5 money-saving tips for exchanging currency
07/31/2014 12:00 AM
07/30/2014 4:55 PM
Headed overseas? It’s easy to get hit with extra fees and expensive exchange rates when switching currencies.
Some currency exchange tables in airports and tourist areas offer bad rates, taking more of your money. And some credit cards and banks can add fees when you buy something with your card.
Your best bet is to bring a credit card that doesn’t charge currency exchange fees and some cash for backup. Most purchases should be done on the credit card, says James Gambaccini, a certified financial planner at Acorn Financial Services. That’s because credit cards offer fraud protection. If you lose cash, or it gets stolen, you won’t get it back. Lost credit cards, or fraudulent charges, are easily replaced or fixed, says Gambaccini.
Here are five tips to maximize your dollars:• Get an app. Before boarding the plane, download a currency converting app on a smartphone you plan to use on vacation. You can open up the app to see if you’re getting a good deal when exchanging money. With the apps, you type in the amount you want to exchange and it will calculate a figure in the new currency. There are several free ones to choose from, including XE Currency and GlobeConvert.
• Ask before you exchange. Be wary of currency exchange places that say they don’t charge fees or advertise really good exchange rates. Often, they will offer you a worse exchange rate to make up for the low fees or have caveats that they don’t advertise. Instead of just handing them your money, ask how much you would get for the amount you want to exchange firstDo currency exchanges in the country you’re visiting. You’re likely to get a better rate than if you do the exchange at home, says Stan McGahey, an international tourism professor at Saint Leo University in Florida..
• Find the right card. Get a credit card that doesn’t charge a foreign exchange fee. Some will charge a 2 percent to 3 percent fee for every purchase made with a foreign currency. There are many that don’t. You can find a list of them on websites such as CreditCardInsider.com, CreditCards.com or Bankrate.com.
• Say no to hotel exchanges. If a hotel or another business asks if you want them to convert the bill into American dollars for you, decline. The exchange rate can be bad, Gambaccini says. Instead, let the hotel bill you in the country’s currency and let your credit card do the exchange.
• Check out checking accounts. As with credit cards, make sure your bank doesn’t charge foreign exchange fees if you plan to use a debit card. Some may charge a flat fee for using a foreign ATM on top of a percentage for currency exchanges. Checking accounts at online banks, such as Capital One 360 and Charles Schwab Bank, don’t charge foreign transaction fees. Personal finance website NerdWallet.com publishes a list of banks that don’t charge fees.
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