Whether you’re planning a trip abroad or need to send money overseas, know the ins and outs of exchanging currency.
Your trip is booked, your bags are packed and you’re ready to go. Now it’s time to convert your USD into the local currency and hop on the plane. If you wait to arrive at the airport to exchange your currency, you’ll be disappointed.
The exchange rate used at the airport is much lower that the mid-market rate — and these services charge a commission. Chances are you’ll be leaving for your trip with less money than you planned on.
Currency exchange can be disheartening if you’re not sure what options you have. Let us help you figure out the best way to change your money before you leave for your vacation.
Where should I exchange currency?
When you’re converting American dollars into a foreign currency, you want to find the best deal. If you visit a bank or exchange office, look at the exchange rate and compare it with the mid-market rate to get the best deal.
What is the mid-market rate?
The mid-market rate is what your money’s actually worth on the global market compared to another currency. It’s the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves.
Use this rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.
Did you know?
The best way to exchange your currency is through an online foreign exchange company like Travelex and World First. They offer better rates and lower fees than you can find at a bank or the airport.
But nearly all providers skew exchange rates for a profit. Some add a large margin to the mid-market rate, while more competitive providers will minimize this margin. Exercise your due diligence before going with one provider and you’ll be sure to get more value out of your exchange. Look for the smallest margin between the mid-market rate and the rate you’re offered.
Who offers the best exchange rates? Since rates change on a daily basis, it’s difficult to exactly pinpoint who offers the best exchange rate. Some companies that offer competitive rates include: OFX, HiFX, World First and Travelex.
How to get the best exchange rate.
Back to topHow should I pay for my purchases overseas?
Credit card
If you find the right credit card for travel, this is a great way to spend while over seas. Look for cards that waive foreign exchange fees and offer rewards for spending on your trip.
Always let your bank know you’re heading overseas — otherwise the credit card company could put a freeze on your card once it detects a foreign transaction. To protect you from fraud, they alert you of any potentially fraudulent activity on your card.
Only use a cash advance in an emergency. The fees are high and you start paying an APR immediately.
Using cash
You’ll find that there are some places that don’t accept credit or debit cards. It’s important to always have a bit of cash on you. But, that being said, only carry the cash you need. Thieves and pickpockets look for tourists as victims. Use either a debit card or travel money card to withdraw your money when you need it.
Using a travel card
Though not popular in the US, travel money cards can be helpful if you’re traveling to more than one country. Travelex allows you to load up to seven major currencies at once, making exchanging money a breeze. There are many currencies that aren’t supported on the travel money cards, so make sure you check before you leave.
Why we like: Travelex Money Card
Load GBP, EUR, CAD, AUD, JPY or MXN onto this prepaid travel money card and use it at millions of locations worldwide.
- Not linked to your bank account for safety.
- Convert currency with a 5.50% Foreign Exchange Fee
- Contactless payments
- Reload, withdraw, or replace your card for free.
Travel cards can lock in conversion rates once you load USD. Use it for purchases without worrying about foreign exchange rates each time you spend. Though where you save in the conversion rates you may pay in fees. You’ll pay fees each time you load the card, ATM withdrawals and sometimes even an inactivity fee.
- What happens to my travel card after I finish my vacation?
If you have money left on your card after your vacation, you can withdraw it or deposit it into your bank account — for a fee. Your best bet is to spend all the money on the card, or take it out from an ATM.
Using debit cards
To get access to your money overseas, using your debit card is your best bet. It’s convenient, but it can be expensive you if you don’t find a bank that waives foreign transaction and ATM fees.
- Can I preload my debit card with foreign cash?
No, cards issued in the US only hold USD. When you conduct a transaction in a foreign currency, exchange rates will apply.
Can I get currency sent to me?
When it comes to a loved on or friend sending money to you overseas, you have a couple of options. Banks provide secure wire transfers around the world, though they aren’t cheap. You’ll pay a high fees and get a weaker exchange rate, ultimately paying too much for your transfer. Money transfer providers like Western Union and MoneyGram make it easier — and cheaper — to send money. Your loved one initiates an online transfer, and you can either pick it up at a store location or have it deposited directly into your account.
WorldRemit has the best of both worlds. Your loved one sends a transfer online, and you can pick it up at a bank.
How can I safely carry cash overseas?
Wherever you are in the world, it’s important that you observe a few safety precautions when carrying cash. Pickpockets and muggers can strike anywhere you travel, so keep the following tips in mind when you set off on your adventure.
- Keep it hidden. Don’t pull out big wads of money when you’re making payments or withdrawals.
- Don’t carry a purse. Purses that aren’t strapped around your shoulders or kept close to your body are targets for pickpockets. It’s best to wear a backpack or put your belongings in your pocket.
- Avoid carrying lots of cash. Use credit, debit or travel cards or leave any extra cash in your hotel room safe.
- Avoid dangerous or crowded areas. Every city has its dangerous neighborhoods where there’s higher incidence of muggings and thefts. Use your common sense.
- Travel with a friend. The extra security of having a travel companion can act as a strong deterrent to thieves.
- Do your research. Hit up several online forums and blogs for advice and warnings from other travelers about common scams and areas to avoid.
Currency exchange services in the US
You have a wealth of options at your disposal when you want to trade in your Australian dollars for foreign currency, including:
- International exchange kiosk. Foreign exchange kiosks are in airports.
- Banks. You can purchase some foreign currency from major US banks.
- Online foreign exchange companies. World First, HiFX and other similar companies offer convenient exchange services online.
The most popular currencies in the US
The most commonly traded currencies in the US:
- The Euro
- The Great British Pound
- The Canadian Dollar
- The Japanese Yen
- The Swiss Franc
- Mexican peso
Comparing the benefits, features and fees of different options will ensure that you get the most affordable deal and don’t get any nasty surprises down the track.
