How to Dodge Foreign‐Exchange Markups When Traveling: 3 Smart Strategies

Traveling abroad often surfaces hidden costs related to how you obtain foreign cash and make purchases. NerdWallet’s recent guidance outlines how airport currency exchange desks frequently impose steep markups—anywhere from 14% to over 17% above the IMF’s representative exchange rates. These surcharges can dramatically increase costs without visible disclosure to travelers. [1]

By contrast, ordering foreign currency ahead of travel through a bank provides significantly better value. NerdWallet reports that in January 2024, Bank of America’s exchange rates averaged about 6% above IMF rates—less than half the premiums seen at airports. Consumers can usually order currency online or via app, select how they’ll receive cash (pickup or shipping), though discreet fees and handling charges may apply. [1]

Additional bank practices highlight areas where travelers lose money: service fees for small orders (< US$1,000), shipping fees (Bank of America charges US$7.50 standard, US$20 for overnight), and minimum/maximum order limits (US$100–US$200 minimum; US$10,000 per 30-day maximum are common). [1]

Given how Card networks and issuers handle foreign transactions, credit and debit cards can replace cash for many purchases abroad. NerdWallet and other sources point out that foreign transaction fees usually add 1%-3% to overseas purchases when using cards that charge them. However, cards such as Capital One Venture and others in aggregator lists offer zero foreign transaction fees, which, combined with strong travel rewards programs, make them a cost-efficient alternative to carrying and exchanging large sums of cash. [2]

Strategic implications for frequent and casual travelers:

• Plan ahead: order currency before travel to avoid inflated airport exchange costs.
• Use fee-free travel cards for payments abroad to avoid both markups and fixed fees associated with cash exchange.
• Compare bank foreign currency purchase policies—including service-fees, delivery charges, and exchange rate competitiveness—before travel.
• Carry some cash where necessary, but limit the amount exchanged at airports; bring appropriate credit/debit tools to cover larger or unexpected foreign expenses.

Open questions:

• How stable are bank exchange rate markups over time vs. IMF rate changes?
• Is there significant variation among banks depending on geography (rural vs. urban) or account status (premium customers)?
• How do prepaid currency cards and multicurrency accounts compare in total costs (rates + fees)?
• What protections or disclosures exist (or should exist) for travelers purchasing currency overseas?