Even in this charge-it world, there are times when having cash on hand is handy, especially when traveling out of the country. Sure, there are plenty of places waiting to make a currency exchange quick and easy. But that almost always means that you will pay more for converting money than you should. What’s the best way to exchange without giving too much of it away? We asked around.

Travelex

If you have to have cash fast, an exchange firm is the easiest way. Travelex is probably the best-known company. You don’t have to order five days in advance (as you often do with your local bank, see below), and you don’t have to deal with language barriers. Travelex will even deliver the money to your home or to your departing airport. 

Of course, all of this convenience comes at a price: the service charge. If you wait until you get to an airport to exchange your currency, you’re probably going to pay a hefty foreign transaction fee. Branch locations may be a little cheaper: Some Yelp customers (who generally give Travelex high marks) have commented that fees were waived if they checked in to a branch location online, and the company would take back any unspent money within 90 days of their trip, converting it back to U.S. dollars for no additional fees. Others comment that there are minimum amounts you have to exchange to avoid larger fees.

Think of Travelex as a concierge service. Like most anything else, you can always pay less if you’re willing to invest more of your valuable time doing the legwork on your own. But if you are taking an impromptu trip, waited too long, or just don’t want to go through the hassle, Travelex, and companies like it will make the process simple.

Your Local Bank

To avoid high fees, you can always go to your friendly local bank branch. But you’ll probably have to arrange for the money several days in advance. “Most banks will allow you to order foreign currency prior to traveling internationally," said Ileaa Swift, owner of the website Swift Travel Deals. "Banks such as Bank of America offer their customers the options to order currency online or in their banking locations by using Bank of America checking or savings accounts. If you do not have a savings or checking account with a particular bank, but have a credit card with the bank, visit the local branch and ask about onsite foreign currency exchange options. Most banks even offer tips that will help you figure out how much foreign currency you will need to order and also offer options for cash advances. Most banks also have the option to print out currency exchange rates as wallet cards for you to take with you during your trip.” 

Craigslist

You read that right. People who travel abroad sometimes end up with foreign currency they haven't changed back into dollars Place an ad on Craigslist, Facebook, or your local newspaper saying that they would like to exchange their currency. You avoid all fees, and depending on the other person, you can probably make the exchange at current exchange rates without any markups.

There are some caveats. First, you have to understand how to calculate exchange rates. There are online currency exchange rate calculators and plenty of articles to help with that.

Second, any time money is involved, safety becomes a concern. Make the exchange in a public place and have somebody with you.

Plastic

The plastic in your wallet isn’t a bad resource. But be careful: If you use your bank ATM card or a credit card, make sure it doesn’t charge a foreign transaction fee. If it does, be prepared to pay an extra 1% to 3%. If you plan to travel abroad regularly, consider getting a credit card with no foreign transaction fees

“Not only is the lack of a foreign transaction fee important but so is the exchange rate," said Mike Scanlin, CEO of Born to Sell, a software development firm that creates covered call investment tools. "I did a test when I was in Japan. I used the same ATM machine first with a Bank of America debit card and then with a Capital One Visa card (with a cash advance feature). Even though the transactions were done one minute apart, the Capital One [card's] exchange rate was much better than the Bank of America [card's] exchange rate. Plus, Bank of America charged a foreign ATM fee, where Capital One did not. Even though the Capital One [withdrawal] was treated as a cash advance (since it was a credit card and not a debit card), I was able to pay it off immediately with online banking, so there was no interest charge for the cash advance.

If you have multiple cards, you can do a similar test in a foreign country and then log onto the bank site to see what happened. Take out $100 with each of two or three different cards and see which cost you the most. Then use the best card for the rest of the trip.” 

The Bottom Line

When it comes to exchanging currency sans fees, your bank will likely offer the best deal, unless you risk doing a private transaction with someone you find on Craigslist. 

By far, the best idea – both in terms of safety and advantageous rates – is to procure cash at a local ATM with a debit or credit card that doesn’t charge a foreign transaction fee. This will allow you to make purchases without incurring any more fees than you would when purchasing items in the United States. So before you go, make some calls and ask your banks and card companies about their terms.