A question I often see in user forums here at Fodors.com is how best to get foreign currency when traveling overseas. When I first started traveling abroad, there were two basic choices: take and exchange cash or take and exchange travelers’ checks. I usually did the latter. How times have changed. Now anyone under 25 could look at me with a raised eyebrow if I mentioned a traveller’s check. But the question still persists. With bank charges increasing every year and seemingly constantly changing exchange rates, what’s the best way to change your money? There is a lot of son about this in our user forums. Here are some simple rules to follow.

Ten simple rules for exchanging your money

1. ATMs remain the best choice for overnight funds.

Although some banks charge high fees for using foreign ATMs, not to mention adding high fees for overseas transactions (Bank of America, for example, charges $ 5 per withdrawal plus a 3% premium. in addition to each withdrawal at a non-partner ATM), the ATM is still almost always the cheapest option to change your money. And if your bank has international ATMs or partner banks abroad, you can sometimes save a little on your cash withdrawals; this is true even at BOA, which only charges 1% in member banks and no other fees. Capitol One Bank does not charge anything for a withdrawal from a foreign ATM, while other banks such as Chase charge 3% on top of each withdrawal plus a $ 3 fee. It is worth shopping for a bank if you travel internationally a lot.

2. “No-cost” money changers are usually the most expensive places to change money.

When you see a sign offering a “no charge” currency exchange service, be sure to check the rates. You will notice that they are almost always much worse than what you would get if you had just withdrawn money from an ATM. It’s a good idea to keep up to date with the latest interbank rates (the rates that banks pay for foreign currencies) so you know if you’re getting a good deal. A website like www.xe.com can give you these rates, which change daily. At best, you normally pay between 4% and 9% of the total amount you trade to change money into a foreign currency, and that cost is usually built into the wrong exchange rate. You are paying again to convert your euros or pounds sterling to dollars, so think carefully about how much money you actually need on a day-to-day basis.

3. If you need a lot of money, ask your bank to increase your daily withdrawal limit.

Suppose you rent an apartment for a week in Rome or Paris and need a lot of euros at a time to pay the landlord, your bank may be able to temporarily increase your daily withdrawal limit to allow you to withdraw. a lot more money than you would. normally be allowed out. ATMs may have smaller withdrawal limits, but you can make multiple withdrawals from the same ATM or multiple ATMs in this case. If you can’t get enough cash to pay a week in advance, your landlord may be able to allow you to pay in installments throughout your stay. If you have a traveling companion, you can both withdraw money to make the upfront payment.

4. Never take a cash advance on your credit card except in a serious emergency.

If you take money from a foreign ATM, you will pay a fee; you will be charged a percentage in addition to your withdrawal as a foreign transaction fee; and you’ll start paying very high interest (sometimes up to twice the normal interest rate you’re charged on your credit card) as soon as the money gets to you. This is a very bad deal. Avoid it at all costs unless you have no other choice. Bank of America has some pretty huge fees, like posters in our forums found.

5. Use credit cards for large purchases.

Most credit cards charge an overseas transaction fee of between 1% and 3% every time you buy something overseas, but it’s still the safest and often the cheapest way to make a major purchase. You will almost always have a head start on the conversion since credit cards add their fees on top of the interbank rate. So you almost always get the best possible exchange rate even if you pay a fee. (And some banks, like Capital One, still don’t charge anything extra for overseas purchases beyond the 1% charged by Visa and Mastercard; some credit unions also have very low fees, although membership to credit unions is generally limited.) Other banks, including Citibank, really chip away at consumers by charging 3% overseas transaction fees even if the purchase is made in US dollars.

6. Avoid dynamic currency conversion.

If you ever have the option of billing your overseas purchase in US dollars, decline. In fact, you should insist that you be billed in the local currency. The so-called dynamic currency conversion not only offers poor exchange rates, but it also includes hidden fees, and your own credit card will charge you its own overseas transaction fees in addition to the cost of the purchase. . This is because you’ll pay double the fees and get a bad trade to boot. You could pay a 10% premium for a purchase. Here is a discussion of the process from our forums. Keep in mind that your credit card company always charges you foreign transaction fees (if they do charge those fees), whether your purchase is made in dollars or foreign currency.

7. Do not make purchases with your debit card abroad.

It is very simple. Use your debit / ATM card to make cash withdrawals. Do not use it for shopping. If anything goes wrong, your account will be debited immediately for the purchase; even if you return something for a refund, your account may not be credited for several days (maybe for more than a week if the purchase is made overseas). If a seller makes a mistake, it may take several days for the wrong charge to be credited to your account. With a credit card, you may never notice that a particular debit has come and gone because it will never show up on your statement. But it’s different with a bank account. The money actually disappears and may not return for several days even if it is a mistake or even if a transaction is canceled. You might need this money in the meantime.

8. The situation of the chip and the PIN in Europe.

Most European countries now offer credit and debit cards with a computer chip that requires a PIN code to activate and make a purchase. This is particularly common in ATMs in Europe, even on European toll roads. If your credit or debit card doesn’t have a chip and PIN (hardly any credit or debit cards in the US), you may not be able to buy a ticket from a machine with your card. Although Visa and Mastercard promise US cardholders that their cards are usable anywhere in the world where they should be accepted with a simple signature, you may still have occasional problems in Europe using your card. Posters in our user forums discussed this issue here. The topic was also covered earlier this year on SmarterTravel.com.

9. Travelers’ checks are a good back-up solution in an emergency.

While the predominance of ATMs has made some people feel that the simple traveller’s check is a relic of a bygone era, it can still be a boon in an emergency. It is true that few places in the world still accept traveller’s checks as a form of payment. Normally you have to change them at a bank and you will have to pay a high fee for the privilege (although in some destinations like Mexico it can be difficult to find a bank that will exchange your travelers checks). But if you can buy your traveller’s checks without paying a fee, they are a good alternative as an emergency cash reserve. And if you have American Express checks, they can still be cashed at an Amex office overseas. Although these are not as widespread as they once were, they are still found throughout Europe and in many other countries.

10. A Ben Franklin is also a great emergency reserve.

A new neat US $ 100 bill is also a good alternative as an emergency cash reserve. While I wouldn’t travel overseas with a large amount of money, having a single $ 100 ticket somewhere separate from your other travel money is a great idea. Even if you lose substantially on currency exchange, it is a currency that is accepted around the world.