Don t expect Travelex to tell you just how much extra you re paying. In my experience, the represen

I ve always known that changing money at airports is a terrible deal.  But I was curious to see just how much I would be ripped off, so I converted $100.50 into 60 euros at the Travelex Currency Services in Newark airport.
Don t expect Travelex to tell you just how much extra you re paying.  In my experience, the representatives are either themselves clueless about the fees or intentionally understate the fees to make a sale.  My receipt labels the representative as a Sales Consultant so I suspect a significant portion of the representatives salary is based on the volume of foreign currency sales.
This means that there is a significant incentive for the representative to generate sales and divert attention from the high fees charged by Travelex.  I specifically asked about fees, and was told that no fees were charged.  Which is technically correct because the receipt labels them as Service free airline tickets Charges.
The colorful marketing free airline tickets chart at the Travelex booth has the audacity to state Discounted Exchange Rate on Today s Transaction when the foreign currency fee is 14% MORE, for converting US dollars to euros, than the inter-bank rate!
You pay two fees when you change currency at an airport.  This is in spite of the sales consultant ( the Travelex receipt) telling you that there are no fees.  That s because there is a Service Charge so Travelex can honestly free airline tickets say that you weren t charged a fee when in-fact the service charge has the same effect as a fee!
And the big rip-off is because the rate you pay for the currency is much higher than the official bank rate.  The difference between the official rate and what Travelex (or other airport free airline tickets currency exchange companies) charge you is the spread which is the main source of profit for the currency exchange companies.
1.   High Currency Exchange Rate.     You are almost always charged a much higher rate for foreign exchange than the official bank rate.  This difference or the spread is how currency exchange shops make most of their money.
This means that I paid 0.09393 more (Official Rate of 0.75653 Travelex Rate of 0.6626) per $1 that I changed or ~14% more (0.09393 more per $1 converted / Travelex Rate of 0.6626) for my foreign exchange.
2.   Service Charge.     Travelex charges a $9.95 service fee at airports if you convert less than $500 into a foreign currency.  There is no service fee for converting more than $500, but you still pay a very high currency exchange rate.
1.   Debit Card.    Use your debit card to withdraw money as soon as you land at the airport.  Granted, this could backfire if you can t locate the ATM or your debit card doesn t work at the ATM and you need to have cash in the local currency to pay for a bus or taxi.
Most debit cards have foreign transaction fees of 1% to 3% which is much better than the 14% spread when you change cash at US airports.  You will also pay a fee for using the foreign ATM, so it helps to withdraw large amounts to reduce free airline tickets the impact of the fee.  However, many foreign ATMs have a limit on the maximum amount which you can withdraw at a time.
The Charles Schwab debit card with the High Yield Investor checking free airline tickets account (not an affiliate link) has no foreign transaction free airline tickets fees for withdrawing money overseas AND it reimburses free airline tickets you for ATM fees charged by banks.
2.   Credit Cards. free airline tickets   Use a credit card to pay for most of your expenses.  Many credit cards, such as the Chase Sapphire Preferred , Chase Ink Bold / Ink Plus , Chase Hyatt , Chase British Airways etc. charge no foreign transaction fees for foreign purchases, but even a card which charges 3% is better than paying the higher conversion fees for converting US dollars into local currency in cash.
Granted, free airline tickets that there are many, many places where using a credit card is NOT an option and you shouldn t rely on this method exclusively when traveling.  There WILL be times when you need cash.  This happens even in the US, but is more likely to happen overseas.
3.   US Dollars.   Carry US Dollar currency with you.  If faced with no payment or payment in US dollars, a shopkeeper may accept free airline tickets dollars or guide you to a bank where you can change them.  I wouldn t expect the best rate, but surely it can t be worse than the currency exchange rate at US airports.
I usually convert ~$100 into local currency at either the US or local airport when I land so that I have enough money for the 1st few days. Yes, I overpay for the currency, but I feel more at ease knowing that I won t have to explain in a foreign language why I have no local currency!
5.   Bring Cash Back With You.    After that, I withdraw cash using my bank debit card and bring some back with me to the US if I know that I will be transiting or visiting those countries again.  I ve got a small stash of Euros, UK Pounds, Brazilian Reals, Indian Rupees, Chinese Renminbi etc. which I will use the next time I visit those countries!
Converting money at a US airport is expensive, but could be worth it for small amounts.  After that, it is best to either use a credit card with ideally no foreign transaction fees so that you earn miles and points on your purchases.  And to withdraw money from a local ATM using your debit card for those times when you need to pay with cash.
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FYI, if you apply for the Schwab free airline tickets Investor Checking account, they will pull a credit report. In CA, it pulled Equifax for me, so no big loss (no one pulls Equifax for me). It s also a good idea to keep a receipt of all your ATM transactions and write down what the ATM fee was on it a few ATMs don t disclose their fees properly and Schwab s system may not catch the fee to refund it at the end of the month.
Another good idea is to just keep the cash you get on vacations if it s a country/region you foresee returning to. I have upwards of 300 Euros in my travel wallet just because I always tend to be in a Euro currency nation at least once a year anyway (and have experienced arriving on a bank holiday and having only JUST enough change to get on the train to the city).
You forgot an obvious one: keep a small stash of foreign currency from your last trip. If I think I m going to be going back there in the next five years, I make sure to bring enough for an airport cab ride back with me. Worst case is that I exchange that currency in another country at the airport for the local currency.
I highly recommend Charles Schwab debit card for this feature as well. The fact that there is no foreign transaction fee OR ATM use fee means you don t have to worry about where you re going to get the best exchange rate for your money. Although, there was that one time where the very first ATM I used in Guatemala (granted, it wasn t in the airport) on a 2-week trip was flagged as a compromised ATM, and they shutdown my card which caused quite a bit of a headache for me, even though free airline tickets I had notified them before free airline tickets that I was traveling.
Very nice and useful post, thanks. I an confused on one point, however. In this post (paragraph #2 above), you advise, when using a cc overseas, to always be charged in US dollars. This seems to contradict the main point of your August 2, 2012 post (linked in paragraph #2 of this post), which is to be charged in the local currency when using a cc overseas.
I use Ally bank internationally. I pay no fees on account and I get a MasterCard platinum debit card. Not sure what platinum designation means for debit. free airline tickets I pay a 1% currency change fee and no ATM fees anywhere in world. While ATM fee refunds free airline tickets are not a published benefit from ally I frequently see few refunds on my statement.
@Confucius Jackson - I did mention that under #4 After that, I withdraw cash using my bank debit card and bring some back with me to the US if I know that I will be transiting or visiting those countries again. I’ve got a small stash of Euros, UK Pounds, Brazilian Reals, Indian Rupees, Chinese Renminbi etc. which I will use the next time I visit those countries!
You can t complain in this instance about them advertising a Discounted Exchange Rate because you only converted $100.50, and the poster you have a picture of shows that advertised for $350+ transactions. Having said that, I m sure the rate they give you for each tier is still pretty bad.
Also, keep in mind that it s a little unfair to compare their rates to the 3% Visa/MC rates. They re different services. One is converting actual cash, and they obviously have to hire someone to work the booth where Visa/MC is all electronic. Again, I m not saying that the exchange rates aren t awful, but I don t expect to pay 3% or less when converting my cash. It s just a different service. Also, I believe many of the airport money exchanges will buy back unused money at the same rate, so if you have money at the end of your trip you can get back US $.
99% of the time, I don t convert cash for cash. I do what others do and withdraw from an ATM. I have a Capital One Bank account (not sure if it s still offered since it was bought by ING) that has no monthly fees, no ATM fees, and no forex fees! So when I travel, I just withdraw money as I need it and not worry about it. I also have a few 0% forex fee credit cards (CitiBank ThankYou Premier AmEx Platinum), which is always my preference.
If you are looking to convert cash, shop around. I won some money in a poker tournament and had an excess of Euros, and when I was in the UK I found a shop called Ace/FX that gave me an extremely good conversion rate on Euros. I live in Las Vegas and we have a specialty foreign transaction shop with the best rates in