Travelling abroad? Exchange currency before you leave.

Currency conversion can be an unnecessary expense, and it’s one that you can avoid with some clever preparation for your travel, Hamm writes.

Anatolii Stepanov/Reuters/File
A man counts money near a currency exchange office in Kiev in this November 2012 file photo. Take some currency with you by exchanging some dollars for your foreign currency of choice at a large bank before you leave, Hamm advises.

One of the most painful parts of my international travels has been the currency conversion process. Many banks, particularly those with international branches, will happily convert currency for you, but at a price.

It’s understandable why they charge a fee. They’re providing a service, and then they have to deal with converting the funds themselves.

Still, it’s an unnecessary expense, and it’s one that you can avoid with some clever preparation for your travel.

The first suggestion I have is that, if you’re traveling internationally, plan to put many of your expenses on plastic. Use a credit card for as many things as you can so that you don’t have to deal with the currency swaps. 

To do this, contact your card issuer before you leave and make sure they know you’re traveling overseas. Talk to them and make sure that there aren’t any restrictions on overseas use – most large banks have few, if any, restrictions on using their Visas or MasterCards.

You may also want to write down your card number and the phone number of your issuing bank and store it in a private place far away from your card, so that if your card is stolen in an international setting, you can get things fixed as quickly as possible.

Still, it is very worthwhile to have some foreign currency on hand, and I recommend doing the currency exchange before you leave.

Doing the exchange before you leave gives you more opportunities to shop around for the best rates and allows you to avoid the pain of having to deal with the exchange fees once you arrive and have more limited options.

So, how do you shop for currency exchanges? Your best bet is to contact the branches of large banks in the city you’re flying out of. Cities with a large international airport often have bank branches that will do the exchange for you, often at a pretty low rate.

The rate is even lower if you happen to be a customer, so if you’re a customer of a large bank with a lot of branches, contact your own bank first and find out what exchange fees they offer you.

My experience has been that these bank branches will give you the best rates you can find. If that doesn’t work for you, the next best rates have come from actually using an ATM card overseas – but if you’re going to do this, contact your bank before you leave so your card isn’t shut down due to theft protection. Usually, the currency exchange fees (if any) on the ATMs is actually lower than dealing with the banks directly, but the ATM usage fees end up tipping the balance toward doing the exchange before you leave.

The worst option is the currency exchange desks that you’ll often find in airports when you land. They’ll exchange currency for you, but the fees are painful and should be avoided.

So, here’s the plan. Try to put most expenses on the credit card, and also take some currency with you by exchanging some dollars for your foreign currency of choice at a large bank before you leave. If you’re overseas and need cash, use an ATM – resort to a currency exchange desk only as a last resort.

I’ve used this strategy with most of my more recent international travel and I’ve found the cost of converting my dollars to be much more reasonable than just playing it by ear. The savings can really add up.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.

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