Where's the Best Place to Exchange Currency? Monito’s 2023 Travel Guide on Fees, Currency Exchange, and Best Alternatives
A writer and editor at Monito, Jarrod is passionate about helping people apply today’s powerful finance technologies to their lives. He brings his background in international affairs and his experiences living in Japan to provide readers with comprehensive information that also acknowledges the local context.
Monito's Managing Editor, Byron has spent several years writing extensively about financial- and migration-related topics.
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While cashless payments are on the rise, cash is still king in many parts of the world, including parts of Europe and Asia. As a result, dodging the (sometimes surprisingly exorbitant) cost of accessing foreign banknotes by finding the best way to exchange currency remains as important as ever.
In this guide, we recommend against the bad advice on conventional ways to get cash abroad: bank or credit union currency exchange. Then, we give you tips on withdrawing cash from ATMs overseas, which is a good alternative.
Watch Our Video on the Cheapest Ways To Get Foreign Cash Abroad
The Best Places to Exchange Currency
- 01. Option 1 — Bank or credit union (not recommended)
- 02. Option 2 — Withdrawing cash from an ATM
- 03. Option 3 — Opening an overseas bank account
- 04. Option 4 — Using an online foreign currency specialist
- 05. Summary: Tips on the best places to exchange money abroad
- 06. Frequently asked questions about getting cash abroad
Option 1 — Use a Bank or Credit Union Currency Exchange
Despite commonly given advice, banks and credit unions are rarely the best places to exchange currency nor are they the cheapest. You can exchange money this way either before you travel or during your trip at a credit union, bank, or bureau de change — both commonly found in airports and foreign cities.
3 Bank and Credit Union Currency Exchange Fees
This popular (but expensive) way to convert money will get you a physical stack of foreign currency banknotes. It is far from the cheapest way to get convert money because of the following three fees:
- Transaction fee: Banks and credit unions often charge a fixed fee or variable commission onto every currency conversion you make.
- Delivery fee: If you'd like to have the foreign cash delivered directly to your home before you travel, this will come with an additional delivery surcharge.
- Exchange rate margin: In all cases, your money will be converted at an exchange rate that is weaker than the real market rate. Banks, credit unions, and other money exchangers will pocket the difference. This tends to form the highest cost of exchanging currency.
Credit Union Currency Exchange Rate Example
We once found that America First Credit Union, a standard credit union in the United States, was converting $1 USD into 0.85019 Euros even though the mid-market exchange rate was at $1 USD = 0.90201 Euros*.
That's a sizable 5.74% fee.
According to Monito's research, the total cost of ordering foreign banknotes combined tends to range from 2.15% to a whopping 16.60% of the total amount converted, depending on where you exchange cash and how much you exchange in the first place.
*Exchange rates recorded on 3 March 2022 11:27 CEST.
Should I Exchange Money Before I Travel?
In general, it's best to wait until you are in-country to withdraw cash from a local ATM.
Banks and credit unions back home tend to be one of the most expensive ways to exchange money before travel and sending money overseas. We recommend against these methods if you're able to withdraw directly from an overseas ATM, which will likely be cheaper.
If you do want to purchase foreign currency, we recommend comparing currency specialists on Monito or finding the best multi-currency travel card.
Option 2 — Withdrawing Foreign Currency at the ATM
Withdrawing cash from a foreign ATM can either be a pricey endeavour or the best way to exchange currency, depending on exactly how you get the job done. If you have a card that charges no international card transaction fees and you avoid paying a dynamic currency conversion, then you will have saved yourself a handful of fees.
To get a full picture of what you're up against, let's take a look at the costs associated with withdrawing money outside of your home country.
How to Avoid Foreign ATM Withdrawal Fees
According to Condé Nast, withdrawal fees typically range from US$2.00 to US$5.00 per withdrawal, in addition to other service fees for foreign currency services. Taken together, paying at foreign ATMs typically includes any combination of the following types of fees:
- Banks or ATM networks (such as Euronet) charge a fee for withdrawals from their ATMs. These fees range usually range between US$2.00 and US$5.00 per withdrawal but can sometimes be higher or include a commission charge of up to 3.00% of the transfer amount, in addition to the fixed amount.
- Avoid this by finding a fee-free ATM, such as a Global ATM Alliance ATM.
- A sneaky fee charged for converting a foreign currency payment into an ATM's local currency. These fees can be higher than 10.00% of the transaction value at the extreme.
- Avoid this by paying the transaction in the local currency (see more on avoiding this fee below).
- In all cases, you'll be charged a margin that forms the difference between the bid price of the foreign currency from your card issuer and the asking price you'll be paying. This sometimes forms the highest cost to get cash abroad.
- Avoid this by using a multi-currency card, such as Revolut or Wise.
4. Bank Charges
- This charge is made by your home bank. If the foreign ATM network you use is outside of your own bank's network or a partner network (which is often the case), you will likely be charged a fee by your bank.
- Avoid this by talking to your bank to see if they offer packages that waive out-of-network ATM withdrawal fees.
Avoid Dynamic Currency Conversions: Don't Pay in Your Home Currency
When you present your home debit or credit card to foreign merchants, you will be given a choice to either pay in the local currency or in your home currency. You should always pay in the local currency (EUR in Spain, USD in the United States, JPY in Japan, etc).
Merchants or ATMs often charge dynamic currency conversions (or DCCs) on card payments to convert foreign currency into local currency. These fees can go as high as 10.00% per withdrawal. Find out more.
Bank Accounts That Exchange Foreign Currency for Free
Monito recommends Revolut as the best all-around multi-currency account and travel card because it allows you to convert money before you travel into up to 26 types of currencies at the mid-market rate. Spend like a local instantly when you touch down at your destination. Practically, this means that you will never be asked by a machine to do a dynamic currency conversion.
Plus, you are given a €/£1,000 fee-free limit for currency exchange and €/£200 per month of free ATM withdrawals.
Revolut is not the only digital bank that offers multi-currency options. Wise, Monese (for UK customers), and many other alternatives may offer better services for you. Compare the best travel cards for 2023 with our latest guide.
Option 3 — Opening an Overseas Bank Account
Opening a bank account overseas may seem difficult or exclusive, but it can in fact be an excellent way to exchange foreign currencies while abroad when you travel to a specific country or region frequently. You generally have two options when opening a bank account overseas:
- Opening an account with a high-street bank in another country;
- Opening an account with an international digital bank.
Store Money in a High Street Bank
Opening a bank account with a traditional high-street bank in another country will likely require you to be present in that country. We further detail how to open a bank account as a foreigner in our many guides on the UK, Japan, the US, Germany, and much more.
Since these banks will require you to present a fair amount of documentation, including passports, visas, and (sometimes) proof of residency, we recommend the second option for your travel purposes.
Open an International Digital Bank Account
If you have no desire of becoming a resident of the country that you're traveling to, then you may consider an international digital bank — and withdraw money from ATMs with their travel card. (If you are planning to become a resident of a foreign country, then look at our in-depth guide on how to open a foreign bank account online.)
International digital bank accounts complement traditional bank accounts well. While you may access savings accounts, investments, and lines of credit with your high-street bank, you can use a digital bank for much more favourable foreign exchange rates and cross-border fees.
These international digital banks, also known as neobanks, offer services exclusively online with a digital app. Neobanks like N26 and Monzo are legally recognized as banks and provide legitimate banking products, such as loans and deposit insurance. This distinction is what sets neobanks apart from E-money institutions such as Wise or Revolut.
Exchange Foreign Currency for Travel With a Digital Bank
For your convenience while travelling abroad, neobanks will provide you with an account where you can:
- Deposit and save money that can be seamlessly exchanged into most foreign currencies;
- Make payments and transfers with personal bank account details;
- Most importantly for you, obtain travel cards for low spending fees and excellent foreign exchange rates.
Neobanks: The Best Place to Exchange Currency
For one of the cheapest ways to get cash from an ATM while abroad (and enjoy the additional products that come with more standard banking), consider opening an account with a neobank.
N26 has partnered with Wise, allowing you to withdraw from an ATM using their travel card with a 0% foreign exchange rate fee. They do charge 1.7% as an ATM withdrawal fee, however, while Monese, Revolut, and Wise charge 0% on such transactions. Restrictions apply so check out our guide to choosing the best travel money cards in 2022.
Bank With N26
Since N26 operates only within the EU/EEA, have a look at our many neobank reviews to learn more about your eligibility.
Option 4 — Exchange Currency With an Online Foreign Currency Specialist
Do you like the feeling of security when you arrive in a foreign country with their local currency already in hand? Currency exchange providers may be a suitable option for you as they specialize in cash pickup services for small and medium sums of money. Compared to banks and credit unions, they are in most cases the easier and cheaper option to exchange money before you travel.
Avoid These Ways to Exchange Currency
To get cash in the local currency of your travel destination, it’s best to stay clear of these exchange options:
- Airport kiosks;
- Bureaux de change, especially in touristic centres;
- Banks and credit unions;
How To Order Foreign Currency With an Online Specialist
Unlike cashless transfer services such as Wise, foreign currency exchange providers like the Currency Online Group and ACE-FX offer cash pickup services. They’ll have your money ready for you at your local branch — or you can pay an extra delivery fee to conveniently send the cash to your door. Some providers do offer same-day delivery, but just make sure to do this in advance of your travel departure.
Their services will charge an exchange rate margin. You'll pay the exchange rate margin between the market rate of the foreign currency and the provider's asking price. As mentioned at the beginning of this article, banks also offer this service but foreign currency specialists are often cheaper.
Compare the Best Ways To Exchange Currency
To find the best foreign currency exchange provider, tailored for you and your travel destination, use Monito's real-time comparison engine. You'll easily be able to compare banks and currency exchange providers and then select which service best fits your needs.
Find the Cheapest Way to Convert Money
Summary: How To Find the Best Way To Exchange Foreign Currency
Finding the cheapest way to get cash abroad doesn't necessarily need to involve withdrawing cash at foreign ATMs using a specialist travel card.
While this method will make your cash withdrawals as optimized and low-cost as possible, there are nonetheless several general rules of thumb to follow to keep the costs down more generally.
Rules of Thumb For Foreign Currency Exchange
Here they are:
- Check your bank's ATM network: Visit your bank's website or mobile app to see whether or not it operates an ATM network or has a partner ATM network in the country to which you're travelling. If it does, opt to withdraw cash only from those ATMs if possible, as you'll likely be charged lower withdrawal fees.
- Make fewer but larger cash withdrawals: Because of the costs associated with ATM withdrawals, it usually makes more sense to withdraw larger sums of money rather than making multiple smaller withdrawals.
Things To Avoid Before Exchanging Currency
On the other hand, here are the four main things to avoid when trying to find the cheapest way to get cash abroad:
- Don't use bureaux de change: Currency conversion offices and bureaux de change at airports and in foreign cities typically charge a high exchange rate margin ranging between 2.15% and 16.60% of the value exchanged.
- Don't withdraw from ATMs in your home currency: When withdrawing cash, always pay in the local currency and not in your home currency; otherwise, you'll likely pay a hidden dynamic currency conversion fee of up to 10.00% or more of the transaction value.
- Don't withdraw from ATMs using your credit card: International credit card withdrawals can sometimes come with additional fees of up to around 5.00% due to cash advance, meaning your withdraw can be subject to snowballing interest rates. These costs are more typically associated with US credit cards.
- Don't top up a travel card with a credit card: While quick, using a credit card to top up a travel card is generally the most expensive way to load money into a travel card. In general, we recommend using a bank transfer to get the job done instead.
Frequently Asked Questions About the Cheapest Ways To Exchange Currency
How do I get cash abroad without fees? 🧾
Strictly speaking, it's not possible to get cash abroad without fees. However, there are specialist travel cards available which charge no additional ATM withdraw fees, meaning getting cash abroad is as cheap is it gets. If you're from the US, EU/EEA, Australia, New Zealand, Singapore, Japan, or Switzerland, we recommend Wise's Multi-Currency Account and its associated debit Mastercard, which gives you access to multi-currency bank details in 10 countries as well as a debit card to spend in dozens of foreign currencies — all for conversion fees to the US dollar of well under 2.00%.
How much money can I take abroad? 💰
The laws may differ from country to country, but in general, there are no limits to how much money you can take abroad. In the US, however, if you bring more than US$10,000 into the country from abroad, you'll be required to declare the money to customs according to the currently laws in place from the Internal Revenue Service (IRS).
Can you use NatWest to get cash abroad? 🏦
Yes, you can use NatWest to get cash abroad if you have a debit card or credit card from the bank. If you use a debit card, you'll be charged a 2.75% commission fee for international withdrawals (except for Reward Silver, Reward Platinum, Black, and Reward Black cardholders) over and above the other fees associated with currency conversion and charged by the ATM network.
Is it cheaper to take money out abroad? 🏧
Yes, in general it's cheaper to take money out while abroad via ATM withdraw rather than at home by purchasing foreign currency directly. This is because the fees associated with purchasing foreign currency banknotes from banks or bureaux de change tend to be exorbitant, and can be priced as high as 16.00% of the transaction value at the extremes.
What is the safest way to take money abroad? 🔒
The safest way to take money abroad is to use a credit card, which typically offer advanced fraud liability policies and quick and easy features to cancel and replace the card in the event it gets lost of stolen. The least safe way to take money abroad is to carry a large sum of foreign banknotes on your person, as this increases the risk of having the money irreversibly stolen.
Can you use a credit card at an ATM? 💳
Yes, it's most certainly possible to use a credit card at an ATM. However, due to the large number of fees associated with using a credit card for ATM withdrawals, we recommend comparing specialist travel cards on Monito to get the job done more cheaply and just as conveniently.
What is the currency exchange rate?
The currency exchange rate is also known as the mid-market exchange rate. This rate is fluctuating constantly.
However, banks and credit unions will exchange foreign currency to you at a rate that is weaker than the current mid-market exchange rate. This is why you should consider multi-currency accounts Revolut and Wise when exchanging currency.
See More Travel Money Guides On the Best Foreign Currency Exchange
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