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What Is the Best Way to Minimize Currency Exchange Costs During International Travel?

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Whether you're at home in your own city or traveling internationally, the world runs on money.

Getting consistent access to cash is one of the persistent challenges of international travel – whether that travel is business-related or personal: Different countries have different rules and practices for ATMs and credit cards, and the ways you handle everyday spending in the U.S. might not work when traveling in other countries.

Spending money while traveling internationally often brings a few extra fees – from currency exchange costs, to credit card transaction fees, to ATM fees. But, with careful planning, you can access the money you need in foreign currencies wherever you travel, while minimizing the various costs.

Do your homework before you go

Before you travel to another country, do some research into what it's like to shop, pay for meals, and otherwise spend money there. If you're accustomed to paying for everything with cards in the U.S. and you rarely carry cash, you might need to make some adjustments to your spending routines.

“Some countries are mostly cash-based, and shops and restaurants don't even have a card reader, while in other countries you will usually be fine just using a card."
- Lelia Savory

International Product and Services Manager at First Horizon Bank

“Before you travel, find out if it is more common in that country to use cash. Travel guidebooks and websites specific to the country you're visiting often have good information on the use of cash, traveler's cheques, credit cards, and other forms of payment."

Also, while currency exchange rates can fluctuate significantly from day to day, before your trip, take some time to acquaint yourself with the typical currency exchange rates for the country (or countries) you're visiting, so you'll have a sense of what to expect and how much your U.S. dollars will buy.

If you'll be using your credit or debit card away from home, it's a good idea to notify your bank/credit card issuer about your upcoming international travel, so that you don't run the risk of having your card declined due to its being considered a potentially fraudulent use.

Bring some cash in the local (foreign) currency

When traveling internationally, there are lots of places to exchange U.S. dollars for the local currency – including “Change" kiosks at the airport, local banks, and ATMs. However, it's usually best to bring some foreign currency with you from the U.S. by getting cash from your local bank at home before your trip.

International Currency

It's usually best to bring some foreign currency with you from the U.S. by getting cash from your local bank at home before your trip.

“Personally, I like to have a little bit of cash in the local currency when I arrive," Savory says. “While there are some countries where you cannot obtain the local currency until you get there due to various currency restrictions, for most major currencies, you can get cash at home before your trip."

Many travel experts recommend bringing enough foreign currency in cash to at least get you from the airport to your hotel or lodging location, in case the local places for currency exchange are closed when you arrive. You also may be able to get a more favorable currency exchange rate from your own bank than you will from a currency exchange company at the airport, which would help your dollars go further.

For example, First Horizon Bank can handle currency exchange for over 75 countries, and you can order your currency ahead of time and pick it up at a bank location before you travel.

You might want to bring a few hundred dollars worth of foreign currency in cash. “It depends on how much cash you are comfortable carrying," Savory says.

Be aware of foreign transaction fees

Using credit cards away from home comes with an extra cost. Most credit and debit cards charge a small fee, called a “foreign transaction fee," on each purchase that you make in other countries. This foreign transaction fee is typically three percent – so if you spend the equivalent of $100 at a restaurant in Paris, your bank or credit card issuer will separately charge you $3 in addition to the converted cost of your meal.

Although many travelers would love to avoid foreign transaction fees, and there are a few credit cards that do not charge these fees, for the most part it is an industry standard convenience fee. In fact, using your credit or debit card – even with a foreign transaction fee – might help you save money overall because you might be getting a more favorable currency exchange rate with your card than if you used cash.

“The good thing about using a major card is the card company is able to obtain wholesale exchange rates, with a larger volume of money and transactions changing hands between banks," Savory says. “So you might get a more favorable exchange rate if you use your credit card from your American bank, because you're getting a rate closer to the wholesale currency conversion rate instead of the retail conversion rate applied to individual paper currency exchange transactions."

Know Your ATM network and withdrawal limit

Depending on your bank, you might not be able to use all of the ATMs in other countries because of network restrictions. Also check to see what the fees are for making withdrawals from ATMs that are not in your bank's usual network; some banks charge extra fees for this.

To find out which ATM networks you can use, look at the back of your debit card: It should list the ATM networks where the card is accepted, for example, STAR, Allpoint, and more. Or you can look up your ATM network on your bank's website or ask at your local bank branch.

Also, before you travel, ask about your daily ATM withdrawal limit. You might want to increase or decrease this limit to meet your needs during travel.

Not all international ATMs will allow you to withdraw as much cash as you want – for example, some of them might have a hard limit of $200 per day regardless of the limit you have with your bank.

Investigate your options before you travel – or be prepared to pay a few extra ATM fees during your trip.

“The most important thing is to do your research, know what to expect, and try to avoid unpleasant surprises and last-minute difficulties," Savory says. “Be aware of what situations might arise so you will be prepared to focus primarily on enjoying your trip."

Planning a trip for business or pleasure? Start with First Horizon Bank's International Currency Services to help take the hassle out of overseas travel.