When
you are traveling to a foreign country, the best way to carry the
bulk of your currency is in travelers' checks, which can be replaced
if stolen, the best place to exchange money is at banks, which
will have more favorable rates than exchange booths in stores,
airports and hotels. Also consider using a major credit card, which
will also offer a good rate. The only way you are going to know if
you are getting the best exchange rate is if you're aware of what
the current rate is! Check out Oanda's
currency tables and stay up-to-date.
You will
get the best interbank exchange rate when buying foreign currency
with either ATM cards or credit cards, which will usually be 2-7%
better than rates you will get when exchanging cash or traveler's
checks. Try to use credit cards whenever possible for large
purchases such as hotel bills, tickets and car rentals.
A recent trend among credit card companies to add fees for
transactions made in foreign currencies, however, could undermine
this tactic. Read more about this trend in our Credit
Cards coverage.
If you can use your ATM card easily in the country you're visiting,
try using it for your day-to-day cash needs. Be aware though that
not all countries are the same. In some countries, you may get
better rates exchanging either cash or traveler's checks.
When exchanging traveler's checks, most of the time it is better to
exchange your money in the country you're going to, not in the U.S.
An exception to this might be if you are convinced the dollar is
going to head sharply lower while you are gone and you want to
exchange at the current rate by purchasing traveler's checks in a
foreign currency.
You will usually get the best exchange rates at banks, post offices
and American Express offices (particularly if using their checks).
Avoid the change bureaus you see everywhere in the touristy areas.
They usually have the worst rates. Wherever you go, read the posted
exchange rates carefully, and ask for the net rate after
commissions. Some commissions are charged on a per item basis on
each transaction, others on a percentage basis. To lure customers,
some money changers will post the sell rate for $USD rather than the
buy rate (which is what you will want if you are exchanging U.S.
dollars into foreign currency). Another popular tactic is to list a
great rate that is only available for very large quantities of money
(thousands or hundreds of thousands of dollars). You usually will
not run into this problem at reputable banks or government-run post
offices.
Finally,
be very wary of black market exchanges, which often result in you
being scammed out of the money you are owed.
