One reason why travel is so easy these days is because of credit cards and atm cards. It is extremely easy to convert your money into the local currency so you don’t have to worry about buying foreign currency before leaving. This is great, but most people have no clue what their bank charges them for this convenience. So, if you are not careful, this convenience can cost you lots of money on taxes and fees. However, when it comes to finances for your vacation abroad, there are few simple things that you do to make sure you don’t pay extra for your vacation. Read on to find the simplest ways for getting the best foreign currency exchange rate while you travel.
Use a Travel Credit Card for Making Purchases
Using a great travel credit card will save you all the foreign transaction fees and will give you the best foreign currency exchange rate. This is my best tip for you if you live in the United States.
One of the many reasons I like the Capital One credit cards for international travel is the great exchange rate I get when using the card for any purchases. I have checked my international purchases for a pretty long period (about three months) and compared the Capital One purchases with the American Express purchases and I was very impressed with the exchange rate from my Capital One purchases.
The result from my experiment was that the Capital One purchases had a better rate than the American Express purchases and they even had a better rate (not much better though) than the posted exchange rate on Google.
After I did this little experiment, I stopped checking being pretty confident that this was the best way to maximize my money on international purchases.
Do not use a credit card for withdrawing cash…never, ever! Using your credit card to withdraw cash in a foreign country is the biggest ripoff scheme. Credit card cash withdrawals should only be used in real emergencies.
Use your ATM Card for Cash Withdrawals
How great this tip is for you will depend on the bank that issued the ATM card. However, as a general rule, getting cash out with an ATM card in a foreign country is the best way to get cash. You also get the best exchange rate possible on cash withdrawals.
I use my Wells Fargo ATM card which charges me $5 for each withdrawal at a non-Wells Fargo ATM, which means everywhere outside USA. So, it doesn’t matter how large the sum, I still get charged $5.
This was the reason why I increased by cash withdrawal limit from the regular $300 to $1000 so that I get more money out one time and only pay $5.
Every time I checked the exchange rate I got on withdrawing foreign currency, the rate on withdrawing foreign currency with my Wells Fargo ATM card was very good.
Check with your bank to make sure you understand their foreign transaction fees. Many banks charge a percentage fee instead of a fixed fee for foreign transactions, so you need to know your bank’s fees.
Use any Other Credit Card for Purchases
Most credit cards, regardless of the issuing bank will give you a good foreign exchange rate. However, all credit cards (with the exception of Travel Rewards cards and Capital One cards) will charge you a 3% foreign transaction fee.
So even though you might get a great exchange rate, you will be paying lots of fees. In the end, I don’t really like regular credit cards for international purchases.
The foreign transaction fees on regular credit cards can be very expensive and you will end up paying a lot more than using cash.
Exchange bureaus
These foreign currency exchange places used to be the only way to exchange foreign currency. They made a lot of money! However, nowadays, simply taking money from an ATM gives you a much better exchange rate and with much lower fees. I really don’t know how these places still stay in business. Maybe there are still lots of ignorant and lazy tourists.
What Is the Best Way to Exchange Foreign Currency?
As a summary, the best way for making purchases overseas is with a Capital One credit card. Secondly is cash that you take out from an overseas bank’s ATM with your US ATM card. If you don’t have the right credit card when traveling, cash is still the “cheapest” for making overseas transactions.
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- Get the best foreign exchange rate
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