Currency: When, Where, and How

If you're traveling abroad, most likely you are not going to be able to use your own country's currency. While many places do accept US Dollars, it is always good to know about the local currency where you're traveling to, the exchange rate, and whether you need cash on hand. Having traveled to almost 60 countries, I have exchanged a LOT of money. I've also learned (sometimes the hard way) the dos and don'ts, so read on for my currency tips!

1. Cash v. Credit Cards

If you are traveling to first world countries, you will most likely be able to use your credit card for all purchases. Credit cards are your best choice because not only should you always be earning miles or points for your next trip, there's also an added sense of security knowing you're not carrying around a bunch of cash. In many countries, the exchange rate can mean that your money turns into a ton of bills. For example, $100 (USD) converts to ‎¥‎10,734.85 in Japan. As you can imagine, that would be a LOT of bills! While it can be fun to carry around a giant stack of cash and make you feel like a real baller, it is also impractical considering most people travel with a smaller wallet or purse than their normal day-to-day option.

If you are traveling to second or third world countries, using a credit card might be a bit more difficult. Whether it be a lack of technology, antiquated business practices, or a refusal of shop owners to pay credit card fees, traveling abroad can sometimes mean needing cash for everything. Even in some more developed places, you may run into instances in which credit cards aren't accepted for unexpected reasons like technical problems (or places telling you the machine is broken because they'd rather not pay those darn credit card fees!).

Regardless of whether you're traveling somewhere that will accept credit cards for everything, there are certain instances when cash is a must. From taxis, to vending machines, to tipping service people, there are plenty of times (even in the United States) where you will need cash. While more and more places in the world are becoming cashless, it is always good to have a little bit of the local currency on hand just in case.

2. To Exchange Before or After You Arrive

Ahhhhh this is a dilemma so many travelers have, myself included. You are always going to run into the issue of having to pay a fee to exchange money no matter where you go. Even if you go to your bank and exchange in order to get the best exchange rate, they will charge you a fee. If I am traveling to a popular country, I will almost always go to my local bank branch and exchange there before I leave. Banks typically have the best exchange rate that is the closest to the "Live Market Rate" on that day. Since banks are still for profit businesses, it won't be an even exchange and you'll have to pay a fee, but it's the closest you'll get. For countries in the United Kingdom (British Pounds), most European Union countries (Euros), China (Yuan), Australia (Dollars), and other first world countries, most banks will either have that currency in stock or they can order it and have it for you in 24 hours. If you are traveling to a less developed country or a smaller country, banks can usually order that currency for you, but it could take a few days. Unfortunately banks do not have the ability to get every currency, so you may have to look for other options.

After banks, most people exchange money at currency exchange kiosks in airports, malls, around town, etc. While these are definitely convenient and in big airports are in abundance, they grossly overcharge you in fees and their exchange rates are much lower. However, there are times when you don't have a choice. For instance, when I went to Cuba this past December, we knew ahead of time that we needed cash while in the country because credit cards would not work. I went to my local bank branch, but they did not have Cuban Pesos, nor the ability to order them. As I was going to Cuba via a cruise, I did my research and learned that there were currency exchange booths in the port where we docked in Havana. Luckily my research also told me that the conversion rate for Euros was much better than US Dollars since more European tourists visit Cuba than US tourists. Knowing this, I actually got Euros from my local bank in New York and then exchanged the Euros to Cuban Pesos upon our arrival. The exchange rate worked in our favor and we received more Pesos than we would have had we exchanged US Dollars. As always, if you research ahead of time and plan accordingly you can find the insider tips you need to save money!

3. Foreign ATMs

Even in the United States, if you have to use an ATM that isn't your own bank's branded ATM, you can be charged a "foreign ATM fee" on top of the fee the machine has already charged you. That can add an extra $5 to what you take out, which is just annoying! If you want to wait until you arrive in the country you're going to to get cash, you can always get cash from an ATM instead of exchanging your own currency. One great thing to note is that many US banks have "sister" banks in other countries, so when you take money out of the ATM it doesn't count as a "foreign ATM." When I studied abroad in London during law school, I discovered that my Bank of America debit card could be used at Barclays bank ATMs with no fees. It was a relief when I needed cash! There are also several banks that have branches worldwide now, so you can pretty much find an ATM in most places without having to worry about fees. I see Citibank ATMs a lot when I travel, so if that is who you bank with, you'll find ATMs in many, many countries.

Just remember that even when taking money out of an ATM that isn't "foreign" to your bank, you will still be taking out foreign currency, so there will be an exchange rate applied to what is taken out of your bank account. Always be knowledgeable on the current exchange rate so you don't withdrawal too much! The last thing you need while traveling abroad is to overdraft your account and be hit with even more fees!

4. Best Website/App for Exchange Rates

If you're on a computer, the best website to check exchange rates is XE Currency Converter (website here). You can enter your country's currency and the country you're traveling to and you will be given the "Live Market Rate." This is defined as "accurate and reliable live mid-market exchange rates from the global currency markets, generated from over 100 international sources." Even if you won't get a 100% match in conversion when you exchange or withdraw cash from an ATM, it gives you an indicator of the current rates. This can also come in handy if you find yourself bartering with a sales person. If you're a naive traveler, you won't know if they're giving you an accurate rate or not. The more you know, the more you'll save!

For apps, I use an app that is called "Currency" from Currency App LLC. The icon is green with the symbols € ₺ $ £ ¥ on top of a darker green circle. I love this app because it gives the current market rates and you can customize your dashboard to any currencies you want. I always have US Dollars, British Pounds, and Euros up and then I add the currency of the country I am visiting. It has come in very handy when trying to decide whether something I want to purchase is worth it!

5. Always Go With The Local Rate

What I mean by this is that when using your credit card, if you are given the option of US Dollars or the currency of the country you are in, ALWAYS go with the local currency rate. The US Dollars amount listed is never a current exchange rate. It is always slightly higher. Whether this is done to make money off you or not, you will end up losing. I learned this the hard way. I always assumed that if the charge could be in US Dollars, that was better because there was no exchange needed. However, when I wasn't paying attention at a restaurant and pressed the Euro button instead, I then checked my credit card statement and saw the amount I was charged in US Dollars was less than the US Dollar option I was given. It turns out that is always the case! Just last week I was booking beach club passes for a trip to Mallorca in August (more on that post-trip!) and the website gave me the option of paying in Euros (the total was 100€) or US Dollars ($122). I chose to pay in Euros and when the charge went through on my Citi American Airlines credit card, the charge was $112.62. Moral of the story: if given the option to choose, go with the local currency!

6. Leftover Cash and Coins

If you find yourself at the end of your trip and you still have some bills or coins left, there are a few options. Obviously the first option is to just buy something, even if that means snacks at the airport or a cheesy souvenir. Second, you can exchange your money back once you get to the airport or at your bank back home. However, as noted above, you are going to pay a fee and likely lose money in the conversion. A third option is saving the cash for the next time you visit a country with the same currency. After my Cuba cruise, I had some Cuban Pesos left, so I converted them back to Euros and have saved them to use next week in Europe. I totally forgot I had 95€ until I got my passport out to start packing this week and it was a pleasant surprise! You can also save the cash as a souvenir. Pretty much every country other than the United States has really pretty money. From the colors, to the symbols, to the pictures, to the sizes, foreign money just looks so much cooler than US Dollars! If you scrapbook, currency is a great added touch to a page.

A final option, which I love, is donating your leftover cash. Most major airports have several "charity boxes" throughout the terminals that you can drop your leftover currency into as you pass by. You can also donate your leftover currency to UNICEF. Through UNICEF's "Change for Good" program, you can place your cash in an envelope that participating airlines will provide or once you're home you can mail the cash to UNICEF. The participating airlines are Aer Lingus, American Airlines, Asiana Airlines, Cathay Pacific, Cebu Pacific Air, easyJet, Hainan Airlines, Japan Airlines, QANTAS, and Tianjin Airlines. You can mail your cash to UNICEF USA, ATTN: Change for Good Program, 125 Maiden Lane, New York, NY 10038.

Bon voyage and happy spending!