What’s the Best Way To Exchange Dollars for Foreign Currency? And When Should I Exchange Money?

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Traveling internationally is one of life’s greatest pleasures.

It’s also a statement that money expert Clark Howard fully believes. He founded and grew a chain of travel agencies early in his career. And he’s constantly taking trips to other countries.

One of the trickiest hurdles to navigate (outside of travel): figuring out how to pay for things in a different currency.

More specifically, what’s the best way to exchange money for a foreign currency so you don’t get ripped off? And should you do it before you leave the United States?

That’s what a listener of the Clark Howard Podcast recently asked.

How and When Should I Exchange Money for an International Trip?

How and when should I trade my dollars for a foreign currency ahead of an international trip?

A Clark listener asked that question on the June 27 podcast episode.

Asked Stephen in Colorado: “Clark suggests waiting to arrive at your destination to exchange money. With this in mind, which exchange agency is best to deal with? Banks, money exchanges, the black market, etc.?

“And, can one get, for example, Australian Dollars prior to departure at a U.S. bank? Or should you always wait until you get to your destination to do an exchange?”

It’s a good thing that Stephen asked. He’s right about waiting to arrive at your destination. But everything else? Not so much.

“Everything you named — banks, money exchanges, the black market — stay away from all of that,” Clark says. “Exchanging money for Australian dollars before you go to Australia? Terrible idea.

“The reason is we have perhaps the worst exchange rates in the world in the United States. There are weird particular reasons why money exchanged in the United States is hideously awful with massive fees in the system.

“So getting money when you get overseas is the way to go.”

3 Great Ways To Exchange Money According To Clark

Clark says we should avoid exchanging dollars on U.S. soil. He also warns us to avoid banks, money exchanges and the black market. Got it.

But what options do we have, if any? Fortunately, there are three different ways that Clark recommends to navigate exchanging money or paying for things internationally.


1. Make Use of Your Smartphone

When was the last time you used cash in the United States? If you’re anything like me, it’s rare these days.

Most places in the world are like that, including Australia. Especially in metro areas.

“You’re going to find in Australia people overwhelmingly pay with their phone with Apple Pay or G-Pay. Or they use a credit card,” Clark says.

“With your Apple Pay, your G-Pay, make sure whatever credit card you tie into or whatever credit card you use has no foreign currency transaction fees.”

Make sure to pay in the local currency. If you pay with a credit card, for example, many foreign establishments will give you the option to pay in dollars.

While that may sound good, since you better understand the cost that way, it’s a trap. You’ll end up paying 7-10% more that way, Clark says.

Team Clark has identified the best credit cards with no foreign transaction fees.

2. How To Get Cash if You Really Need It

Clark frequently advises people to keep some cash on hand, even in the United States. He typically keeps $400 at home just in case.

It’s not the worst idea to have some local currency when you’re in a foreign country. Even if you’ll be able to pay for everything with your phone or a credit card.

Even so, there are some areas away from major cities where you may need cash.


“In most of urban Australia, most places, it’s like, ‘Cash? What’s that?’” Clark says. “But particularly if you’re going to the Outback, you’re going to more rural areas or you’re going to Western Australia, you want to have an ATM card that charges no foreign currency transaction fees and no ATM fees.”

For a long time, Charles Schwab was Clark’s lone recommendation for this. Schwab famously doesn’t charge international ATM fees. It will even reimburse you for any ATM charges you incur in the U.S. or internationally.

Clark cited USAA as another company that offers to take care of all ATM charges you incur (up to a ceiling).

“More and more financial institutions stand apart with this,” Clark says. “And this is something that’s more and more common.”

If you can withdraw money from your financial institution in the local currency without incurring any fees, you’ll save a lot of money vs. exchanging your dollars at a bank in the U.S.

3. Credit Cards That Specialize in Foreign Currency Exchange

In addition to withdrawing cash from a foreign ATM or using your phone or a credit card, you can look into getting a credit card from Revolut or Wise.

“These are companies that specialize in foreign currency exchange,” Clark says.

“Their principal market is sending money to friends or relatives overseas at much lower prices than traditional sending money services. But they also have Visa or Mastercard stored value cards that work in whatever currency of the country you’re going to at much lower or no fees depending on the currency.”

Why These Are Better Than Exchanging Money at a U.S. Bank

Just to reiterate, the worst thing you can do is exchange your money at a U.S. bank before you leave for your trip. That’s because the fees are so high that they represent a major ripoff.

“Any of these methods will work and be vastly superior to using a money exchange, using a bank, anything like that here or overseas,” Clark says.


“And still, even if you did default to going to a bank or money exchange overseas, almost always, their ripoff fees will be much lower than the ripoff fees exchanging money here in the United States before you go.”

Final Thoughts

Going on a trip out of the country? Congratulations! You’re in for a great experience.

Just make sure that you follow Clark’s advice when it comes to exchanging money. You’ll be spending enough of your hard-earned dollars without getting ripped off by a U.S. bank or money exchange.

Wait until you get to your destination. Then either pay with your phone, with a credit card or by withdrawing from an ATM through an institution that won’t papercut you with fees.