The most common mistakes when exchanging currency: How to avoid them on your next trip abroad

In the digital age, many feel comfortable using their credit and debit cards on vacation, skipping the hassle of converting their dollars or pounds into the currency of the country or countries they are visiting.

Nevertheless, some attractions or restaurants may require customers to pay in cash, so you may want some on hand.

You should plan ahead to avoid unnecessarily losing money when converting currency. Do you think you will need cash to get from the airport to your hotel? Then, you might want to purchase currency ahead of time and keep it safe during your travels with a money belt or other security item.

Oftentimes, banks offer this service, and all you need to do is head down to your local branch. However, check retailers online as the conversion rate provided is often better. For instance, if you are planning to exchange for Euros, Wells Fargo offers a rate of 1 EURO (EUR) for 1.1393 U.S. dollars (USD). Google Finance puts the exchange rate at 1 EURO = 1.08 USD. The bank is consuming the gap between these two rates for offering the service. Additionally, financial institutions are likely to look at trends in the market and not adjust their rates on a daily basis. If you were to exchange $1000, Google Finance would say that it is worth €923,70, while Wells Fargo would return the customer €877.73.

These days, you can buy currency online, which can be delivered to your home. Several options are available, so before deciding, it’s important to check the official conversion rate. Then, choose a retailer that offers you an amount close to that rate. These businesses make money selling you the currency at a rate where they can take a percentage of each dollar you want to exchange. On Currency Exchange International, a customer can exchange $1000 for €860, meaning the online trader takes more out. X Change of America offers an even worse deal, allowing customers to trade $1000 for €850. Nevertheless, depending on the location, some exchange rates might be better than others.

Where to exchange currency when you arrive at your destination

If you choose to wait until you reach the country you are visiting, and there are arguments to do so, avoid making large conversions at the airport. These retailers know that some people will be in a pinch and will need to exchange and, as such, will be willing to do so at a higher rate than they could find in the city. If you are caught off guard, consider exchanging enough to get to the destination so you pay less in fees.

The places you can exchange money will differ depending on the country you are visiting. In some countries, tourists can exchange money at the post office. Do your research ahead of time, as sometimes post offices and pharmacies offer the service. Additionally, one’s hotel might also be a place to exchange currency, though the rates might be higher there too.

The last option is to use your debit or credit card at an ATM to take out cash in the local currency. Likely, the rate will not be great but it could be better than those offered by online retailers, remember that you will also be charged a fee for using your card in a foreign country. Nevertheless, if you take out a larger sum, and carefully bring it back to where you are staying, you may not need to undertake this operation more than once, and you avoid the headache of transporting money with you when you arrive.