Wallet Hacks

The Best Way to Exchange Foreign Currency & Money

We're planning a vacation to England and one of the things we'll need is cash.

In previous visits, we've relied on the partnership between Bank of America and Barclays. I could use a Barclays ATM to withdraw British Pounds without paying a fee while getting the most up to date currency conversion rate possible. More recently, Bank of America started including a 3% international transaction fee. That makes my previous strategy less appealing.

So what's the best way to exchange dollars into another currency, like the British pound?

When I talk about currency exchange rates in this article, everything will be listed as USD/XXX where XXX is the foreign currency. The pair is a foreign exchange (FOREX) convention, which means how many USD can you get for 1 unit of XXX. USD/GBP is 1.25, so you can get $1.25 for every £1. I do this, instead of the reverse, because when we go to buy stuff in England it'll make it easier to think about.

All rates quoted were from March 30th, 2017 – use them as a way to compare relative rates. They are no longer current.

Use a no foreign transaction fee credit card

The most efficient way is to use a credit card that doesn't charge you a foreign transaction fee.

Visa and MasterCard are the most widely accepted. American Express works at major retailers but rarer at smaller merchant. No one has heard of Discover. 🙂

In my case, I'll be relying on the Chase Southwest Rapid Rewards Card, which is a Signature Visa card and has no foreign transaction fee. You can always check the rates that Visa uses for exchanges.

The rate was $1.247675 USD per British Pound — better than Google's listing of $1.25! (there may have been rounding involved though)

This is great! Except we're going to need cash sometimes.

Order it from your bank

How much of a premium will you pay? It depends on your bank and the currency.

Here's the pricing from Bank of America:

The exchange rate according to Google for each shown currency is:

It appears the premium is about 4-6% but Bank of America will even mail it to you.

Rates will vary, Wells Fargo will only charge you $1.3058 USD per GBP. Cheaper than bank of America, but slightly more than the going rate.

Use local atm with partnership

In my case, Bank of America has partnered with a lot of banks so you can withdraw money without the $5 ATM fee (though you still pay a 3% international transaction fee):

Check with your bank to see their list of partners in the country you're traveling to.

You get decent rates for it, plus convenience, but be very aware of any fees.

At the Airport

The worst possible way because the exchange rates are the worst. But if you find yourself in a jam and need a little cash, it's not completely unreasonable to turn to one of these.

Travelex is a popular airport currency exchanger. If your airport has international flights, chances are it'll have of these guys too.

When I checked online, their current rate was 1.367 USD per British pound. Far worse than any others on the list… but if you're in a jam, it's not horrible.

We will probably rely on a mixture of using a credit card and ATM withdrawals. Bank of America tacks on a 3% international fee but you get the current market interbank rate, which is better than the rate for shipping money to you.