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currency exchange money foreignWhen it comes to international travel, getting the most for your money is a big deal. While we usually recommend withdrawing local currency from an ATM as soon as you arrive, there are certain times when it makes sense to purchase currency in advance.

Mark Rowlands, sales director at currency provider Covent Garden FX, explains that buying in advance allows travelers to shop around for the best rate and hedge against exchange rate fluctuations that might affect their buying power. Buying in advance can also give you peace of mind if you’re traveling to a place where ATM’s might not be prevalent, or if you’re concerned about your card being declined.

Below are Rowlands’ tips for getting the best deal when buying foreign currency.

1. Shop around — and shop online. This might sound obvious, but it’s amazing how many people assume their friendly travel agent or supermarket will look after them. Think about it: They are in business to make money, and you are a captive audience. Politely decline and go and surf the net. You can cover the whole marketplace from the comfort of your home.

2. Plan ahead. Don’t leave buying your currency until the last minute. When buying online, you need to allow enough time for your payment to go through, your identity to be confirmed and your currency to be delivered.

Get the Best Exchange Rate

3. Beware of “free delivery” offers. What really matters is how much currency arrives on your doorstep. What’s the point saving five bucks on delivery if it costs you $15 worth of currency? Look out for extra hidden charges, and try to find out how much you are paying in total and exactly how much currency you will receive. The benefits of a great exchange rate can be totally negated by commissions and handling fees.

4. Avoid Saturday delivery. There is often an extra charge to get money delivered on weekends. Some companies will deliver to your work address during the week, but make sure you have a secure place to keep your travel money safe.

5. Get together with friends. If you order your currency in bulk, you will have greater buying power. Even online bureaus are happy to negotiate for larger amounts. Call or send an e-mail asking for their best deal.

6. Ask for a price match. If you’ve found a better deal elsewhere, ask a company to match it.

7. Check the money market. Compare the deal you are offered to the market rate. Visit XE.com and look at how much profit margin has been added. You can’t buy from a wholesaler, but knowledge is power. If your supplier is adding 5 percent — which is not unusual — walk away.

8. Beware of the credit/debit card trap. The bureau will probably inform you it has a small charge for debit cards. This is quite reasonable with such tight margins. But very often that’s not the end of the story; most credit cards and many debit card providers will treat your transaction as a cash advance. Check the small print or call your provider. If someone tells you there is no additional charge, get that person’s name. Sign up for Internet banking and pay using a bank transfer to avoid hidden charges. The last thing you want is a 3 percent charge plus interest on your statement when you return from your vacation.

The Best Way to Carry Money Overseas

9. Don’t be fooled by buy-back “guarantees.” Read the small print: Is what you are getting really worth paying for? You might be better off shopping around for the best deal for unwanted currency when you get back home. Never assume you have to take your unwanted currency back to where you got it from. Take it home, cash it in and shop around for the best buy-back rates available.

— written by Mark Rowlands and Sarah Schlichter

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15 Responses to “Buying Foreign Currency: Get More Bang for Your Buck”

  1. Henry Sosinski says:

    One way to avoid the hefty cash advance fee is to overpay your credit card balance when making a foreign currency purchase. Essentially you create a positive balance on your credit card account nullifying the cash advance impact on the account. It takes a little calculating, but is worth the extra hassle.

    • Nancy Chase says:

      Are you saying that if you overpay your CC for the approximate amount of money you will need on your trip (taking into account the exchange rate), the CC company will first debit the amount off your overpayment before applying the cash advance fee?

      • Freddy says:

        This is correct. I travelled throughout South America this way and it was pretty convenient. Each time I got to a new country, I would head to the nearest bank (this was 20 years ago and ATMs still were uncommon in those countries) and ask them to take a withdrawal from my credit card in order to get cash. I never had any problems and also didn’t incur any fees other than the forex fees.

  2. Ingrid Shapiro says:

    This is a great article. I really learned a lot of things about money as I am going to Europe in two weeks. I am going to have my bank order my money so I will have some foreign cash when I land. Really like these stories. Thanks

  3. The Forex Guy says:

    Yes you need to do your shopping around when it comes to exchange rates, you can really get screwed over. Some of these Forex exchange booths are just rip off, sometimes the conversion rate of the exchange booths in the shopping center is disgusting.

    It does pay to shop around, every cent counts in the conversion.

  4. Yehonatan says:

    A brilliant synopsis for the novice traveler. Thank you all for your contributions

  5. Jessie Retchless says:

    Thank you very much.

  6. Colin Goodwin says:

    This “trick” of putting a credit balance on my CC did not work for me (Visa, Westpac Bank, Australia). I copped all the CC cash withdrawal fees. I would STRONGLY recommend checking with your CC provider first before going down this path.

    • Pete says:

      You will be charged the cash advance fees (3% or $10 for me) and possibly another 3% for foreign transaction fees (zero for me). But cash advances also start attracting interest rate cost immediately, no waiting until your next billing cycle. So having a positive balance on your card will help avoid this interest rate charge.

      If your card does not charge foreign transaction fees, then your costs are basically 3% or $10 (whichever is the greater). And you get the interbank exchange rate, which is the best you can get at any given moment in time.

      Travelers checks fees to buy are 0 to 1%. Then, when you cash in, the bank or bureau de change will to charge you a commision and an inflated exchange rate. You’re probably going to pay more than the 3% or $10…. Cash will only save you 1% of these charges.

  7. Nicole says:

    Clearly planing ahead save something.

    But it happened to me that I tried to exchange $CAD 500 to one bank and I wanted to have it in small $US bills of 1,5,10 and 20. They didn’t do it because I asked too much and I wasn’t their customer.
    So I was in the position to see how the rates fluctuates from my bank and when I considered that was a good rate then I did the transaction.

    I am trying to go with my money exchanged from my home because I saw that if I go to hotels or booths exchange office from malls I do not get a good rate because of the commission they withheld.

  8. MadMaxx63 says:

    In exchanging USD to GBP, am I better buying GBP in their offseason like February or when we get there in August, typically?

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