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Is There a Fee When Exchanging Currency?

Various types of currency, including US dollars, pounds sterling, and euros.
A person making a purchase with a 20 euro bill.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 14 October 2014
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Exchanging currency in any foreign country is going to incur fees. Yet how much you will pay in fees largely depends on where and how you are exchanging currency. Certain memberships to travel agencies like AAA, or possessing specific credit or ATM cards may help you save a little bit as you travel.

At present, the cheapest method of paying for things in a foreign country is to use your credit card. Alternately, consider using an ATM or debit/credit card for exchanging currency. The trouble is, you can’t always tell exactly what the fees will be if you’re using foreign ATMs, unless you have accounts at specific banks.

For instance, if you have an account with Bank of America or Citibank, fees for using the ATM may be waved if you use an affiliated bank in a foreign country, and you can expect to pay about 3% of the amount withdrawn for exchanging currency. For all other ATMs unaffiliated with these banks you may pay a percentage amount of a flat fee for withdrawals. A good tip is to get a list of foreign banks affiliated with your bank before you travel, and find out where such banks have ATMs.

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When you’re exchanging currency at a bank or foreign exchange office, fees will rise sharply. But you do need to carry a little local cash with you, for expenses you can’t cover with credit cards. At a bank you might pay about 10% in fees. As a good rule, don’t allow local merchants or companies like hotels to exchange your currency. They may charge over 20% for this, and be especially wary of small merchants who offer to convert any leftover homeland currency you have. Chances are you’ll pay for it in extra fees, or if you don’t know the exchange rate, you may be ripped off on the exchange.

While exchanging currency is undoubtedly least expensive if you use ATMs or credit cards, be sure to check rates and fees before you travel. Some banks offer “pre-loaded” credit cards/ATMs that may save you more money, and certain banks may offer you a better deal on foreign currency exchange in your own country than banks will in the country to which you plan to travel.

Traveler’s Checks®, once the best way to carry money in foreign countries, are now less preferred than using your ATM or credit card. There have been numerous instances of dummy checks, which can create hesitancy to accept them among merchants, especially in small cities or rural areas. If you want to make sure your bank account is not accessed if you lose your ATM or credit card, consider purchasing a pre-loaded ATM instead. Also, make as few exchanges as possible. Even when you’re using an ATM or credit card, you’ll probably be charged a percentage or flat rate for each transaction, on top of a percentage fee for exchanging currency.

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