In response to the daily fluctuations of the currency markets, one bank, merchant, or currency exchange location could offer you a marginally better currency exchange rate. Therefore, when travelling internationally, stay mindful of foreign transaction fees, currency exchange conversion fees, and other fees.
In that regard, you’ve probably noticed that the exchange rate announced in the media is called the mid-market rate. “Cream-off” is a clear term for the difference between the rate your financial institution pays and the one that you are subject to when withdrawing money from overseas in addition to any fees. This fee varies depending on the transaction and payment card you use and the money changer that you choose to use.
As a rule of thumb, there are certain tactics to obtain cash and make purchases that are more advantageous than most when you’re ready to travel internationally. The following insights may help you minimize currency fees:
Avoid Currency Exchange Kiosks at Airports
Even though you didn’t have the chance to get cash at the bank before your trip, it can be tempting to obtain foreign currency at a currency exchange stand at the airport. Even so given their convenience, they typically offer less favourable exchange rates than your bank at a local branch.
Besides charging higher fees, airport kiosks often charge lower exchange rates when converting dollars into euros, pounds, or another currency. If you need foreign currency in cash at the airport at short notice, you may need to consider paying the extra charge to save time. It is, therefore, best to avoid airport kiosks and other exchange counters in heavily touristed areas as their business model is based on charging extra for being a convenient, last-minute option.
Pay by Card, But Be Prepared for Foreign Transaction Fees
Upon arriving at your destination, you may consider preserving your foreign currency and accepting as many credit or debit card payments as the situation permits. In addition, the other possibility is to charge foreign transaction fees. Depending on your credit card or debit card, you may be charged a foreign transaction fee of up to 3% when making purchases abroad.
As a final note, be sure to read the fine print of your credit card and bank accounts before you travel to avoid foreign transaction fees and check with your bank to learn whether there are foreign transaction fees. Especially if the credit card you choose has a great travel rewards program, you may want to open a new account with one that does not charge foreign transaction fees before your trip.
Pay in the Local Currency to Avoid Currency Conversion Fees
Depending on the merchant, you may have the option of paying in U.S. dollars or the local currency. However, this does not always apply. Then you should always pay your bill in the local currency. A currency conversion fee will be applied if you choose to pay in dollars. The exchange rate is also likely to be poor. While you may think that paying in dollars rather than in the local currency is a convenient choice, it will likely cost you more in the long run. Instead, you may have to consider paying with your credit card in the local currency.
If you are familiar with currency exchange fees, foreign transaction fees, ATM withdrawal limits, and other aspects of making foreign currency payments, you will be able to save money and time and make the most of your trip. Therefore, give some thought to how you’ll receive cash for your next trip and how you’ll pay for everyday purchases before you depart for your next exciting international adventure.