You have a few options for where to get your cash if you are in a country with a different currency. It always helps to have some cash in the local currency to where you are going (not everywhere will accept payments in US Dollars).
But think hard about how much cash you want to convert and carry at the onset; if you convert all your spending money right away and carry it with you throughout your trip, you have no recourse if the cash is lost or stolen, unless you have travel insurance that covers such an eventuality (although with insurance you would still need proof of the cash you lost).
But what about exchange rates? How do you get the best rates? Leaving it to the last minute and changing at the airport is probably the worst possible idea, with rates being quite bad and with commission charges possible as well.
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So here are some tips for foreign currency usage:
1. Plan ahead, know how much you will need and of what currency. Allow enough per day of spending money, but also consider how much you might spend on credit cards rather than cash.
2. It is not always a good idea to convert your cash at the airport. The currency exchange booths know how easy it is for us lazy tourists to simply convert our funds at the airport (or other transportation hub), so they often inflate the conversion rates and commission fees. Instead, wait until you get into town and find a bank or exchange booth there. If you need money right away (to pay for an airport bus for example), consider using an ATM instead, or charging the expense to your credit card. Although you can use a credit card abroad, make sure you know whether they will charge commission and if they will give a good rate. Some card issuers will give good rates but some will give you a poor rate.
3. If you think you can just take along your bank card and get cash from the ATM there, consider that you will be likely be a charged a fee by the ATM (because you have a foreign bank card) and you may get a poor rate, and your own bank will probably charge you a fee as well. You have to find out in advance what the commission rates will be, as in some places the rates are comparable to a foreign currency exchange you might use at home.
4. In some places, the ATMs are not only possibly going to charge a high rate, but some will be booby-trapped, i.e. they have a card skimmer attached, so as soon as you put your card in the slot, an almost invisible device intercepts your card as it goes in and steals your card details. You can still get your cash, but when you are not even aware, some criminals somewhere are draining whatever was left in your account. Some places are obviously safer for ATM usage than others, so do some research first before you go to see if the ATMs are safe in your destination or in your en-route travel plans. Consider using an ATM inside a bank rather than out on the street not only are not you on display in public getting cash out, but the bank will be far more vigilant in stopping any card-skimming devices being attached to a machine inside their premises.
5. Go online and search for places in your home area that do currency exchange. The best thing to do for most of these places is to order online, pay with your debit card (credit cards will probably incur a surcharge) and then collect the currency from the local outlet. You will have to take proof of ID with you and the debit card you paid with, along with a printout of the confirmation of your order. They will give you a better rate if you do it this way, ordering in advance rather than just turning up a bureaux de change and getting the currency there and then. You should also be sure that the place does not charge commission, or else a very low and reasonable commission that is acceptable.
6. A currency exchange place online may also offer home delivery, but this will usually incur a delivery fee. It is better to order online and collect in person, also because money sent in the post could get lost and then you would be without your foreign currency, even if it was insured and they send out a replacement but what good is a replacement if it arrives after you have flown to another country? Only use home delivery if you really cannot get to the exchange place in person.
7. If you order more than a certain amount you might get a better rate. For example, when buying 300 Euros recently, I noticed that if I had doubled my order to 600 Euros I would have gotten a better rate. So if you are buying currency and they offer a better rate for more money in one transaction, it might be good to team up with a friend or family member you are travelling with, put your money together, and if the total is enough you could get a better rate.
8. It is a good idea not to buy too much foreign currency, as there is no point in getting double the amount you need just to get a better rate. If you have hundreds of Euros left over at the end of your trip, you can either convert them back to your home currency (and you will not get back as much as you paid for them), or else hold on to them for a future trip to Europe, except that by then either they might have abolished the Euro or the exchange rates will be so much better to buy Euros that you will be annoyed. Besides, holding on to lots of cash that you cannot immediately spend does not make sense, it is not earning interest and cannot be used in an emergency while you are at home.
9. When you get the foreign currency, get it in fairly small and common denominations, such as 10 and 20-Euro notes or £10 or £20 notes, etc. One time when I bought Euros, some of it came as 50-Euro notes, which were not easy to spend; not everyone can give you change of a 50-Euro note. Bear in mind that these exchange places will not give you foreign coins, only notes.
10. Before travelling, if you do intend to use any bank cards, you really have to inform your bank of your dates away and in what country or countries you will be in, so that they do not block the use of your card abroad they might assume when they see a transaction in an unusual country that someone stole your card (or your card details) and reject the transaction as fraudulent.
11. Beware of friendly locals offering to exchange money for you. There’s a reason why they are offering you this service, and it isn’t from well-meaning benevolence. Even if it’s not a full-on scam, they’re getting something for playing the middleman, and it’s coming out of your pocket. You might also end up with counterfeit currency.
12. Split your foreign currency into more than one wallet/envelope/small bag, so that if one set of money goes missing or gets stolen, you still have other foreign currency you can use. And keep one set of cash stashed somewhere secure in your luggage for emergencies. Put the day’s spending money in your wallet (this can also be an effective budgeting technique), and then stash some money in a few other places which you don’t access in public, such as a second wallet, lock some in your luggage (an unlikely place like with your dirty clothes is good), and/or put a few emergency bills in your shoe (underneath the insole is great).
13. It could also be a good idea to put cash in a special pocket underneath your clothing, so if you lose everything, you still have some cash to get out of whatever difficulty you might be in.
14. You can use your credit cards abroad, but there are some instances when you can use cash to your advantage. When you are looking at making a purchase (regardless of whether you are in a country where haggling is the norm), ask the vendor if they will give you a discount if you pay with cash. Vendors often have to pay a premium for customers who use credit and debit cards, so if they know you’re paying with cash, they could give you a good deal.
15. Also be aware that in some countries they use Chip and PIN, where the card has a microchip in it and you have to put your card into a card reader and enter the PIN for the card. If your card does not have that feature, then some places might decline the usage of your card.
16. If you have contactless cards, keep them safe inside an RFID-blocking wallet, which I shall describe next.