Where to Find the Best Travel Exchange Rates?

August 12th, 2021

When you are traveling to a foreign country, you naturally want to stretch your budget as far as it can go. Finding the best travel exchange rates can be the difference between traveling comfortably and having to make do with what you have (or spending more money than you’d like).

This is why we wrote this blog – to provide practical advice on where you can find the best exchange rates. We’ll cover where you should look for the best rates, both in and out of the U.S., how you can compare the rates and what to look out for, and how to avoid common tourist traps if you are exchanging money in a foreign country.

Airport kiosks or stores

Instead of starting with where you should look to exchange your money, we’ll do the opposite – where you shouldn’t. And that’s airport kiosks and stores. The rule of thumb is that airport kiosks and stores will have the worst exchange rates you can find. Always avoid them if you can.

There are probably a few exceptions to the rule here and there, but that’s not something you should ever count on. There’s a good reason (from their perspective) why their exchange rates are bad – the cost of operating a business at an airport is high, so they need to charge higher fees, and exchanging money at an airport kiosk is convenient, so they can charge more.

While this may be a fair and valid basis for having bad rates, there’s no reason you should do business with them, unless it’s absolutely necessary. For that matter, you may need to pay certain fees in the local currency when you land in a foreign country (for example, a lot of countries require health screenings that you pay for upon arrival).

So, even if you don’t plan on exchanging all of the money you plan to use on your trip in the U.S., at least make sure you have enough of the local currency in your pocket to pay for any fees that might be required. The bottom line is – avoid airport kiosks and stores if you can.

Where to Find the Best Exchange Rates While in the U.S.?

Essentially, you have three primary options for finding the best exchange rates: banks, credit unions, and online exchanges. Banks and credit unions will usually offer good rates and relatively low fees, but you’ll likely have to go there in person to do the exchange.

And there’s one additional issue – most banks and credit unions don’t have exotic currencies to exchange on hand. If you are exchanging one major currency pair for another, let’s say USD for EUR, you’ll have no issue. But, if you want to exchange the USD for the Norwegian krone or another exotic currency, you’ll likely have to order it and wait for it to arrive.

Your other option is finding a good online exchange. Not all online exchanges are made equal, so you shouldn’t do business with the first one you find. The best online exchanges will have competitive rates, allow you to pay by credit card (which is, maybe surprisingly, not that common), and deliver to your door.

Using an online exchange may be your best option if you are a bit short on time because of travel preparations, or even if you simply want the convenience of ordering a currency online and having it delivered to you.

Pay Attention to the Interbank Rate

If you plan on exchanging money at a bank or credit union, there’s an additional thing you should pay attention to – the interbank exchange rate. A lot of people see very good exchange rates on the news, but end up with something different when they actually go to exchange their money.

That’s not because the rate changed by the time you got to the bank (at least not usually), but because the interbank exchange rate was advertised. This rate strictly applies to major banks when they do business with each other.

So, you’re seeing the rate that, for example, JP Morgan Chase and Deutsche Bank use when they trade between themselves. Consumers are able to exchange money based on the interbank rate, but with an added premium. This means that the best currency exchange rates you see on the news are not necessarily what will be applied to you.

Comparing Exchange Rates

To find the most favorable exchange rates, you need to compare them with each other. A benefit of using online exchanges is that the better ones offer a currency converter you can use to quickly and easily determine what the best deal is. This makes comparing exchange rates easy and can help you find the best rates before you decide to do business.

Best Travel Exchange Rates

Exchanging Your Money in a Foreign Country

When you are in a foreign country, your safest option is to use your bank’s ATM network. You’ll likely get good rates and pay low fees if you want to buy the local currency, but it all depends on your bank operating in the country you’re in.

However, if you have a substantial amount of money in the local currency left over from your trip, you may not be able to exchange it back to USD at the ATM. In this case, you may want to take your money back home and exchange it back there.

Another option is using local exchange shops, either to buy the local currency or sell it back. Once again, avoid airport kiosks. Additionally, be very careful that you don’t run into a scam and exchange your money there.

Avoiding Tourist Traps

First things first – at most major tourist destinations, you’ll likely encounter individuals who offer to exchange your money personally, right there on the street. Putting the legality of such exchanges aside, you can never know what you’ll get. While we can’t claim every such person is a bad-faith actor, it’s best to stay away.

Even if they offer the best “tourist” exchange rates, a lot of things could go wrong and you won’t have any practical recourse. Besides being very loose with the rates, it’s not unheard of for such people to sell you defunct, old bills, or even counterfeit ones, and for you to realize only too late.

Then, even if there’s a shop that seems totally legitimate, you should still be wary. There are two common tactics that shady shops use to lure tourists. One is putting up a sign that advertises an excellent rate in big, bold letters. People see the rate from afar and don’t check the smaller letters once they go near – and the smaller letters say sell, instead of buy.

The fair practice is to advertise how much of the local currency you’ll get when you sell a major currency (we’ll use the dollar as the example). So, the advertisement would be 1 USD = 8.90 TRY (this is just an example and not the going rate). You expect to go there, sell 10 USD, and get 89 TRY.

However, they invert the process by writing “sell” in small letters somewhere underneath the big advertised rate, which means that this is the rate that they will sell the major currency to you. In fact, the rate at which they will buy the major currency from you is much less favorable, so you end up with 70 TRY for the 10 dollars you sold.

Another trap is having two exchange rate boards. One is bigger and prominently displayed, and has excellent exchange rates. But, somewhere on it, in small letters, they state that these are not the actual rates, that these are the rates without the commission, or something along those lines.

They also provide a smaller, printed-out piece of paper with the actual rates, but they place it so it’s easy to miss. These types of scams may seem naive, but they wouldn’t exist if they didn’t work from time to time.

In essence, to avoid scams if you’re exchanging your money in a foreign country: 1) don’t exchange your money with people on the street; 2) always read all of the signs in an exchange shop and count your money on the spot.

To Sum It All Up

To find the best travel exchange rates, compare the rates of multiple banks, credit unions, and online exchanges, and factor in the ease of actually getting the currency you need. If you decide to exchange your money in a foreign country, be careful not to fall into a tourist trap.

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