Travel Hack: Always Choose Local Currency For Withdrawals

As a seasoned luxury travel explorer with over 150,000 miles of new international travel under my belt each year, I’ve learned countless valuable lessons that have made my journeys more enjoyable, cost-effective, and stress-free.

One of the most important pieces of advice I can offer fellow globetrotters is to always withdraw money from ATMs in the local currency when traveling abroad.

This simple travel hack can save you a significant amount of money and help you avoid unnecessary fees and poor exchange rates.

Understanding Dynamic Currency Conversion

When withdrawing money from an ATM in a foreign country, you may be presented with the option to conduct the transaction in your home currency.

This seemingly convenient feature is known as Dynamic Currency Conversion (DCC).

While it may appear helpful at first glance, DCC is often a trap that can cost you more money in the long run.

The Pitfalls of Dynamic Currency Conversion

When you opt for Dynamic Currency Conversion, the ATM or the bank processing the transaction will convert your withdrawal amount from the local currency to your home currency at an exchange rate determined by them.

These rates are often significantly less favorable than the rates offered by your own bank or credit card company.

In addition to the poor exchange rate, you may also be charged an additional fee for using the DCC service.

The Advantages of Withdrawing in Local Currency

By choosing to withdraw money in the local currency, you allow your own bank or credit card company to handle the currency conversion.

These financial institutions generally offer more competitive exchange rates, which can result in substantial savings over time.

Moreover, you’ll avoid any additional fees associated with Dynamic Currency Conversion.

Having Cash On Hand for International Travel

Even in 2024, I’m routinely surprised by the amount of places that don’t accept or use credit cards – even deep in the first world! Sometimes you’ll be in a place like Barcelona Spain where credit cards are beyond ubiquitous, and nearby you have Berlin, Germany where Cash Only is still dominant.

Before embarking on your international journey, look into the Debit ATM fees charged by your bank and consider opening an account with a bank that offers low or no international transaction fees. By doing your due diligence, you can save a significant amount of money on ATM withdrawals throughout your travels.

Many small businesses, street vendors, and local markets may not accept credit cards, making cash a necessity. Moreover, having local currency can help you avoid potential scams or overcharging that may occur when paying with foreign currency.

Real-World Example: Saving Money in Japan

During my frequent trips to Japan, I always withdraw money from local ATMs to cover my daily expenses.

On one occasion, I was presented with the option to finish the transaction in my home currency (USD) or the local currency (JPY).

The ATM did not even display an exchange rate conversion – only the amount displayed an exchange rate of 1 USD to 100 JPY for the Dynamic Currency Conversion. However, I knew that my bank’s exchange rate was closer to 1 USD to 110 JPY.

By choosing to withdraw in the local currency, I saved approximately 10% on that transaction alone.

Tips for Withdrawing Money Abroad

1. Always choose to view and conduct transactions in the local currency when prompted by an ATM.
2. Inform your bank about your travel plans to avoid any potential issues with international transactions.
3. Consider using a credit card that offers no foreign transaction fees for added savings.
4. Withdraw larger amounts less frequently to minimize ATM fees. Use Debit Cards and Checking Accounts that reimburse you for all ATM fees, even internationally.
5. Keep an eye out for partner banks that may offer reduced or waived ATM fees for your specific bank.

Final Thoughts

As an explorer, I’ve learned that small money-saving habits can add up to significant savings over time. By always choosing to withdraw ATM money in the local currency when traveling abroad, you can ensure that you’re getting the best possible exchange rate and avoiding unnecessary fees.

This simple travel hack, combined with proper research and preparation, can help you make the most of your international adventures while keeping more money in your pocket.

So, the next time you find yourself at an ATM in a foreign country, remember to select the local currency option and enjoy the savings that come with being a savvy traveler.