Exchanging Currency Abroad: 6 Travel Tips

How to exchange money abroad
How to exchange money abroad

I won’t lie to you. I used to be extremely clueless when it came to exchanging foreign currency. Normally, I would just arrive to the airport or train station and directly change it at the counters without giving it a second thought, after all, it’s convenient and it’s official enough that you feel safe from any possible scam.

The problem? That was not the best way to exchange currency and so I ended up loosing money in each transaction. The worst part? I never once realized it until recently! You see, there are basically two ways of exchanging currency abroad: The convenient way and the smart way. And I’m here to share with you some of my best tips for the smart way. Enjoy!

Currency Exchange Tip #1: Understand the way that a currency’s value works

The value of a currency is always a matter of trust. Said trust depends on many factors such as political stability, economic growth, role in the international markets, reserves and a relatively low inflation. That’s the reason why the USD is almost universally accepted while the Argentinian peso is not. Strong currencies include the USD, Euro, Japanese Yen, Sterling Pound and the Swiss Franc among others.

On any other situation, if you’re traveling from Country A to Country B, it is wisest to obtain Country B’s currency while you are in Country A. The reason for that is because Country A wants to get their own currency back while getting rid of Country B’s currency before inflation reduces the purchasing power of said currency.

Currency Exchange Tip #2: Do your research when traveling to currency restrictive countries

Argentina and Venezuela are probably the best examples of countries with policies that forbid their own citizens from the free-trade of currency. Citizens of both countries need to show a proof of immediate air travel in order for them to purchase USD. Foreign visitors have no chance and are actually stuck with local currency with no way of exchanging them within the country (and if they try to do it abroad, the rate will be way lower).

On a similar note, ATM’s will give you the country’s own “imaginary rate” so you will also end up loosing money while using them. For example, an Argentinian ATM back in 2013 gave you 10 AR pesos for 1 USD. However, you as a foreigner could not buy 1 USD for 10 AR pesos since USD were restricted so you would end up stuck with AR pesos after your trip with no way of changing them back. Luckily for you, restriction creates an opportunity for black markets where you can exchange USD for AR in unofficial places for a much higher value than the one at official ones.

Currency Exchange Tip #3: Land borders are the last spot to exchange currency the smart way

A few months ago, I was in Costa Rica and I made the mistake of withdrawing more money than what I needed. And since I didn’t have enough time to go to an exchange center, I decided to exchange it at the Nicaragua-Costa Rica border. The problem? The exchange rate I was offered was not as high as I hoped so I decided to ignore them and wait for El Salvador in order to exchange my Colones.

That was a big mistake. You see, the furthest that a not-so-strong currency is away from an usable place (in this case, Costa Rica and the border towns in Nicaragua and Panama), its value declines dramatically. It doesn’t matter if the Costa Rica economy is above the one of El Salvador, what matters is that a Salvadorian bank has really no use for Colones. And it makes total sense.

Currency Exchange Tip #4: Use the no-fee exchange agencies but don’t forget to double check the rate

Specially in highly touristy cities such as Prague, it is common to find no-fee currency exchange centers right next to the most famous landmarks. The problem? Their rates are astronomically absurd. One place offered to buy 1 Euro for 22 Crowns while asking 30 Crowns in order to buy 1 Euro. The official rate? 27 Crowns for 1 Euro.

Your best choice is to ask the hotel/hostel staff for the best place to get a fair exchange rate. If you’re arriving to the airport/train station and are in the need for local currency, why not ask a fellow traveler if he could exchange some coins with you at the official rate? Most of the times they will actually need the currency you have since they might be going there soon.

Currency Exchange Tip#5: Never obtain more money than what you need

Whether you’re using an ATM or exchanging USD, never obtain high sums of foreign currency unless you’re actually planning on spending it. Yes, it might be tricky when you just arrive to a new destination and you don’t know exactly how much money you’re going to need but please consider the following: Currency exchange is a very profitable business.

Selling prices are way different than buying prices so during the process of exchanging USD to a foreign currency and then changing the leftovers back to USD you are already loosing money. Twice. I first realized this in Honduras when I withdrew 200 USD-worth of Lempiras (Hondura’s local currency) and only ended up spending one quarter of it so you can imagine my surprise when the exchange office at the bank gave me only 130 USD instead of the 150 USD I should have gotten.

Currency Exchange Tip#6: Keep those foreign coins. Seriously, you’ll need them sooner than later.

Even if you’re not a collector, having foreign coins is always a good idea since not only it counts as a good souvenir but you can actually sell them to hardcore coin collectors, specially if they have a good design. Cuba’s Che Guevera coins go for as much as 10 times their real value in the US!

And the best part? You can use foreign coins to fight-off scam artists. Yes, you heard that right: I have found a way to scam the scammers using foreign coins. But more on that on next week’s article about travel scams.

How experienced are you when it comes to exchanging money abroad? Have you ever lost money while doing it? Did you even notice? Share your thoughts and share them with me!

7 Travel Tips for Money Exchange
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49 Comments

  • Worth noting that hotels often offer the *worst* rates around.

    Also, some banks (and some countries) are pickier about the types of bills they accept. After three different attempts at three different branches, I can safely say Kasikorn Bank in Thailand is the worst at this. Tiny nicks or writing on the bills (where cashiers and tellers do the writing!) means they won’t change that bill.

  • Excellent post, and I can relate a lot to this – I used to be like you too: clueless! We were also hit by the unfortunate situation in Argentina last year, and I wish we’d been better prepared as we would’ve brought dollars or euros with us from the UK. As soon as we left Argentina for Uruguay, we took out as many dollars as possible to take back to Buenos Aires, and it was the best monetary decision we made during our time in South America! It sucks for the locals in Argentina, but it can really work to your advantage as a visitor. Otherwise, we generally try to never exchange cash, but instead withdraw just what we need, as we have a great bank in the UK that doesn’t charge anything for foreign withdrawals and gives us practically that day’s mid-market rate, which is amazing.

  • Useful tips! Being from a Euro-country I ever hardly need to change money, but if I do I usually use my credit card at the ATM.

    • I think that the Euro is accepted everywhere within the EU but at least in the Czech Republic, if you try to pay with Euros directly, they will give you a lower-than-average rate (25 to 1) at restaurants and hotels so it’s better go to the exchange house directly.

  • I always have a few euros and dollars, because you can use them in so many places. Apart from that I try to use my credit card as often as possible so that I can get away with very little cash.

    • Exactly, Karen, USD are universally accepted in all places, even as tips for waiters and hotel staff. I always try to get at least 200 USD in cash for emergencies after many bad experiences of my bank blocking my debit card.

  • Great tips Raphael and hope other travellers can take note and use them. My main tip is what it has always been – ALWAYS (that’s always) carry a stash of US Dollars on you – no matter where you go. It can be exchanged almost anywhere and even used as currency in countries when you run out of the local money. I never travel anywhere without US Dollars, and actually Euros as well these days. Safe travels. Jonny

  • Thanks for this information! I didn’t knew that there is such thing in Argentina and Venezuela, that you loose so much just taking money out of ATM. While traveling through Asia I was used to not bother about money exchange, I just took out money from ATM, before that just making a calculation how much I will need for that some next period of time. To not take it too often, so to not pay bank commissions too often.

  • You are so right about Argentina and Venezuela! Another example is Iran and Turkmenistan. You can’t use the ATMs in Iran even if you want so bringing lots of cash is the only option. And Turkmenistan is pretty difficult too, even if you manage to find an ATM…

  • Some great tips! Some of these I have in my head, but it’s great to see them all out there. I’ll be sure not to make baby sloth cry! I LOVE sloths, especially baby ones, and I’ve seen those videos of them crying! ;)

  • Thanks for sharing these very useful tips!
    A lot of people are very careless about how and where they exchange money.
    I am sure they will have an ‘Aha!’ moment when they read this post ;)

  • This is really great advice. I think many people research their trip and forget about the part of exchanging money! I think many people also think all exchanges are a like – great tips!

  • Great tips! I am currently operating somewhere with a non-convertible currency, so I always practice the rule of “don’t get more than you’ll spend.” The last thing I want is a stack of what is effectively Monopoly money!

  • Hehehe ok the one about exchanging currency in your home country I did not know. Good tips :)

  • Thanks for the tips! My boyfriend managed to leave our travel money card in an ATM in Colombia (I won’t let him forget it!) and we got destroyed by fees using our British bank cards abroad!

  • Great advice! I have used traveller’s checks in the past. Exchange what you need when you need it. Also several crispy U.S. dollars on hand are good, especially when you need to “tip” at the border.

  • Excellent post. I am so lazy I just use ATMs. Thankfully the card I have (Charles Schwab) has no fees so I get all of my money back at the end of the month.

    For those traveling to Prague: avoid those money changers they will rip you off!

  • One tip I would like to share and that is when you get you foreign currency in your home country before travelling, check it. This may sound an obvious thing to do but for whatever reason this particular time, I didn’t check it. I was travelling through Vietnam, China and then to Hong Kong. I used an exchange in my home town in Australia to get Cash for the countries I was visiting. Whilst in Hong Kong I decided to catch the ferry to Macau and paid cash. I gave the cashier the money and was surprised when he returned a couple of Thai Bhats. Thailand wasn’t one of the countries I was visiting this trip. They were hid amongst the rest of the Hong Kong dollars and were of similar size and colour. I will definitely put that one down to experience.

  • When we were in Dominican we took money out of the ATM machine and it came in dominican currency We were told to go into the bank to change it to US currency. Upon getting the money I counted it before we left and we were $100 short! I hadn’t even left the counter and called the teller back. Without recounting my money, he gave me my $100.

  • Good day. Any idea how to cash an old Mexican 10,000 Peso bill? Two Mexican banks would not accept it recently but advised I could perhaps find someone local who might exchange for about US$100. Current exchange is about $700.
    Thanks, Ray

  • My wife and I have been thinking about going on a trip out of the country, but we weren’t sure how to get the right money. I really like that you say to only get enough foreign currency for what you need. It would be nice to know that you won’t be carrying a lot of cash around.

  • It’s good to know that just exchanging money at the counters isn’t the best way to do it. I don’t want to lose money when I go to China next year, or Europe the year after! I’ll remember what you said about getting the destination country’s currency while I’m still in the States.

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