When travelling abroad, visitors have many ways to pay – cash, credit, or traveler’s checks. While it may make sense to use credit card at larger, more secure establishments, or with no foreign transaction fees, a worldly traveler should always have some cash for quick purchases, or at merchants who do not accept credit.

That being said, there are many ways of withdrawing or converting your funds to the foreign currency. This article will focus on cash conversion & withdrawal and their pros and cons, along with best practices.

TL:DR – Use the ATM, preferably with a low or no fee checking account.


Cash Conversion

How I imagine money exchange tellers

How I imagine money exchange tellers

You’ve seen them all over, in airports, hotels, and touristy locales: Travelex and other foreign currency exchange businesses. These (in my opinion) prey on the uneducated. Typically located in a high traffic area, away from competition, they may charge high flat fees or percentage commissions, in addition to an abysmal buy/sell spread.

They operate by buying currency at the buy rate, and selling it to customers at a higher sell rate. That difference is their spread, or profit, which is in addition to any fees that they charge.

Sometimes, they have interesting incentive tiers, such as lower fees for higher amounts converted, or the option of buyback. This means that upon your return to the airport/hotel, they will “buy back” your unused currency at the previous rate. While these options are somewhat attractive, they are still attached to a highly unfavorable trade rate.

Alternatively, you can exchange your funds for local currency at hotel front desks, also at unfavorable rates. I always compare versus Google Finance for the most up to date information.


Foreign Currency Withdrawal

At the ATM: Be Safe!

At the ATM: Be Safe!

You can withdraw local currency at ATMs around the world – but it is a little tricky. In my experience, they give you two offers:

  • Withdraw a flat amount of home currency at a set conversion rate (withdrawing in local currency) (Example: Withdraw $100, at 1 USD: 105 JPY – offered rate = 10,500 JPY)
  • Withdraw local currency, posting as a converted withdrawal of home currency from your account (Example: Withdraw 10,000 JPY, at 1 USD:110 JPY – official rate = $90.91)

For the first, the ATM typically shows you a set conversion rate, below the “official” exchange rate. For the latter, the conversion rate is pretty close to the official rate. Sometimes for both, and depending on the ATM, they may charge a conversion fee.

I highly recommend travelers invest in a strong checking account, such as Ally, Charles Schwab, or Capital One, which allows foreign transaction ATM withdrawals with low or no fees. It is incredibly convenient and satisfying to know that you are not being cheated simply because you want to have cash.

Of course, this depends on whichever country you go to having ample, easy access ATMs in secure areas. This may not be a problem for metros in Europe or Asia, for example, but the more remote you go the harder it will be.



No, you can't pay with Gold

No, you can’t pay with Gold

Lastly, carry a debit card and be sure to place travel notices on your accounts. The last thing you want is to be denied on your credit/debit card and find yourself stranded with no way to pay for food or excursions. I found the practice of withdrawing foreign currency very easy in Japan and Europe, but more difficult in places such as Mexico where ATMs were more dilapidated, or in more sketchy or unsafe areas. Be safe, and get cash smartly!


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