Don't Make These Foreign Currency Mistakes

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Many travelers don't think about foreign currency exchange until they arrive overseas and have to take a taxi to their hotel. A little planning can help you avoid getting overcharged -- although it's getting more and more difficult, as banks and credit card companies are upping their transaction fees for foreign currency purchases. Here are our best money-saving tips to avoid getting ripped off on your vacation.

1.Don't forget to call your credit card companies and tell them about your travel plans.Fraud has become such a worldwide problem that credit card companies are on the alert for unusual activity, such as cash advances and purchases in foreign currency. Some companies, like Capital One, will even reject out-of-state charges if you don't alert them in advance. Also, ask what fees apply to foreign purchases ; most companies have recently begun charging up to 3 percent for international charges. Capital One and Schwab Bank do not charge a fee, and many credit unions charge either a low fee (1 percent) or no fee at all. Some debit cards have even begun charging a fee.

Don't forget to check foreign currency exchange rates online before you travel. If you know what the best exchange rate is, you'll know what to expect when you do a currency exchange. Get current information at sites like or, which even has photos of foreign notes to help you become familiar with them. Some sites, like, support a link with a retail currency exchange service, like Travelex, which operates exchange bureaus in over 100 airports in 25 countries. On a day when the exchange rate was $127 to=€100, Travelex was charging $137.

3. Don't change money at an airport kiosk. These currency exchange desks make a lot of money either by giving you a poor exchange rate or charging a fee, which can be a flat fee or a percentage of the dollar amount exchanged. If you must exchange currency here, get the minimum you need to get you to your hotel (unless it's a flat fee). The better option, though, is to withdraw money from an ATM---which may not be easy for arriving passengers to find, as they are often outside of the area where passengers clear customs, or in the Departures section of the terminal. Ask a local (perhaps someone in the Duty Free shop) or a seasoned traveler (like a flight attendant). Also, if you can get to your hotel by train or in a taxi that accepts credit cards, you may not even need foreign currency until you get into the city center, where you'll find a more favorable exchange rate at a bank (if you are traveling with cash).)

4. Don't use a credit card to get a cash advance without checking in advance what the surcharge will be. It may be more advantageous to use a debit card, but again, do check if any fees will be charged. (At one time, many debit cards did not charge a fee for this service, but some companies now impose fees.) If you make a cash withdrawal with a card, use an ATM run by a major overseas bank. Avoid freestanding ATMs at convenience stores---as is the case at home, these are more likely to charge a fee , and are more vulnerable to tampering. Credit cards will charge a fee for a cash advance, usually 3 percent (or more) of the amount withdrawn (typically with a minimum fee of say, $5), and you may get hit with an ATM fee as well. Also, the company's highest APR applies to cash advances (up to 20 percent), which kicks in from the date you withdraw the money (no grace period) until you pay off your entire balance.

5. Don't buy traveler's checks. So last century! Nowadays, they're more of a nuisance than a help. If you don't have a debit card, buy a prepaid Visa or MasterCard which is good at all shops, restaurants, and ATMs displaying the logo. This is also a great precaution if you're leery about using a debit card linked to your main bank account (and all your assets).

6. Don't assume you will have to exchange currency at all. If you are traveling to Panama, Ecuador, El Salvador, the British Virgin Islands, or Turks and Caicos, the U.S. Dollar dollar is the official currency. The almighty buck is also welcome in Lebanon, Zimbabwe, Iraq, Jamaica and other tourist-oriented islands.

Savvy travelers plan for future trips

7. Don't spend all your foreign currency if you (or a friend) might take another trip. Keep enough foreign currency to get you through your next arrival. Euros do make it easy for travelers, as they are official currency of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The Euro is also officially accepted in Andorra, Monaco, Montenegro, San Marino, Kosovo, Saint Barthélemy, and Saint Martin and widely accepted in Switzerland, Sweden, Turkey, Morocco---and anyplace else where goods are sold at a bazaar.

8. Don't plan on changing foreign currency back into dollars. You'll lose even more on a second exchange, so if you're not planning another trip (and don't know someone who is), plan your cash expenses for the last few days. Remember especiallly to count taxi, tips, breakfast and airports snacks. If you end up with extra cash, you can spend it on duty free shopping on the ground or in the air. If you don't have a little coin collector at home, you can donate any leftover foreign currency to charitable causes with collection jars at the Duty Free shops, currency exchange desks, or even onboard your flight. British Airways is one of several airlines that collect for charity; over 16 years, BA's Change for Good collected over £27 million for Unicef. Their new program, Flying Start, aims to raise £8 million by 2013 for impoverished children in the UK and worldwide.
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