Exchange Currency for Overseas TravelExploring a new country can be exciting, but one part of international travel that always drags the fun down is having to exchange your dollars for the local currency. The currency exchange kiosks you see at airports and tourist hubs usually feel like a rip-off, and you don’t want to start a vacation with bad exchange rates and high service charges. While there’s no perfect solution for exchanging currency, some options definitely stand out as the cheapest, fastest and most convenient. We’ve detailed four of the best ways to exchange currency, including what makes them so good, as well as some of their drawbacks. Whether you’re prepping for a long-anticipated getaway or looking for last-minute tips, keep reading below.

One note before we start. The ideal exchange rate for currency is the market rate, which you can find on currency exchange tracking websites such as XE or Bloomberg. It’s almost impossible for regular consumers to get market rate currency exchanges, but the closer a service’s exchange rate is to the market rate, the better.

Credit cards

While it may seem a little too good to be true, a credit card is one of the best ways to exchange currency while you’re traveling internationally. Not only are they inherently convenient and secure payment methods, but they also often provide really good exchange rates. When you use a credit card in another country, the exchange rate you get is set by your card network, and the major networks tend to set their rates close to the market rate to encourage more credit card use. You can also check your card’s exchange rates daily if you have a Visa or Mastercard using their online rate calculators. Many credit cards do have a foreign transaction fee (typically around 3%) that gets tacked onto any purchases you make abroad, but there are plenty of travel cards that will waive the foreign transaction fee as a user benefit, including some cards with no annual fees.

The reason why credit cards aren’t the unequivocal best way to exchange currency is that they require the merchants you’re dealing with to have the right technology. Some services, regions and countries don’t have widespread credit card infrastructure, and mostly do business in cash. Getting cash with a credit card isn’t ideal even when you’re taking out American dollars, since cash advances tend to come with fees and high interest rates that start accruing right away. Finally, if you don’t let your card issuer know you’re traveling, they could mistake your vacation purchases as fraudulent transactions and lock down your card, putting your main payment method out of commission until you get the issue sorted out.

Foreign ATMs

You may be surprised to learn that there’s a good chance your debit card’s ATM network extends all around the world, even if your bank only has branches in the U.S. This is because big banks and credit unions partner with financial institutions in other countries to extend their ATM coverage, letting customers exchange currency and withdraw money from those ATMs without a lot of extra fees. For instance, if you have a Bank of America account and you travel to Italy, you can withdraw euros from BNL D’Italia bank ATMs without paying an out-of-network fee or ATM operator access fee. Do note, however, that you will probably have to pay an international transaction fee, which tends to be around 3%, and you will have to use your bank’s exchange rate, which may or may not be a good thing depending on which bank you use. If you can’t find an ATM in your network, you can use an out-of-network ATM as well, but you’ll likely have to pay additional fees to both your bank and the ATM’s owner. If you do resort to an out-of-network ATM, though, stick with one that belongs to a bank. Independent ATMs can have unpredictable exchange rates and may be more susceptible to security breaches like card skimmers.

Domestic banks

If you have the time or inclination to plan ahead, your local U.S. bank can most likely get you cash at a pretty good exchange rate with few limits or fees. Some banks even let you exchange currency over the phone or online and can deliver the cash to your home if you don’t want to pick it up at the branch. The downside is that you need to make sure you place the order a couple of weeks in advance to make sure you get the money in time. Many banks don’t carry a lot of foreign currency by default, so it may take them days or weeks to get your currency. You’ll also have to bring the money with you while you’re traveling, which means keeping track of one more thing while dealing with a potentially hectic trip. Still, if you think you’ll need cash when you arrive to pay for a taxi or something similar, this is probably the cheapest way to make that happen, and lets you avoid the dreaded airport exchange kiosk.

Prepaid travel cards

While traveler’s checks are becoming more obsolete every year, their spirit lives on in the more modern and convenient prepaid travel card. These are cards onto which you can load money in different currencies and at a decent exchange rate, and then use like a credit card. They’re more secure than carrying around a debit card because they’re an extra step removed from your bank account, so if you lose your travel card or your card number gets stolen, you can just call the issuer to cancel the old card and transfer your loaded funds to a new one. Some cards even have $0 liability protection. However, if you’re going to use one of these cards, you should shop around and look at the terms agreements of each card to see what kinds of fees they charge. Some prepaid travel cards can be laden with fees, including monthly fees, ATM withdrawal fees and purchase fees. Additionally, many of the cards have inactivity fees, so if you leave money on your card with the plan to use it again during your next trip, you could come back to find the balance drained. They also have the same technological limitation that credit cards have, and some cards have lists of prohibited countries where they won’t work.

Using a combination of these methods, you can make exchanging currency as painless as possible and still be prepared for whatever your international journey throws your way. For more tips on smart money management, whether you’re abroad or at home, follow our personal finance blog.