Foreign Currency

As soon as your plane touches down in a foreign country, chances are you’ll need some money in the local currency — for a cab, public transportation or even a meal. The growing proliferation of ATMs around the world means that the local currency is usually as close as the nearest cash machine, especially if you’re flying into a major international airport. (For more information, see ATMs Abroad.)

But this is not always the case. If you’re traveling to a developing country or you’re not sure if an ATM will be available, it’s a good idea to have some local currency on hand even before you leave home. Read on to learn more about foreign currency exchange before your next trip.

Bring Your Own Currency?

Purchasing foreign currency from a bank or exchange bureau before you go overseas is generally not the most cost-effective option of exchanging money; you’ll be charged a commission, and you won’t get the interbank rate that you would if you used an ATM or credit card. (For more information, see The Best Way to Carry Money Overseas.) That’s why, if you’re headed to a major international airport or train station, your best bet is probably to seek out an ATM as soon as you arrive and withdraw some cash in the local currency.

However, there are certain circumstances where it still may be worthwhile to have some local currency on hand before arriving in a foreign country. First, some small airports may only have a single ATM — and there’s no guarantee that it will be functioning, or that your particular ATM card will be compatible with it.

Take one example from IndependentTraveler.com reader hafa: “Don’t count on being able to use an ATM in Japan. For some reason they don’t seem to be connected to foreign ATMs. I have used my ATM card in countries all over the world but it wouldn’t work in Japan. I ended up having to get a cash advance on my credit card.”

Likewise, certain countries may also have spotty ATM service; one IndependentTraveler.com editor was nearly stranded without cash on a small Caribbean island when the only cash machine in town was out of service. (Fortunately it was a weekday, and she was able to go into the bank for a cash advance.)

Smaller airports and train stations, particularly in less developed countries, may not have ATMs at all. (Airport websites typically include information on ATM locations, change bureaus and other services; check ahead to see what’s available.)

In these cases, it’s a good idea to have some cash on hand before you arrive — we suggest about $100 – $150 in the local currency, depending on the cost of transportation and how soon you think you’ll be able to reach an ATM. You can either bring U.S. dollars to use at the airport’s exchange bureau, or change your money before you leave home. The latter is a nice option simply for the convenience factor; writes Host Bonjour, “The last thing I feel like doing when I arrive is to have to find the ATM in a foreign airport after a long flight. I just want to FIND my LUGGAGE, FIND my way to my HOTEL and then figure it out from there. So long as I have currency, I don’t have to worry about a thing.”

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Where to Get Foreign Currency at Home

There are several companies that will sell you small quantities of foreign currency in the United States for use on your trip. Two of our favorites are Wells Fargo Foreign Exchange and Travelex. Note that you will not get the interbank rate on these exchanges as you would if you used your ATM or credit card. Both companies will also buy back leftover currency, though they only accept notes, not coins.

International airports and large banks have exchange bureaus where you can change a small amount of money before you leave. Your own local bank may also be able to order certain foreign currencies for you with a few days’ notice. For useful tips on buying currency in advance, check out Buying Foreign Currency: Get More Bang for Your Buck.

It’s also a good idea to keep some small U.S. bills with you when you’re traveling overseas. These will come in handy in case you ever need to change just a small amount of money, and in some countries, particularly those in need of “hard currency” or with huge inflation rates, you may get better exchange rates with U.S. dollar bills. We’ve even given U.S. dollars as tips when we only had large bills in the local currency — though this isn’t something that’s accepted everywhere.

Leftover Currency

Most banks charge a hefty fee when you make an ATM withdrawal in a foreign country; likewise, you’ll lose money each time you exchange currencies at an exchange counter because of commissions and rate spreads. The trick is to withdraw or exchange only as much money as you are going to need on your trip.

Try as you might, however, you will inevitably end up with some small change left over when you leave a country. Some travelers save exactly what they will need for transportation out of the country, then apply their remaining foreign currency to their last hotel bill, charging the balance due. Others run around the train station or airport on their way out, wildly spending the rest of their remaining cash. And some travelers like to hang onto foreign coins and notes as souvenirs.

One option you might not have considered is to donate your leftover currency to those in need (chances are, you won’t be using the coins for anything more than novelty when you return anyway). The United States Fund for UNICEF has made it easy to turn your remaining currency into charity with its Change for Good program, which has raised millions of dollars for needy children around the world.

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