How to save money on currency exchange

save money on currency exchange

As I am getting ready to move to Guatemala, I am also putting my financial life in order and planing to exchange a lot of currency before I go. My mum is lending me money for a couple of months, until I get my flat’s money, so that I can put a deposit on the land I just bought. I need to send over $25000. I also need a little bit of cash for daily expenses, as I will be flying to Cancún, then taking a bus to Guatemala.


Note:Yes, I am cheap! Saving about $900 is worth the hassle in my books.


I will need US Dollars to buy the land, Mexican pesos to travel through Mexico, and Guatemalan Quetzales for my daily life over there. I also keep my Euro account open, as well as a British Pounds UK account where I receive rent and pay my bills on my UK flat.


What are the options to get the best deal on currency exchange?


Never, ever, exchange currency at the airport!


You know the price difference between a hard-discount supermarket and a small, organic shop?  That is the kind of markup that you will be paying for if you exchange currency at the airport. If you really have no other choice but to pay for the convenience, please at least exchange your currencies at the arrival airport. That is because the dollar being internationally recognized, you will always get a slightly better rate in Morocco for your buck than if you try to get Moroccan Dirhams at LAX.


Get prepared in advance


As with any purchase, if you have time to look around, you will get a better rate. You can ask your bank for a quote, as well as online currency services, that offer to deliver the currency by courier usually for no extra fee. Remember currency rates change every day so try to ask all providers for a quote on the same day. Your bank is likely to offer main currencies such as Canadian Dollars or Euros, but if you are going to an uncommon country, you might be better off taking your Dollars with you and exchanging over there.


Check out all your cards


I have a wonderful UK credit card called Santander 0 (so good they no longer offer it!), that charges me no commission on cash withdrawals and purchases made abroad. The only catch is that interests are high and start running from the day the transaction is made, so in order to pay 0 interest on the cash, I have to pay my balance in full from withdrawal date, and can’t enjoy the 50 days interest-free purchases. As I spend so much time abroad, this credit card is perfect for me, and I use it like a debit card.


Check out your cards.The average is 2% commission on withdrawals plus a flat $2 or $3 fee. Be smart and withdraw all your money at once, or every $10 withdrawal will cost you $3 in fee (in this case, yes, you should change money at the airport!). The rate of your card should be better for purchases made abroad than cash withdrawals, so make as many purchases by card and use little cash. Use the best of your cards, obviously.


If two cards are a tie, check if they would earn you rewards while abroad.


Avoid cash to stay safe


I hate to have money on me. I am messy and tend so lose everything so easily that I try to carry as little cash as possible. If you really want to bring cash, try to get Travelers Cheques. You can’t exchange them everywhere but if you lose them or get mugged you can have them replaced. Usually the rate is a bit better than cash but you pay a commission to have them printed.

For big amounts, use online currency services. Those services offer you to transfer from your bank account to a bank account abroad, and they take care of the currency exchange part. I used them a couple of times, between my French and UK account and also to send money to the US. I have accounts with several companies, but only have used Currency Online so far.

How does it work? You create an account, and are presented with the live rates (including the guy’s commission) and when you click “OK”, your deal is sealed at the price you have chosen. You then have 3 days to wire the funds to them, and on reception, they will send the converted amount to the designated recipient.

After using it a few times, I have seen that my bank has a 2% spread on currency, while those services usually have a 1% spread, so it is worth the extra trouble. Even on a $1000 transfer, you can save $10. This is how I will send the land’s money over to Guatemala.


Check out all the fees!


When you send money abroad, you pay a fee. This is normal, and expected. Some banks will ask for 0.5% of the amount, other up to 2%, or a flat fee. Again if you are banking with several institutions, check them all out.

The person you are sending money to will probably be charged a fee too. You have the option to send your own currency, and have the receiver’s bank deal with the exchange rate, I really don’t recommend that as you don’t know for sure what will get to the other person’s account, and the surprise will usually be unpleasant.


Only exchange what you need


This one can be tough, as you rarely know exactly how much you are going to spend on your holiday.  Usually when I am about to leave a country I get rid of all my cash and pay what is left by card. When it is not possible, I estimate the cash that I need (to go to the airport, buy the last meal…) and spend anything left on gum or snacks for the trip. Overland travelers can fill their tank with the exact change they have left.

While you can usually make a charitable donation at the airport with your spare change, know that upon return, your coins won’t be accepted back by your bank or currency dealer, only bills. Unless you plan on going back to the same country on your next trip, there is no point keeping currency that you won’t spend.


My choice


I use my fee-free credit card for cash withdrawal and purchases,  trying to have little cash on me. It won’t cost me more to go five times to the ATM and even if it did, I think I’d rather pay for the peace of mind. If I need a bigger sum (something over $2000), I have it wired over via Currency Online, I avoid high street banks.


This post was featured on the Control Your Cash, Carnival of Personal Finance, Feeling Financial, Figuring Out Money, thank you!


A 30 something French girl embarking on a journey towards Financial Independence. I blog about money, travel, simple and deliberate living, freedom and choices. You can find me on Twitter, Google+, or Reach Financial Independence's Facebook Page

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  1. Nice post. I have not traveled internationally very often so I don’t know much about currency exchange while traveling (or in your case, moving) so it’s great to hear your tips on the subject.
    DC @ Young Adult Money recently posted..Ways to Increase IncomeMy Profile

  2. Depending on the country we are going to I will get currency at the bank before we leave. As you mentioned I usually try and take a good amount of money in traveler’s checks. It’s much safer.
    Sean @ One Smart Dollar recently posted..What You Need to Know About PrePaid Debit CardsMy Profile

    • Travelers checks are great, if you aren’t going to remote places where no one knows what they are for. Strangely they always know about dollars so if you bring a few $10 bills with you you will be fine!

  3. Great tips! We are traveling out of the country in February so this is very timely for me. We made sure to get a new credit card without foreign transaction fees already. Now we just have to figure out the other stuff!
    Holly@ClubThrifty recently posted..Why the Recent U.S. Mortgage Rate Drop is Great NewsMy Profile

    • That card is awesome! Just make sure about the cash, maybe like mine, you have to repay from the day of withdrawal or you would start paying interest on it. Another thing is the limit, since you are on holiday and spending a lot, once my mum got stuck like that when we were on holiday, we had no money for two days!

  4. Good post. I agree with not exchanging at the airport as that is just a ripoff. We take very little cash with us and take the majority of cash we do have in the form of Traveler’s Checks. They might be a bit of a hassle if no one accepts them, but it’s worth the peace of mind. We try and use our credit card as much as possible.
    John S @ Frugal Rules recently posted..Blogging Tips From a BeginnerMy Profile

    • If you travel occasionally, Traveler’s Checks are a good option. For more than one trip per year abroad, I would say it is good to get a card like Holly’s that has no fees on transactions abroad.

  5. I’ve slowly started not using traveler’s checks when I travel internationally. I used to be really uptight about that, but with credit cards and debit cards mostly being available where I’ve traveled, it seems the most convenient. Good luck in your travels!
    Budget & the Beach recently posted..42 Things in 42 YearsMy Profile

    • It is very convenient to use credit and debit as long as you have them in two different places in case of emergency. A wallet is a very convenient little thing that allows you to lose everything at once!

  6. Veronica @ Pelican on Money says:

    That’s why I love the internet, you can compare rates and see all that’s available in one place! I feel really stupid because I’ve actually converted currency at the airport without thinking first. *slaps self*
    Veronica @ Pelican on Money recently posted..10 Cheapest Cars for 2013My Profile

  7. I wish I had money to travel!!!!

  8. Being avid travelers, we have definitely learned the tricks you share above. What we really find most helpful is to convert money at the bank at home before we leave. We seem to get the best rate this way.
    Miss T @ Prairie Eco-Thrifter recently posted..Non-Financial Investments For Your FutureMy Profile

    • If you are going to a country with a major currency (Euro, Yen), buying at home can give you the best rate. For secondary currencies (Thailand Baht for example), I would change at a Thai bank.


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