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The best exchange rates come from ATMs in your destination country and pre-trip transfers via services like Wise—not airport booths, hotel desks, or your home bank’s currency counter. On a $2,000 trip budget, choosing the right method over an airport kiosk saves $100–400 depending on trip length and currencies involved.
Why the gap between methods is larger than it looks
A bad exchange rate doesn’t announce itself. You hand over $500, get a slightly smaller number in local currency, and move on. But the spread between a 2% markup (a decent local ATM) and a 12% markup (airport kiosk) on $2,000 in converted funds costs roughly $200. Over a month abroad, that’s $200–400 gone before you’ve spent a dollar on anything.
The worst exchange rates aren’t accidents—they’re built into convenience. You pay for immediacy and location.
Markup size tracks directly with how trapped you are. Airport kiosks, hotel desks, and tourist-area money changers charge the most because they know you’re in a hurry with limited options. Local bank ATMs charge less because they process volume and have lower overhead per transaction.
Comparison of exchange rate methods
| Method | Typical Markup | Speed | Best for | Gotchas |
|---|---|---|---|---|
| ATM (local bank) | 1–3% | Instant | Most travelers | Foreign ATM fees ($2–5); daily withdrawal limits |
| Credit card | 2–3% | Instant | Large purchases | Not all cards waive fees; cash advances cost 3–5% extra |
| Wise (formerly TransferWise) | 0.5–1.5% | 1–3 days | Pre-trip transfers of $1,000+ | Requires account setup; not for last-minute trips |
| Bank pre-exchange | 2–4% | 1–2 days | Peace of mind | Slower than ATM; less flexible on arrival |
| Airport/hotel/tourist kiosk | 8–15% | Instant | Emergency only | Highest fees; poor rates; hard to avoid at midnight |
Our verdict
For most trips: use ATMs from local banks at your destination (1–3% markup). For stays longer than a week or transfers above $1,000: use Wise (0.5–1.5%). Use credit cards for hotels, restaurants, and shops. Avoid airport kiosks unless you land at midnight with no ATM in sight.
ATMs: the default best option for most travelers
Local bank ATMs give you the interbank rate plus a small markup—usually 1–3%. Your home bank debits your account in home currency, the destination ATM’s bank converts at their rate, and you walk away with local cash. The markup is what the two banks agree to charge for that service.
The costs to factor in
- Foreign ATM fee: $2–5 per withdrawal, charged by your home bank. Some banks waive this for premium accounts or partner networks.
- Daily limits: Most ATMs cap withdrawals at $200–500. On a longer trip, you’ll make multiple transactions.
- Rare-currency penalty: In smaller markets—Iceland, New Zealand, parts of Southeast Asia—ATM markups creep toward 4–5%.
Run the math: two $400 withdrawals at a $5 fee each costs $10 in flat fees. Add 2% markup on $800 converted ($16), and your total cost is $26. An airport kiosk at 10% on the same $800 costs $80. The ATM wins by $54 on a single trip to the machine.
Use ATMs run by the largest local bank, not independent machines in tourist corridors. In Europe, that means Deutsche Bank, ING, or national retail banks. In Southeast Asia, Bangkok Bank, BDO, or their local equivalents. These process the most volume and offer the tightest rates. Before you leave, ask your home bank which partner networks they use abroad—Citibank has a global ATM network; many US credit unions offer fee reciprocity worldwide.
Credit cards for purchases, not cash
Credit cards typically carry 2–3% markups with no per-transaction fee, making them the right tool for hotels, restaurants, and shops—anywhere that accepts them. They’re not for cash.
Using a credit card at an ATM (a cash advance) triggers a separate fee structure: most cards charge 3–5% plus interest from day one, with no grace period. That’s expensive enough to make an airport kiosk look reasonable by comparison.
One trap worth knowing: when you swipe abroad, the merchant’s terminal sometimes asks whether you’d like to pay in your home currency. This is dynamic currency conversion, and saying yes hands the exchange rate decision to the merchant’s bank, which typically adds 4–8% on top of the real rate. Always decline and let your card process in local currency.
Wise and pre-trip transfers
For stays longer than a week, or any transfer above $1,000, pre-moving money via Wise (or similar services like OFX or Remitly) beats every other method on rate. Wise converts at the true interbank rate and charges 0.5–1.5% depending on the amount and currency pair.
Concrete example: $2,000 USD to EUR via Wise costs roughly $15 (0.75%). An airport kiosk at 10% costs $200. The difference is $185 on a single transaction.
Trade-offs worth knowing
- Setup time: Transfers take 1–3 days to settle. Not useful if you’re leaving tomorrow.
- Minimums: Most services require $100–500 minimum transfers.
- Account requirement: Wise is free to join but requires identity verification, which takes a day or two.
Wise is not for everyone. If you’re on a short trip converting under $500, the setup friction isn’t worth it. It earns its place for expats, long-term travelers, and anyone moving $1,000 or more.
What to avoid
Airport currency booths charge 8–15% as a standard markup. A $500 exchange at 10% costs $50 in hidden fees before you’ve left the terminal. Use them only if you land at night with no ATM access and need cash for a taxi.
Hotel and tourist-area money changers run 6–12%. Hotels in particular know you’re a guest who’d rather not leave the building.
Prepaid travel cards with “locked-in rates” often charge 3–5% markups plus per-transaction fees. They’re rarely better than a good ATM or credit card, and they tie your money into a card that’s difficult to access if lost or frozen.
PayPal runs 2–3% worse than ATM rates on currency conversion, then adds fees on top. Skip it for this purpose.
Practical tips before you go
- Withdraw $300–600 per ATM visit. Withdrawing $100 at a time wastes money on repeated $5 fees. Withdrawing $600 at once costs the same flat fee.
- Use your debit card at ATMs, not your credit card. Debit avoids cash advance interest; credit triggers it immediately.
- Notify your bank before you travel. Unusual foreign activity triggers automatic card freezes. A two-minute call or app notification prevents a declined card at the worst moment.
- Bring a backup card. A second debit or credit card from a different network costs nothing to carry and saves you if the first is lost or blocked.
- Don’t exchange money at your home airport. The markup is just as bad as at your destination’s airport. Wait until you arrive and find a local bank ATM.
Frequently asked questions
Is it better to exchange money before I leave or after I arrive?
After you arrive, at a local bank ATM. Exchanging at your home airport typically costs 8–12% in markups. ATMs at your destination charge 1–3%. The one exception: if you’re traveling somewhere with very limited ATM access—certain remote areas or countries with currency controls—bring a small amount of cash exchanged beforehand, enough for the first day.
What’s the difference between the exchange rate and the markup?
The exchange rate is the actual price of one currency in another (e.g., 1 USD = 0.92 EUR). The markup is what a bank or money changer adds on top. If the real rate is 0.92 and you receive 0.88, you’ve paid roughly a 4% markup. Always check what you actually receive, not just the rate advertised on the board.
Should I use a travel card instead of a credit card?
Not usually. Most travel cards charge 3–5% markups plus per-transaction fees. A credit card with no foreign transaction fee (2–3% markup, no flat fee) or a local ATM (1–3% markup plus $2–5 per withdrawal) beats them in almost every scenario. Travel cards only make sense if your regular cards charge very high foreign fees and you’re making dozens of small daily transactions.
Why do some ATMs show a different rate than others?
Different banks negotiate different interbank rates and set different markups. A major local bank ATM typically runs 1–3% above interbank. An independent ATM in a tourist area—the kind with its own branding and a flashy interface—often runs 5–8%. The rule is simple: use ATMs operated by the largest local bank you can find, not standalone machines near hotels or attractions.
Is it worth paying extra for travel insurance that covers currency fluctuations?
No. Currency fluctuation insurance is expensive relative to what it protects. On a typical trip, a rate shift costs you tens of dollars, not thousands. The one narrow exception: if you’re booking a large international purchase months in advance and rates are historically volatile, locking in a rate via Wise at the time of booking can make sense—but that’s not insurance, it’s a transfer.
Maya has spent twelve years writing about travel, from budget backpacking to family resorts, and still packs too many socks.
