Don't Get Scammed at the Airport: Where to Find the Best Exchange Rates Abroad

Whenever you travel outside your home country you will probably need to exchange money into the local currency. It's easy to rush into these transactions at airports without knowing how the services work. Airport counters offer convenience but hidden fees can quickly eat away at the value of your money.

Why Do so Many People Use Airport Currency Exchange Counters?

Currency exchange counters are strategically placed near the areas where people arriving into a country will need local currency the most. Locations like airports allow them to capitalize on the high demand for their service. Travelers exchange money impulsively all the time because they're tired from traveling or don't know where else to go.

So, How Bad Are Airport Exchange Rates?

Providers located at airports tend to charge larger margins than some of their competitors. You may not even see these fees broken out on your receipt. Instead of charging an obvious commission, providers disguise their profits by giving you a worse rate. You might receive less foreign currency than you anticipated, even if the exchange counter claims to only charge fees.

Market Rates vs Retail Rates

The market rate is the publicly available value for which currencies swap hands between financial institutions around the world. Just about anyone who exchanges currency will pay more than the market rate. Professional currency exchangers buy currencies from the market and then mark that rate up before selling to you.

Red Flags to Watch For

Keep your eyes out for these deceptive phrases that frequently appear on airport exchange counters:

• "Exchanging currency without commission"
• The rate is displayed without mentioning the market rate
• You don't know how much you're actually getting back until after the exchange
• The rate to sell dollars is much higher than the rate to buy them

Exchange Rate Differences: Why Do They Occur?

It simply comes down to cost and how much profit a provider wants to make. For this reason you will notice a wide variation of rates offered to consumers. At any given moment in time your bank, a currency exchange bureau, a travel agency, and an online/mobile money transfer service could all offer you a different rate for the same currency pair.

Shop Around Before You Leave Home

The simplest way to avoid overspending on currency exchange fees is to prepare ahead of time. Look into your options before you leave and you will almost always get a better rate. Travelers who research which providers they have access to and monitor exchange rates before they depart will not be forced into making these rushed decisions.

ATM Machines Can Offer Better Rates

If you don't mind waiting a few minutes for your money to appear, you may want to visit an ATM when you arrive. Many people choose to withdraw local currency from the bank upon arrival. The rates are often more favorable, you get the money instantly, and there will be many more opportunities to withdraw money later.

Avoid Dynamic Currency Conversion Fees

When abroad you might notice vendors offering to charge you in your home currency. This option might sound convenient, but it's likely unfavorable. Most of the time your bank or credit card provider will offer you a better rate than the merchant's.

Comparison Shop Mobile Money Apps

Technology has allowed many financial services companies to enter the currency space. They tend to compete aggressively and often provide great value to customers. These services allow you to hold multiple currencies in one account, which you can manage via a mobile app. Many charge lower fees than your bank or currency exchange counter.

Mix of Cards and Cash for Your Trip

Using cash abroad can be cumbersome, as can relying exclusively on debit cards and credit cards. Striking the right balance can make your travel experience easier:

• It's always good to have some local currency on you
• Bring more than one credit card just in case your primary card is lost or denied
• Keep a stash of emergency money separate from what you normally spend
• Confirm that your card works internationally before leaving home

How to Compare Exchange Rates

Currency exchanges often advertise their rate as the whole story. Once you start looking closer you will find this isn't necessarily true. An exchange rate can be extremely high while the fees are low. Conversely, an exchange rate may seem low but the fees make it a bad deal.

Try Not to Exchange Currency at the Airport

One of the most common times to make an impulse currency exchange is when you arrive at the airport. Take a minute to search around, and potentially you'll save yourself some money. You never know until you look, and that money you can spend elsewhere.

Nobody wants to spend their vacations worrying about finances. Understanding how to avoid costly airport currency exchanges can keep more money in your pocket. If you know what to look for, you can secure a great exchange rate abroad. Don't be that tourist who got swindled at the airport.