Currency Conversion: Dos and Don'ts While on Vacation

Between rising bank fees, variable exchange rates, and a multitude of options for making purchases overseas, using foreign currency can cost you much more than it should. Here are a few tips for preventing unnecessary fees, and unnecessary stress, while you’re enjoying your vacation.

Do: Use a credit card whenever possible

Depending on where you bank, this can often be the cheapest option. Most credit cards charge 1-3% on foreign purchases, but you will often still get the best rate of conversion this way. There are exceptions depending on where you bank so call your bank for details. While I use one bank for all my banking needs in the USA, I use one of the United Mileage Plus cards from Chase  when I travel overseas because they do not charge me any foreign currency exchange fees. Of course banks change their rules all the time so check carefully before you use any banking product.

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Don’t: Make purchases with your debit card

Use it at an ATM, not to make direct purchases. It takes several days for transactions to go through and can cause a huge hassle if you try to return something.

Do: Use an ATM to take out cash

Generally, this is the cheapest way to convert your currency. Again, this can depend on where you bank. Some banks charges a flay fee, plus a percentage of the withdrawal. Some banks charge less if you make a withdrawal at their partner banks overseas. Some banks charge no fee at all for foreign ATM withdrawals.

Don’t: Take a cash advance on your credit card

Unless it’s an absolute emergency, this is never a good idea. You’ll be charged a fee on top of a foreign-transaction charge, as well as astronomical interest rates (sometimes twice what you pay for your credit card normally).

Do: Carry emergency currency

Although they seem outdated and many places don’t accept them, you can generally change them in a bank (although there can be exorbitant fees). You never know what can happen, and these can be very helpful in an emergency. Similarly, a $100 bill is accepted in all countries, so carrying one just in case can be prudent.

Don’t: Currency conversion at a “no-fee” bureau de change

The name is extremely misleading; these so-called “no-fee” currency exchanges are usually the most expensive ways to change your money. The conversion rates are almost always much worse than they would be at an ATM.

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