you can’t exchange foreign coins. A credit union enables you to request delivery to your home and to sell back the foreign currency.
You can also save up to 3% on credit card surcharges overseas with some credit unions. After exchanging currencies, you can withdraw the funds from your credit union account.
Online Bureaus
An online bureau enables you the convenience of transacting via your desktop or a mobile app. The added benefit is that such institutions are located in several countries and at popular destinations.
Some online bureaus refund you the difference between a lower overall price of another institution and their offering if you can prove a cheaper alternative. They enable you to pick up the money at an airport several hours after placing your order. The other option is for the online bureau to deliver the money to you.
Credit Cards
Using a credit card abroad is a form of currency exchange. It enables you to purchase goods and withdraw money in a foreign country. Your bank uses the spot rate at the time of the transaction to deduct the equivalent dollars of your foreign purchase.
To avoid transaction fees, you should take out a no-foreign-transaction-fee credit card. A no-foreign-fee debit card is also available. Major banks such as Chase, Capital One and Bank of America offer such cards.
Using cards is safer than cash and avoids the hassle of physically exchanging currencies; your bank does it for you. Another benefit of a no-transaction-fee card is its fraud protection feature. It’s easier to replace stolen or lost credit cards than cash.
Avoid using your card for a cash advance to get foreign currency. The fees for cash advances are exorbitant, and high interest begins accruing immediately.
Should you Hold Onto Foreign Currency?
Holding onto a foreign currency is one way to diversify your portfolio. It ensures you spread your risk across several countries. That can help you profit from changing global conditions.
Your foreign currencies could strengthen against the dollar, enabling you to exchange them to receive more dollars. Rising inflation, low interest rates and money printing in the U.S. are some of the reasons for the dollar’s potential weakening.
Recent geopolitical events have shown that you may need to emigrate to a foreign country to ensure your safety. In such instances, you might not get an opportunity to exchange local currency for a foreign one to flee.
Another advantage of investing in foreign currency is that you receive information about variables in real time. Insider trading is less common in the foreign exchange market than with equities. Monetary flows drive currency evaluations, so it enables you to analyze events that might impact a foreign currency’s value.
The Worst Places to Exchange Currency
Certain institutions make currency exchange arduous and expensive. In some cases, they have so much red tape that makes exchanging currencies impossible if you don’t have all the required documents.
To prevent a headache, you should avoid certain places when exchanging currencies.
1. Airport kiosks: Avoid airport exchange kiosks because they offer a worse exchange rate than your local bank. Moreover, you might incur high transaction fees and commissions.
2. Traveler’s checks: Many places don’t accept traveler’s checks because they’re outdated. Even if you can use them, be aware of the high foreign transaction costs and ATM fees.
3. Money cards: These are similar to traveler’s checks as they are prepaid. Expect to pay high fees for purchases and withdrawals. The only advantage of using a money card is that some institutions offer 24/7 assistance, allowing you access to emergency cash if your card is stolen, lost or damaged.
4. Street vendors: Locals of some countries target popular tourist attractions and offer tourists foreign currencies. To lure in customers, they provide better rates than legal entities. Using street vendors is risky as those individuals don’t have a legal right to trade. Moreover, they can offer you counterfeits.
Getting the Best Currency Exchange Service
The best places to exchange currency depend on several factors including where you're located, the amount of money you're exchanging, the type of currency you need, and your goals for getting the most out of your money. Generally speaking, banks and reputable online services offer some of the most competitive exchange rates, but they may also charge fees. Alternatively, airports and other travel-specific locations may offer more convenient services, but their rates might be less competitive. Ultimately, it is important to compare different options in order to find the best place for you to exchange currency.
Compare Online Forex Brokers
Finding a reliable online currency exchange means that you have to scour the market. That’s time-consuming, and investing with the wrong broker is risky. Benzinga has made your search more convenient by listing the best online foreign currency exchange brokers.
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Frequently Asked Questions
When can I sell foreign currency?
You can trade in the foreign exchange market 24 hours a day, Monday to Friday. That’s applicable if you’re trading currencies with a broker. If you want to buy or sell foreign currencies on hand, you’ll have to check with your local forex institution for working hours.
Your local bank will be the best option for exchanging foreign currency after your trip abroad.
Where can I exchange money without fees?
It’s challenging to find an institution that offers to exchange currency without fees. Your best option would be to try a local bank. If you’re a client with a good track record, your bank may not charge you fees.
Otherwise, you may reap certain rewards such as points or discounts by trading with your local bank.
How do you avoid exchange rate fees?
International travelers often face foreign transaction fees when making purchases or withdrawing cash from an ATM in another country. To avoid these fees, it is recommended to use a debit or credit card that does not charge foreign transaction fees while traveling abroad.
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About Goran Radanovic
Equities, Forex, Crypto