How do I Avoid Currency Exchange Fees?

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  • Written By: Patrick Lynch
  • Edited By: R. Halprin
  • Last Modified Date: 18 January 2020
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It is nearly impossible to avoid currency exchange fees, but overseas travelers can look for ways to keep those fees as low as possible. In many cases, making an exchange at a bank or with an ATM card can provide some of the lowest fees, and there may be some credit cards that do not charge additional currency exchange fees. Traveler’s checks are not always the best option, and rates can vary depending on where they are bought. An airport "bureau de change" should be avoided, as their fees are often quite high. Falling into the trap of taking too much of a foreign currency abroad is the principle reason why people lose out because of currency exchange fees.

The rates of exchange offered by banks and other financial institutions do not reflect the true worth of a currency. The real rate is known as the "interbank rate" which can be found by accessing certain websites. The rate offered by financial institutions is several percent lower than that to ensure they make a profit on every transaction. In order to get the rate closest to the interbank rate, currency exchange fees need to be avoided if possible.


While traveler’s checks were once regarded as the safest way to carry cash overseas, they are now seldom used due to cheaper alternatives that offer the same level of security. Although traveler’s checks can be replaced if they are stolen or lost, they offer relatively poor exchange rates as well as additional fees. Due to the length of time it takes to purchase them, they are also difficult to buy at short notice.

Banks will generally offer a decent exchange rate but they still charge currency exchange fees for every transaction. Legitimate banks are very up front about their fee structure. Using an ATM machine at a reputable bank can a good approach; if you limit the number of withdrawals, you can cut down on the fees. Keep in mind, however, that you will likely be charged a fee by your home bank and the local bank for each transaction. The worst place to exchange money may be an airport bureau de exchange. This is because they charge the highest currency exchange fees and provide the lowest rate of exchange.

Credit cards are also a trade-off; you may get a good exchange rate but you will likely be faced with a double fee structure similar to an ATM transaction. The first surcharge is assessed by the credit card company to convert one international currency into another. The second is any extra fee the local business wishes to charge in order to maximize profit.

Possibly the easiest method of avoiding currency exchange fees involves using a bit of common sense and forward planning. Many individuals have a tendency to buy far too much foreign currency when traveling abroad. When they return, there is still a large amount left over which means they will incur a second set of currency exchange fees. The easiest way to guard against this is to set a reasonable budget when abroad and stick to it. By the time you're ready to come home, you should try to use up all or nearly all of your foreign currency.



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