Key Points
- Credit cards with no foreign transaction fees give you the fairest exchange rate on nearly every purchase you make abroad.
- Airport and city currency exchange kiosks routinely mark up rates by 5 to 10 percent, making them one of the worst ways to get cash.
- Withdrawing cash from a real bank ATM after declining dynamic currency conversion is usually your best option whenever you need physical currency.
Introduction
Few things drain a travel budget faster than a bad currency exchange. Figuring out how to exchange foreign currency when traveling trips up even experienced travelers, because the "obvious" options, like airport kiosks or your hometown bank, are often the most expensive ones available. The good news is that getting a fair rate isn't complicated once you know which tools to use and which to avoid. In this guide, you'll learn exactly how to pay for purchases abroad, when cash still makes sense, how to avoid the fees that quietly eat into your trip budget, and what to do with leftover currency once you're home.
Quick Answer
For most trips, your best strategy is to pay with a credit card that has no foreign transaction fee, always choosing to be charged in the local currency rather than U.S. dollars. For cash, use a bank ATM at your destination instead of a currency exchange counter, and skip dynamic currency conversion there too.
Why Your Currency Strategy Matters
A bad currency exchange isn't just a minor annoyance. On a two-week trip where you spend $3,000, the difference between a fair exchange rate and a bad one can easily run $150 to $300. That's a hotel night or a nice dinner, gone to fees you never had to pay.
The confusion mostly comes from how these fees are hidden. Currency exchange counters rarely show you a commission line item. Instead, they simply offer you a worse rate than the real market rate, which is much harder to notice in the moment. The Consumer Financial Protection Bureau has flagged this exact pattern, warning that providers often advertise "free" conversions while burying the real cost inside an unfavorable exchange rate rather than a disclosed fee. Understanding the difference between the actual exchange rate and the one you're being offered is the single biggest lever you have for saving money abroad.
The Three Ways to Pay Abroad, Explained
Every payment method abroad falls into one of three categories, and each comes with tradeoffs.
Credit cards are usually your best option when accepted. Acceptance has improved dramatically worldwide, and the right card gets you a fair exchange rate automatically, plus purchase protection and rewards on top. The catch is that you need a card specifically built for travel. Regular cards often charge a foreign transaction fee, and Visa and Mastercard each apply their own network-level currency conversion charge on top of that. Reading through how these network fees actually work is worth five minutes, since it explains why two travelers using different cards for the same purchase can end up paying noticeably different amounts. If you don't already have a no-fee card, it's worth reading through credit cards with no foreign transaction fees before your next trip. The Chase Sapphire Preferred is a solid starting point for most travelers, since it skips foreign transaction fees entirely and still earns strong rewards on travel and dining.
Debit cards at bank ATMs are the best way to get physical cash. You'll typically pay a flat withdrawal fee of a few dollars, which is far less than what you'd lose at a currency exchange counter.
Cash exchanged in person, whether at a bank, hotel, or dedicated currency counter, is almost always your worst option. These businesses build their profit into the exchange rate itself, and the "no commission" signs you often see are misleading. You're still paying, it's just baked into the rate rather than itemized.
Step-by-Step Process
Step 1: Get a Credit Card With No Foreign Transaction Fee
This is the single highest-leverage move you can make. Before you book anything, check whether your current cards charge a foreign transaction fee. If they do, it's worth applying for one that doesn't well before your trip so the account has time to age. Beyond the Sapphire Preferred, cards like the Capital One Venture X also skip these fees entirely and add airport lounge access, while the lower-annual-fee Capital One Venture Rewards covers the same no-fee benefit if you don't need the premium perks. It's worth comparing whether travel credit cards are worth it for your specific spending pattern before deciding which to carry.
Step 2: Always Decline Dynamic Currency Conversion
This is the fee that catches the most travelers off guard. When you pay by card abroad, some merchants and ATMs ask if you'd like to be charged in U.S. dollars instead of the local currency. It sounds convenient, but it's a trap. The merchant sets their own exchange rate for that conversion, and it's almost always worse than what your card issuer would give you. Fee ranges for this practice, known as dynamic currency conversion or DCC, typically run from 3 to 12 percent of the transaction, which on a $1,000 purchase could mean paying an extra $120 just for the "convenience" of seeing dollars on the receipt. Always choose to pay in the local currency, even if the screen tries to nudge you toward dollars.
Step 3: Withdraw Cash From a Bank ATM, Not a Currency Counter
Once you land, look for an ATM attached to an actual bank branch rather than a generic "ATM" or "Cambio" sign, which often belongs to a private operator charging inflated fees. Withdraw a moderate amount rather than maxing out your limit in one go, especially if your card doesn't reimburse ATM fees. If it does, smaller, more frequent withdrawals mean you're not carrying excess cash that could be lost or stolen.
A number of banks reimburse ATM fees worldwide, and these accounts are worth having if you travel internationally more than once or twice a year. Charles Schwab's checking account is the most commonly cited option among frequent travelers, since it has no minimum balance and refunds every ATM fee at the end of the month. Fidelity offers something similar. Premium banking tiers from Chase and Citi also waive these fees, though they typically require a high account balance to qualify.
Step 4: Know the Exceptions
The advice to avoid currency exchange counters has a few real exceptions. In countries where the official exchange rate diverges sharply from the informal market rate, like Argentina's long-running "blue dollar" gap, exchanging cash through legitimate local channels can actually get you a meaningfully better rate than an ATM withdrawal at the official rate. This isn't the norm, but it's worth researching if you're heading somewhere with a history of currency controls. In parts of Southeast Asia, well-known exchange counters in cities like Bangkok also sometimes offer rates close to the market rate with minimal markup, though this varies by location and isn't something to count on elsewhere.
Step 5: Handle Leftover Currency Before You Leave
At the end of a trip, you've got a few reasonable options for unused local currency. If it's a currency you'll use again soon, like euros for a European traveler who visits the continent regularly, just hold onto it. If not, spend it down on your last day rather than converting it back, since exchanging it a second time means paying a spread twice. Some travelers use leftover foreign coins and small bills to load a Starbucks gift card at a location that supports that currency, though this only works in a handful of countries and isn't universally reliable.
Real-World Example
Say you're spending two weeks in Italy and plan to convert $1,000 into cash and charge another $2,000 to a card.
If you exchanged all $3,000 at an airport currency counter with a typical 8 percent markup, you'd effectively lose about $240 before spending a single euro.
Compare that to the smarter approach: withdrawing $1,000 from a Schwab-linked ATM (fee reimbursed, exchange rate within a fraction of a percent of the real rate) and charging $2,000 to a no-foreign-transaction-fee card. Your total loss to fees and markup would likely be under $10. That's a savings of roughly $230, enough to cover several dinners or a full day of activities, just from choosing the right payment method.
Advanced Strategies
Frequent international travelers can take this further with a few upgrades.
Multi-currency accounts, like those from Wise or Revolut, let you hold and convert balances in dozens of currencies at close to the real exchange rate, which is useful if you're managing money across multiple trips or countries in a short period.
Stacking a no-fee bank account with a no-fee credit card covers both your cash and card spending without a single markup anywhere in the chain. This combination is worth setting up well before a big international trip rather than scrambling at the airport.
Notifying your bank of travel plans used to be essential to avoid a frozen card, and while most major banks no longer require this, it's still worth doing for smaller banks or if you're headed somewhere off the beaten path, where a flagged transaction can leave you without access to funds at an inconvenient moment.
Common Mistakes to Avoid
- Exchanging money at your home bank before departure. Rates are typically worse than what you'd get at your destination, and many U.S. banks don't even stock foreign currency without an advance order and a fee.
- Accepting dynamic currency conversion "for convenience." It always costs more, even when the screen frames it as the easier option.
- Carrying large amounts of cash "just in case." This increases your risk of loss or theft without meaningfully improving your trip, since ATMs are available in nearly every destination travelers actually visit.
- Assuming all currency exchange counters are equally bad. A few destinations are genuine exceptions, so it's worth a quick search before writing off cash exchange entirely.
FAQ
Is it better to exchange currency before or after you travel?
After, in almost every case. ATMs at your destination generally offer a far better rate than exchanging dollars into foreign currency before you leave home.
What is dynamic currency conversion, and why should I avoid it?
It's when a merchant or ATM offers to charge you in your home currency instead of the local one. The exchange rate they use is set by the merchant, not your card network, and it's almost always worse than declining and paying in local currency.
Are airport currency exchange kiosks always a ripoff?
Nearly always. Markups of 5 to 10 percent are common, and some locations add a flat transaction fee on top of that markup.
Do I need to notify my bank before traveling internationally?
It's rarely required by major banks anymore, but it's a quick step that can prevent your card from being flagged for suspicious activity in destinations you don't visit often.
What should I do with leftover foreign currency?
Spend it down before you leave if it's a currency you won't use again soon, or hold onto it if you expect to return. Converting it back to dollars typically means paying a second markup.
Conclusion
Getting a fair deal on foreign currency comes down to two habits: pay by card whenever you can with a card that skips foreign transaction fees, and get cash from a real bank ATM rather than a currency counter. Do those two things consistently, and you'll keep hundreds of dollars in your pocket on every international trip instead of handing it to a kiosk at the airport. If you haven't already, take a few minutes to check whether Chase charges foreign transaction fees on the card you're currently carrying, and compare it against the best credit cards for travel before your next trip abroad. This article contains affiliate links. If you apply through our links, we may earn a commission at no cost to you, which helps us continue sharing points and miles strategies with the community.
