Why You Should Not Exchange Currency at the Airport

TransferWise
03.09.18
8 minute read

Traveling is wonderful… but it can be a bit stressful as well. So it’s only natural to be on the lookout for ways to cut down on the hassle and bother of going from one country to another.

When it comes to the question of money, it’s oh so tempting to think that the easiest option of all is to use one of the many currency exchange booths you’re certain to find at the airport. After all, that’s what they’re there for - they must offer a decent service. Right?

Well…

Of course, they’ll get the job done. But you probably won’t get a good deal. In fact, you almost certainly won’t. Here’s a quick guide to exchanging money at the airport - and, more to the point, why you shouldn’t.


But before you get started, a word.

Banks often charge hefty fees for foreign and multi-currency accounts. And if you’ve already tried managing multiple accounts in multiple countries, you know it’s rarely simple.

TransferWise could help. With TransferWise, it’s free to open a borderless multi-currency account with no monthly fees. There, you can manage and send dozens of different currencies all from the same account. All around the world. (Likely, for a lot cheaper than your bank.) You can also get a linked TransferWise debit Mastercard, which you can use your AUD balance to pay directly for goods and services.

Give it a try. Check out TransferWise today.

Now, back to what you came here to read.


What you should look out for when exchanging money at the airport

Let’s say you’ve made it to the airport already, and you’re on the verge of exchanging some of your money. It’s still not too late to reconsider... at the very least, you should know your options.

In a nutshell, you should look out for one thing: the exchange rate. A lot of airport exchange services primarily make their money through offering bad exchange rates - read on to find out how.

Fees: Is 0% commission really true?

“But wait!” you say. “This currency exchanger is offering me 0% commission! It must be a good deal.”

Sadly, this is an all too common trick. Sure, they’re not charging commission. But that doesn’t mean they’re not making any money out of the transaction. They’re a business after all, and businesses need to make money. At the very least to cover their operating costs.

Most likely, they’ll have marked up the exchange rate. Sometimes it can even be by quite a lot. And when they charge you that inferior exchange rate, they’ll simply be able to pocket the difference.

0% commission? Zero fees? An unlikely story. A marked-up exchange rate is really just a different sort of fee. Don’t fall for it.

So how can you find out if you’re about to get ripped off? Just whip out your phone. Head to a currency converter like XE, Google or TransferWise, and see what your money’s really worth. Then take a deep breath, and look at the exchange rate you’re being offered by the airport currency exchange.

Airport exchange rate

That’s all very well, you might think. But isn’t that going to be true anywhere you convert your money?

Well, yes and no. It’s certainly true that exchange rates fluctuate all the time. But they also change from place to place. And if you want cash and you’re at an airport, you’re essentially at a captive market: you don’t have so many alternative options, so currency exchangers think they can get away with charging you inferior rates.

While exceptions are always possible, in general you’re a lot less likely to get a decent deal when converting cash at an airport. The places are so full of desperate tourists in need of foreign money fast, that they can afford to push up the prices.

Where to exchange money at the airport

It might well be the better option to avoid exchanging money at the airports altogether. But if you’re dead set on it, here’s a look at your options, and the pros and cons of each.

Exchange money at the airport you leave from

If you’ve arrived at the airport in good time, you’re likely to find plenty of places all too eager to exchange your money for you. You can read guides to navigating currency exchange services at Sydney Airport, Melbourne Airport and Brisbane Airport.

Think twice before doing this, though, for all the reasons noted above: you really might not get a good deal this way.

Take cash, and exchange once you arrive

Wherever you’re going, it’s likely that your destination airport will have plenty of currency exchange options too, so you can always use one of those.

There are two downsides to this. The first is the same as just noted - you pretty much never get a good deal at an airport. The second is that you have to travel with Australian dollars in your pocket - it’s always better not to travel with large amounts of cash if possible, for simple security reasons and there are also certain limitations on how much cash you can take into, or out of, Australia, for example.

Order cash pickup in advance

Now we’re getting somewhere: this method might actually save you some money.

Some currency exchangers offer a pickup service where you can order (and pay for) foreign cash online, and collect it at the airport. If they offer this service, it’s common for the exchange rates to be somewhat better than you get if you just turn up.

Before you go, look up what services are available at your destination airport, and see if they let you do this - it’s a little more effort, but will likely save you some money.

Take money out of an ATM

There’s a real risk of overthinking things when it comes to converting money at the airport. In fact, using an ATM at the airport might give you a better deal than any of the above options.

Of course, it might not - you still need to check the exchange rate. But don’t forget about this simple solution: so long as your bank card or debit card works abroad, an ATM is a surprisingly competitive way to get foreign money.

But the airport still might not be the best place to do it. You might be better off using an ATM once you’ve properly arrived - read on for more on this.

Why you shouldn’t exchange money at the airport

As explained above, you’re highly likely to get a bad deal on currency exchange at the airport, because you’re a captive market. It’s the same reason food is more expensive on board a train, and why popcorn costs a small fortune in a cinema: you’re already there, and you don’t have any other options.

But actually, you do have other options. All of the below options.

Where to exchange money, instead of at the airport

For a better deal, try any or all of the below, and use the money you’ll save on extra fancy postcards to impress your friends.

Exchange money in the city

As you’ll see below, you shouldn’t feel you have to use a traditional currency exchange service at all. But if you do, you might well be better off finding one in the city or town you’re visiting, rather than at the airport. The difference in exchange rates can be incredible. Pick the least tourist-heavy spot you can find, and look for one there.

Use an ATM in the city

Surprisingly enough, the very easiest way to get cash could also be the best value.

If your debit or cash card works abroad - and it probably will if it’s Visa or MasterCard - then do consider simply traveling cashless, and withdrawing money from a foreign ATM as if you were still in Australia. You could use one at the airport, although there might be better deals available elsewhere, so consider waiting if you can - or just get out a small amount at the airport to cover costs, and make a larger withdrawal later on.

Will you be charged? Yes, there’ll probably be a foreign transaction fee - maybe even several - and the exchange rate still probably won’t be the mid-market rate. But the exchange rate is, however, likely to be better than you’ll get at a bureau de change - so much so that, even when factoring in the fees, the ATM could very well be the cheapest option.

The ATM might ask you whether you want to use the local currency or your home currency. Take care to always choose the local currency - if you opt for Australian dollars, the machine will convert your money via a method called Dynamic Currency Conversion (DCC) - and give you a truly awful exchange rate. Just don’t do it.

One thing you should do, though, is tell your bank you’re going abroad, so they’re not surprised to see foreign activity on your card. While you’re at it, find out if they have any international partnerships: if they do, then you might get a better deal at certain ATMs.

Hotel currency exchange

If you’re staying at a larger hotel, it might offer its own currency exchange service. That’s certainly a convenient option - but then, so was the airport… Do make sure they’re offering a decent exchange rate if you’re tempted by the hotel’s exchange desk.

Send money in advance with TransferWise

If you’re going somewhere where you have a trusted friend or family member, then you could consider bypassing all of these options altogether. With TransferWise, you can exchange your money at the real mid-market rate - an average of all the banks’ buy and sell rates, so always the best rate on offer. The only, low fee is always stated clearly upfront, so there’s no funny business with hidden costs or shifting exchange rates.

Once the money’s with your friend, they can withdraw it from an ATM as a domestic transaction, leaving you with more of your holiday money.

That’s not all you can do with TransferWise. For people who often need to use money overseas, a borderless multi-currency account could be even more helpful. For no monthly fee, you can store money in 40+ currencies, and get virtual bank details in Australian and US dollars, euros and British pounds - so that, in any of those destinations, you can pay or get paid like a local. With widespread coverage around the world, a borderless account is the ideal way to make an international life that little bit easier. In the future you’ll also be able to get a debit card connected to your borderless account, which will make it even easier to spend money abroad.

Enjoy your trip abroad - and good luck handling your money abroad.


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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