by Roland McShane

Created on: August 31, 2008   Last Updated: March 01, 2009

In preparing for your travels abroad, be prepared to exchange currency according to which country or countries you will be visiting. Not all countries use the same money so trading foreign currency is necessary. Though a few countries have a set conversion rate to the U.S. dollar, most foreign currency exchange rates constantly fluctuate.

The risk of using your ATM card abroad, the high ATM usage fees, and high foreign currency conversion fees make using an ATM too expensive for foreign currency trading.

Follow these simple foreign currency trading guidelines to save time and money:

1. Set your budget in U.S. dollars. After the foreign currency conversion, you will know how much you spent if you decide in advance. Because of the foreign currency exchange rates, be prepared to receive a different amount of the foreign money.

2. After you decide on how much money you want to spend, check with a larger or international bank which is more likely to offer trading in foreign currency. Compare their posted foreign currency exchange rates with easily accessible rates found online (at XE.com, for example). Ask about the fees they charge for trading foreign currency. Often this rate is expressed as a percentage of the total amount of your exchange.

3. At international airports there are foreign currency trading offices which offer the most common world currencies. Beware of high fees and low exchange rates at these offices.

4. If you take U.S. dollars into the country you are visiting, you can visit most banks or businesses specializing in foreign currency conversion. Beware of fees. Exchange rates are lower at shops which advertise "Zero Commission." This type advertising is a hidden way to charge a fee.

5. In many city centers or international airports, you may be approached by an individual trading in foreign currency. Never trade in foreign currency with an individual on the street as this may be illegal. In any case it is not safe.

6. If you are trading in foreign currency with large amounts of cash, be prepared to show your passport.

7. While still in the foreign country, exchange the excess foreign currency into the currency of the next country on your itinerary or into U.S. dollars before you return home.

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