Hot Tips for Handling Foreign Currency

As I was traveling to the airport this morning, I was casually talking to my Uber driver about traveling. I mentioned that I had just returned from Mexico and he immediately started asking me questions about how to handle money in Mexico.

I started answering all his questions and realized I have been asked this question so many times that this is information that should be shared with all travelers.

Rule #1. Always Use Local Currency.

Always conduct money transactions in the local currency of the country you are in. In Mexico, use Pesos. In Iceland, use Krona. This is best for the vendor, as well as best for you. Some tourist spots will offer to let you pay in US dollars as a convenience to you, but that is aimed at tourists that aren’t savvy with foreign currency and very often can be a tourist trap. In this instance, the vendor is providing the exchange rate and is it most likely not favorable to you. Don’t fall for this. Always insist on paying in the local currency. Some places will have an exchange rate posted in a restaurant. I have never seen a posted exchange rate that was favorable to the consumer. So, follow Rule #1 and always pay in local currency.

If you are paying with a credit card, always tell the server that you want to pay in local currency. If you are American they will sometimes make the assumption that you want to pay in US Dollars. In this situation, request to pay in local currency and your credit card company will convert at the current competitive exchange rate. Although, you do need to be sure you are using a credit card that doesn’t incur foreign transaction fees, as that could be costly (2-4% per transaction).

I recommend either Chase or Amex as they have no foreign transaction fees:

Rule #2. Get the Best Exchange Rate

News flash. Currency Exchange places do not have the best exchange rates. These places are there to make money. They use a low exchange rate when selling and a high exchange rate when buying. So, don’t use them. On my first trip to Mexico, San Miguel de Allende, I mistakenly took large sums of US cash with me. I was a newbie and didn’t know better. While my experienced travel buddies popped into the nearest ATM upon arrival and withdrew pesos, I walked around aimlessly looking for a bank that would exchange and trying to find a decent exchange rate. I found neither. When I finally did use a currency exchange place, I had to fill out some paperwork and let them copy my passport which was way too intrusive. The easiest way by far is to leave your cash in the bank in the US, and use an ATM once you arrive. The exchange rate will be your bank’s current exchange rate and probably very competitive. I usually take out enough for the week so that I only pay one transaction fee (usually $3-4 dollar ATM fee).

I have recently found a new “no account fee” debit card called So-Fi that I have started using for international travel. It is a simple savings account with a debit card. I set up this card for the specific purpose of travel only. I use this to withdraw pesos at ATMs in Mexico. I only put money in the account when I’m traveling, and I never connect it to any other accounts or bills. So if it is compromised, there is very little at risk.

Bonus: So-Fi refunds all ATM fees so this is a win-win for me. I can go to the ATM as many times as I want without worrying about fees. I only transfer my travel funds (about $500 per trip) to the So-Fi account before my trip so I never have to worry about it being compromised.

They have a bonus ($75) for signing up thru a referral and making 2 direct deposits.
Use my link to sign up and you get a $75 bonus. I only recommend products I use and love. And now, I am worry-free when traveling. http://bit.ly/SoFiLara

Be sure to use an ATM that dispenses in local currency. In Mexico, the ATMs are clearly marked at the top Pesos vs. Dollars.

Rule #3. Learn How to Calculate the Exchange

Before you travel to a foreign land, know the local currency. Look it up on online so you are familiar with it and research with your bank/credit card what the current exchange rate is. You will want to have a good idea of the exchange or at least a working knowledge before you buy anything so you can determine if you are getting a good deal for the price. For example, in Mexico right now, the exchange rate is 19.5 to 1, for a rough calculation, I take the amount in pesos and drop a zero off the end and divide in half. 400 pesos is about $20 dollars. This way I can calculate the rough price in my mind before talking to the vendor. If the exchange rate is more complicated, there is no shame in using the calculator on your phone.

Rule #4. Bring Back Foreign Currency with you.

Many people ask “what do I do if I have foreign currency left over when I am about to return?” I say keep it. Especially if you plan on returning to this country. When I get home, I put the remaining foreign currency in a ziplock bag and put it in the safe. When I am ready to return to that country, I am excited to know that I will be returning with local currency in my pocket.

And what if you have a really large chunk of foreign currency that you do not want to leave sitting in the safe. Well, I have been known to buy last minute souvenirs in the airport gift shops with remaining currency, just before I leave, but my preference is to bring it home instead as airport gift shops usually overcharge.

Final Tip: Call the bank and credit card company before you leave the US.

One final tip, before going on vacation, call your bank and your credit card company and let them know the dates that you will be in a foreign country, and let them know that you will be using your ATM card and credit card. Otherwise, they may see this foreign activity as suspicious and put a hold on your cards and block your withdrawals. You don’t want to be stuck in a foreign country with no cash or credit.

Happy Travels. Here’s to a most prosperous journey!

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35 Replies to “Hot Tips for Handling Foreign Currency”

    1. Thanks, Meghan. I want to do my best to help other travelers have the best experience possible. I just wish I had known these tips when i took my first international trip.

  1. Hi, Very Good Article. I really appreciate it. Well researched article. Now you got one regular visitor to your website for new topics. Keep up the Good Work Thanks for always sharing. Nicole Graham

    1. Thanks, Nicole. My goal is to share this info with travelers before they go international. It can save so much confusion. I am surprised by how many friends that I travel with that don’t have a strategy at all. Thanks for sharing.

  2. The final tip is a big one! When I studied abroad, so many of my friends had their cards locked because they forgot to give their bank a call. Wish I had read this before I set off on my travels! Great post!

    1. Thanks, Sydnie. I was surprised by how many of my friends didn’t know to do this. I hope to get the word out to all international travelers!

  3. We travel to see family in Holland frequently and usually bring home money and take it back next time. I totally dread standing in the exchange line at the airport. UGH! LOL Thank you for the tips!

  4. Wow! I wish I knew all that before our first trip! We lost so much by not paying in local currency. When we noticed that everywhere was willing to take US Dollars, we just did that, thinking it was so much easier. It wasn’t until the last day of our trip that we noticed the exchange rate at restaurants and stores was nowhere near where it should be!

  5. Very good tips! I have a small stash of foreign currency in my office – not only will it be great for our next trip, the kids have enjoyed taking it in for show and tell when they were small.

  6. OKAAAY! This…I definitely need! Thanks for all the info! We are going for a month to Malaysia, Singapore and Thailand in the summer, and I have to know this stuff! Pinning it for sure because I will need to review this post again! 😉

    1. Thanks Vessy. That is precisely why I wrote about this topic. I want everyone to know before they go and not get stuck. Have a wonderful trip!

    1. Thanks, Amanda. Exchange rates are not something people usually think about. It is good to give it a thought before you get there. Hope you have a trip soon where you can use this info.

  7. I agree with the ATM tip! When living in England for a month, I used an ATM once a week. Much cheaper than the exchange places!

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