The holiday season is on. Your bags are packed, your passport is ready and you’ve made it safely through the airport.
You have one last thing to check off your list that seems harmless enough: changing a few hundred dollars in foreign currency at the airport.
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But according to UK consumer finance expert Martin Lewis, that’s exactly where travelers are likely to pay the most, as shared by the Mirror. (1)
Lewis warned travelers that airport currency exchange counters thrive because they have a “captive audience” because that’s when travelers are about to board because they think they have no other option.
Although Lewis is based in the UK, the same advice can apply to Americans heading overseas for a getaway: Exchanging money at the airport means you can start your trip with less money than you expected.
Luxury, with a price tag
It’s not necessarily that airport currency exchanges charge outrageous service fees, but the biggest hit often comes from the exchange rate itself.
Because travelers are busy and have few options when it comes to security, airline providers can offer less competitive rates than banks or services you might arrange before you leave home.
That’s why organizations like AAA recommend (2) avoiding airport currency exchanges whenever possible, noting that they are often among the most expensive places to change money. Forbes Advisor similarly advises (3) that you get your money from the bank rather than from the airport.
Planning ahead can help you avoid last-minute scrambles at the airport, so be sure to think about when you might need cash, such as for taxis, tips or small purchases.
Some US banks allow customers to order foreign currency before departure, and the rates may be more competitive than airline kiosks. AAA also offers currency pre-ordering for a wide range of currencies, allowing travelers to have cash before they even leave home.
Lewis also recommends comparing exchange rates before buying, as the “best deal” isn’t always zero advertising fees. A slightly higher fee combined with a strong exchange rate can still leave you with more foreign currency.
Read more: 7 important savings you can make once you save $10,000
Another costly mistake many Americans make overseas
Appearing on ITV’s This Morning, Lewis told the hosts, “The best thing you can do is use a few travel exchange comparison sites online. Now, the thing is, you have to be careful. It’s a combination of the exchange rate and the fee. So what exchange rate are they giving you? What money are they giving you? You want that all together. And that’s what comparison sites are going to do.” (1)
Lewis also warned travelers about another common money trap that catches people once they arrive.
When paying by credit card or withdrawing money abroad, most payment terminals ask whether you would like to be charged in US dollars or local currency.
Seeing the dollar amount may sound reassuring, but it’s often the most expensive option.
This practice is known as dynamic currency conversion (DCC). Instead of letting your bank or card network convert the purchase, the overseas merchant or ATM operator does the conversion using their own exchange rate.
Lewis’ advice is simple: if you’re in France, pay in euros. In Japan, pay in yen. In Mexico, pay in pesos.
Choosing the local currency usually allows your card issuer to handle the conversion, which is often better than accepting the merchant’s rate. Even travelers who use standard credit cards may come out ahead by deciding to opt out of dollar conversion.
If you have a credit card with no foreign transaction fees, the savings can be even greater.
When it comes to travel, preparing before you take off, and even before you arrive at the airport, can mean a lot of money in your pocket for important information. Skipping the airport exchange counter and paying in local currency abroad may not sound exciting, but combined it can be two of the easiest travel savings you can make on vacation.
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Sources of the article
We rely only on vetted sources and reliable third-party reporting. For details, see ourconduct and guidelines.
Mirror (1); Club Alliance AAA (2); Forbes (3)
This article first appeared on Moneywise.com under the headline: ‘You should be careful’: A financial expert warns travelers about the biggest mistake they are making at the airport.
This article provides information only and should not be construed as advice. Offered without warranty of any kind.
