There are a few choices for getting your foreign currency and we’ll talk about each of them as well as some common items.
1) Exchange Beforehand
2) Use the overseas ATMs
3) Use your Credit Card
4) Traveler’s Checks
Before we look at each item, there are few things that you must understand before making your
decision. The rate you see on the stock ticker and from sites like Yahoo! Finance are NOT the rates that you can get. These are the bank to bank market rates. As a traveler, you purchase foreign currency at a “retail rate” that is set by the bank or business you are getting your currency from. For example, the Euro may be trading at 1.42, but when you try to buy it yourself, you will pay 1.50. On the other side of this, if you have left over currency you want to sell back, you will only get paid the buyback rate, which could be 1.36 using the numbers above.
Now on to the choices.
1) Exchanging beforehand is the easiest of the solutions. You can either use a local exchange office or go through your bank. We personally went through Bank of America, which charges no fees to use if you are exchanging at least $1000USD. Otherwise, you will pay $7.50 to have it shipped to your local bank.
Pros:
- No hassles with exchanging money on your trip. No worries on transaction fees or finding the best rates while over there.
Cons:
- You have to carry around all your spending money. If you already are carrying your passport around (which you must), adding money to your money belt isn’t that big of a deal.
- Using local ATMs or specific credit cards can sometimes get you a better retail rate than your bank. See the pros for these below for more specifics.
- If you pull out too much, you will have extra Euros to bring home. If you don’t plan on going back, you will have to sell those back at the low buyback rate.
2) Using the overseas ATMs is an easy alternative.
Pros:
- You don’t have to worry about getting money beforehand or worry about pulling out too much money and having to sell the extra money at the low buyback rate.
- The exchange rate you get is actually lower than a bank retail rate. Using a debit card with a Visa logo means you will get the money at the Visa International rate which is lower than a retail bank or exchange office rate.
Cons:
- You can only pull out a limited amount per transaction. This could be anywhere from 200-500 Euros depending on your bank and the ATM. From what we have read, 250E is pretty standard. If you are traveling with a family of 4, this could mean you’ll be looking for an ATM multiple times on your trip.
- Fees. When using an ATM overseas, you will be charged transaction fees for each withdrawal. These fees vary a lot, but can really kill your exchange rate if you are paying E5 each withdrawal plus 1-3% transaction fees. You can avoid a lot of these by using partner banks (see below for more info), but that means you’ll have to look for specific ATMs in each city.
- Some ATMs are rigged by thieves. You will need to be on guard at overseas ATMs. Many of them have card scanners or card eaters on them. With a scanner, a person will then have the card info and probably trying to watch you type in your PIN to later steal your money. See below for more info on this.
3) Using your credit card
Pros:
- It’s easy and eliminates the need to carry a lot of cash around.
- You get the Visa or Mastercard international exchange rate which is lower than a normal bank retail rate.
Cons:
- Lots of places don’t accept them (especially US cards that don’t use the Chip & PIN system). This includes small restaurants, shops, and of course the WCs (bathrooms).
- No matter what you will need some cash.
- Higher chances of theft of your Credit Card. Getting your info stolen overseas would be a nightmare while on a trip.
- Fees. Most card companies charge an international transaction fee. For instance, Citi cards 3% on every foreign transaction. Some cards are better for foreign use such as the Capitol One card. They don’t charge foreign transaction fees.
4) Traveler’s Check
Most places don’t accept them and they are outdated. Don’t even bother with them.
Our personal recommendation:
Step 1: Use a Capitol One credit card to purchase most of your major expenses online
beforehand such as hotels, transportation (only ones you know you will take), and sites. Only
do this for the things you are certain you will be doing. This will reduce the amount of cash you
need to carry right of the bat and you will be getting the better exchange rates without any fees.
Step 2: Get a good idea of your expenses before hand using the info from this site and your own
research. Pick up that amount of currency in your home country at a place you trust such as
your local bank or currency office. Don’t go overboard and overestimate by a huge amount.
Step 3: Use your ATM card overseas if you are running out of money near the end. This
minimizes your hassle, but gives you some flexibility if you decide to buy that nice handbag in
Florence.
Items to add:
Website with locations of partner alliance banks
Visa international rates
Bank of America foreign currency page
