Travelers to countries that use a different currency from their home country's currency need to exchange their money in order to be able to make purchases while they are traveling. There are multiple ways to exchange money and many places to exchange money. Some places are better than others, based on factors such as cost and convenience.
At Home
One way to exchange money for your trip is to do so before you leave. You can visit a local bank that does currency exchanges and exchange cash for the currency you need. You can also order traveler's checks online from companies such as American Express. These checks are insured and can be cashed upon arrival to your destination. You can also order actual currency from websites such as AAA.com and have the currency mailed to your home.
There are risks associated with getting the currency you need before leaving. Online websites may not always be reputable, and there is a risk that your currency could be stolen while en route to your home. Also, you may be at risk as a result of carrying large amounts of currency while traveling.
With traveler's checks, you may run into problems cashing them as some retailers may not accept them as payment or a fee may be charged for cashing them at foreign locations.
ATMs
Using an ATM to get local currency when traveling can be a wise idea for a number of reasons. The first reason is that this eliminates the need to carry large amounts of cash around with you. You can visit an ATM whenever you need cash and take out what you need.
Another reason that ATMs are beneficial for currency exchange is that the fees can be better than those of currency exchange locations around the area you are visiting. Fees can range between 1 percent and 4 percent depending on fees charged by Visa and MasterCard, fees assessed by the issuing bank and fees charged by the ATM owner. ATM cards or debit card should be used instead of credit card cash advances as credit card advance fees will be higher than debit or ATM card fees.
One should also be aware of the transaction fee that may be assessed in addition to a percentage fee. If your bank charges you $5 to $10 for every withdrawal plus the percentage fee, it may be better to take out larger amounts at once.
Banks
A bank in another country is a place where you can exchange your money for the local currency. Banks set their exchange rates based either on supply and demand for the currency or government-mandated exchange rates. These rates can vary depending on the country you are visiting and the current currency value as compared with other currencies.
Currency Exchange Kiosks and Stores
When you travel, you will see privately owned shops and kiosks that advertise everything from currency exchanges to cash loans. These locations usually display their current exchange rates and fees, but travelers need to be wary of these locations. Often their rates are based on the "convenience" factor--that is, they tend to be located in high-traffic areas, retail areas and other areas where tourists are likely to be.
It is important to carefully read over rates and fee schedules and ask for documentation as well as a receipt when exchanging money. Dishonest exchange kiosk operators may charge more if they see a certain currency being presented for exchange or if they sense a naive tourist.
Hotels and Airports
When you arrive at the airport, you will often see at least one currency exchange kiosk in the airport. Although these locations can be more trustworthy than ones found in tourist locations, the rates and fees may be set with "convenience" in mind and may cost more than a bank or ATM exchange.
Hotels also offer currency exchange to their guests although sometimes this is not openly advertised. Asking the front desk staff about currency exchange is the best way to determine whether it is worthwhile to exchange your money at the hotel.
These locations may charge exchange fees and rates that when combined can be as high as 20 percent, far higher than you might pay at a bank or ATM. Unless you need currency immediately, these locations should be a last resort to get local currency.
Warnings
In addition to carefully considering exchange rates and fees to avoid getting ripped off, it is important to practice safety while traveling with large amounts of currency. Always check your surroundings before pulling out money or a bank card to do an exchange. When approaching a kiosk or an ATM, look around and be aware of those around you; if someone looks suspicious, do not pull out your money or bank card.
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