You will require access to foreign currency if you intend to travel abroad. While you could use a credit or debit card for every purchase, you risk spending too much on foreign transaction fees. Carrying cash and exchanging money can help you prevent that. Unfortunately, there are situations where access to foreign funds can be expensive.
In this article, we’ll cover:
- How foreign currency exchange works
- Places to exchange foreign currency in the US
- Places to exchange foreign currency abroad
- Places to avoid exchanging currency abroad
- Alternative to foreign currency exchange
- How to exchange foreign currency
- The top Banks that exchange foreign currency
- How Does Foreign Currency Exchange Work?
- Places to Exchange Foreign Currency in the United States
- Places to Exchange Foreign Currency Abroad
- Alternatives to Foreign Currency Exchange
- How to Exchange Foreign Currency
- Top Banks That Exchange Foreign Currencies
- Bottom Line
How Does Foreign Currency Exchange Work?
Consider the currency exchange rate the same way you would purchase food at the grocery store. As an illustration, a gallon of milk might cost $4.50 one day and then $3.50 the following week. When milk costs $3.50 a gallon, your dollar is worth more and is less when it costs $4.50.
The value of one nation’s money relative to another nation’s money is known as a currency exchange rate. Just like the cost of products, the dollar’s value is compared to those of other nations’ currencies, such as the pound, the Canadian dollar, and the yuan, which is prone to change. Though most banks update their rates once daily, exchange rates can fluctuate minute by minute.
Since exchange rates change, you’ll want to ensure that you obtain the most foreign currency for your U.S. dollar. To achieve this, you should seek out the best conversion rates and minimize the costs you must pay.
Places to Exchange Foreign Currency in the United States
The best and most affordable institutions in the United States for currency conversion and exchange are:
Banks and Credit Unions
Research your bank or credit union’s currency conversion services and rates before you embark on your foreign trip. Generally, banks will provide reduced rates to exchange foreign currency to their customers via the internet, phone, or in person.
Some banks offer online orders that are conveniently deducted from your account. If you request less than a particular amount of cash – typically less than $1,000 – some banks may charge you a fee, while others won’t charge you anything.
Different institutions may have different exchange rates and processing times for your new currency. One to seven business days are typically required to receive your funds at home or the bank. However, orders finalized before a specific time may be eligible for next-day delivery with some banks. Make sure to compare rates and purchase your new currency before your trip.
Currency Exchange Websites
Currency exchange websites are online platforms that typically offer customers competitive exchange rates. They provide a practical means of safely acquiring and exchange foreign currency. The money will be sent directly to you when you place an order on the exchange website.
However, keep in mind that some currencies might not be able to be exchanged when ordering cash online, and some nations might have monetary rules and convertibility limits. And even though online conversion rates can occasionally be a little higher than those offered by your bank (including shipping fees), this is still one of the better options.
Find the best online currency exchange website by researching on:
- Most favorable exchange rates
- Lower fees
- Options for receiving or delivering cash
- Various nations and currencies for exchange
- Exchange rate tools
- Support and assistance of any kind.
Places to Exchange Foreign Currency Abroad
You might need a backup exchange option when you get to your destination, just in case the money you exchanged wasn’t quite enough. Below we’ve highlighted a few places where you can obtain foreign currency while abroad:
Using the ATM network of your bank is the most cost-effective option to exchange money abroad. To increase your chances of avoiding unwanted costs, find out before you travel whether your bank has an ATM network or even bank affiliates at your location. Keep an eye out for ATMs that bear your bank’s logo when you arrive at your destination.
It’s a good idea to withdraw more significant sums of money at once while utilizing foreign ATMs outside your network to limit the number of withdrawals. Doing this could incur fewer fees, such as those for using an international ATM or foreign transactions.
Foreign Bank Account
It can make sense to open a bank account in your country if you frequently visit there or, more specifically, if you own property there. You might wait until you get there to obtain the necessary funds if the bank sells currencies. It could take some time to set up an account, so you should either do it beforehand or create the report so you can access it on your subsequent trip.
These bank branches might still be able to exchange currencies for you even if you don’t have a foreign bank account. But you’ll probably have to pay a fee if they’re willing to do it.
Places to avoid exchanging currency abroad
There are more options for exchanging currencies when traveling, some of which are pretty convenient but may be misleading.
Hotels, Transportation Hubs, and Airport Kiosks
The last place you should try to exchange money is at an airport, a kiosk next to a hotel, or a station. These methods may be easy to access, but their only goal is to generate profit (and it’s certainly not for you). High ATM fees and unfavorable conversion rates are to be expected.
Currency Exchange Stores
Stores offering currency exchange in popular tourist areas are another place to find unfavorable conversion rates. You could locate exchange stores at different marketplaces or well-known outdoor spaces when you get there. Although these shops are positioned in a tourist-friendly area, you can find much better deals elsewhere.
Although they are quick and handy, independent or private ATM operators should not be used to withdraw money. These are far more expensive and, in addition to being unrelated to banks, carry a higher chance of security challenges. Always use an ATM linked to your bank, or better yet, one affiliated with one.
Alternatives to Foreign Currency Exchange
Highlighted below are some of the ways you can avoid the hassle of exchanging currency:
Debit and Credit Card
You can instantly access your funds when you use a debit card, which aids in monitoring your spending plan. Furthermore, since a credit card is not connected to a checking or savings account, you have access to more money and generally have more security. But remember that there can be charges if you use either choice.
It wouldn’t be a bad idea to combine the two payment options as they are both typically more convenient than carrying cash around. Even better, some banks provide cards that don’t charge foreign transaction fees, so using your card overseas won’t cost you anything extra. However, some seasoned travelers purchase credit card travel insurance because there is still a chance of losing their card while traveling.
Traveler’s checks are paper checks with prepaid fixed amounts that work similarly to cash. If you know the specific serial numbers of the checks, you may quickly replace or refund them, and there are no withdrawal fees or expiration dates. However, there aren’t many issuers today, and this method is somewhat outdated. When obtaining a traveler’s check, you must also pay an exchange fee.
Prepaid Travel Cards
Prepaid travel cards let you deposit money onto them before you leave the house. Despite being just as easily replaced as traveler’s checks and valuable for budgeting, these cards may incur higher fees than debit or credit cards. Finding credit cards without foreign transaction fees is usually less complicated.
Remember that daily reloading and withdrawal limits are familiar with prepaid cards. Moreover, pre-authorized price increases may be encountered by cardholders at specific service providers like restaurants, hotels, and automobile rental companies.
The benefits of fraud protection and trip budgeting are the main reasons people prefer to use prepaid travel cards. The fee-free perks you receive with a debit or credit card will not apply if this is not the case.
How to Exchange Foreign Currency
Currency exchange is not available at all financial institutions. Even if your bank offers this service, your closest branch could only have a limited variety of currencies on hand.
Therefore, consider using the following process to purchase foreign currency if you want to avoid unnecessary visits to the bank.
Contact the Bank’s Customer Service
To find out if your branch stocks the kind of currency you need to exchange, contact your bank’s customer service department. A bank employee can immediately place an order if the desired currency isn’t in stock.
Several financial institutions could offer to send the funds to your residence for a fee. If your bank demands that you exchange money in person, you can schedule an appointment to visit a branch.
To get a general sense of how much cash you’ll need, you can check exchange rates online, although they do not precisely reflect the rates offered by financial institutions.
Make Sure You Provide the Complete Paperwork
When exchanging money, be careful to have the following readily available:
- An ID, such as your passport or driver’s license
- The currency being exchanged
- Extra cash or payment option if your bank levies a transaction fee
Typically, banks will charge a transaction fee when exchanging money. Depending on the quantity and kind of currency, you will either pay a fixed or variable rate.
When you arrive for your appointment, a bank employee will walk you through the process of purchasing currency. Your financial institution might be able to repurchase the foreign currency once you get back from your trip.
Top Banks That Exchange Foreign Currencies
The following is a list of 10 financial institutions that exchange foreign currencies. Kindly be advised that you may need to be a bank or credit union customer to exchange currency.
- Bank of America: Customers of Bank of America have online and telephone exchange options for up to $10,000. Additionally, branch locations accept orders that total over $10,000. Currency exchange is free, but there is a $7.50 shipping charge if you want your order sent home.
- Citibank: Contact or go to a Citibank branch if you want to exchange more than 50 different currencies. Customers of Citigold or the Citi Priority Account Package are not charged. There is a $5 service charge for any transaction below $1,000 for Citibank customers whose accounts are not listed above. Depending on your delivery preferences, there is a $10 to $20 fee if you’d prefer to have the funds delivered to your home.
- Chase: Customers of Chase can exchange foreign currencies worth up to $5,000 at local branches. To find out about the transaction fees, visit the branches closest to you.
- First Citizens Bank: Customers can exchange more than 80 currencies at their branches. While there are no restrictions on the amount you can exchange, you should contact your nearest branch to find out more about any potential charges.
- America First Credit Union: Credit union members can exchange up to $5,000 at a few branches. If your exchange is for $300 or more, the charge is $10; if it’s for less than $300, the fee is $20.
- Huntington Bank: Customers of Huntington Bank can exchange up to $20,000 at any of their banking locations for an $8 charge. Due to the bank’s 75 different currency types, you can exchange different currencies.
- Wings Financial Credit Union: The local branches of Wings Financial Credit Union accept orders in over 90 different currencies. For orders under $300, there is a $10 transaction fee. However, the fee is not charged if your order costs $300 or more.
- TD Bank: TD Bank offers 55 different currencies. Orders can be placed without having a TD Bank account. You can place orders either online or at a TD branch. However, note that online orders have a $7.50 fee and a $1,500 purchase limitation.
- Service Federal Credit Union: The number of currencies available for customers at Service Credit Union exceeds 60. Orders can be placed by phone, or you can stop by a nearby branch. Purchases under $200 can be subject to a $10 transaction fee.
- US Bank: Customers of US Bank can exchange money at a nearby branch. For orders of $250 or less, there is a $10 transaction fee. Orders that total more than this does not incur a transaction fee.
Understanding currency exchange charges, ATM withdrawal caps, foreign transaction fees, and other costs associated with paying in foreign currencies can save you time and money while traveling. Therefore, consider your payment options for regular purchases before you book your next overseas trip.