Franc exchange: Be wary converting cash abroad
ATLANTA, Georgia (CNN) -- It was time to load up on some extra lire, so the American tourist headed to the currency exchange counter at the train station in Naples, Italy.
Impressed by the rates, she handed over $300 in cash, took her Italian bills and boarded the train. An hour later, recounting her money, her heart sank: She had lost nearly $100 in the transaction, the victim of an unpublicized "commission."
"I was naive and didn't know what to do," she lamented later.
Her experience was not unique.
"I think there's a lot that people don't know in terms of what's the best way to change their money," said Nathan Lump, a senior editor with Travel + Leisure magazine. "Some people think it doesn't make a big difference how you do it, and it actually can."
In doubt? Use ATM card
When you arrive in a country, ATMs are often the best place to get your currency, experts agree, since cash or debit cards typically yield the best exchange rates and cheapest fees.
Generally you'll pay the wholesale exchange rate plus a conversion fee. Even with the ATM fee you're charged on an international transaction, it's likely to be your best deal, Lump said.
But ask your bank beforehand what the fee's going to be.
"Fees can be a killer," said Rob Sangster, author of the "Traveler's Tool Kit" (Menasha Ridge Press). "If you're going to be charged $5 for a transaction it doesn't make much sense to exchange $25."
Avoid cash advances
Before you go, make sure you have a four-digit personal identification number, as ATMs don't accept five-digit PINs in some parts of the world. If you use letters for your PIN, figure out the numeric equivalent, because some ATMs in Europe and elsewhere don't have letters.
Cash and credit cards also get you good exchange rates with retailers and restaurants, but the good deals don't extend to getting cash with credit cards, Lump said.
While you may get the same exchange rate as with an ATM card, you also are likely to pay a cash advance fee, and interest will begin accruing immediately, possibly at a higher rate than on direct purchases, Lump said.
If you're not using an ATM to get your money, banks can be the next best option. They're convenient too, often located in airports where travelers can change money upon arrival.
"Banks do not all offer the same rate, so it's worth looking around. In that case, it's kind of your time versus a small savings," Sangster said.
But banks, of course, won't always be open when you need them -- nights, weekends, unfamiliar holidays or even siestas.
So you might have to turn to commercial exchange businesses, which can be found on almost every street corner in major cities. Although they're open for more hours, they often -- but not necessarily always -- charge higher rates or commissions.
Beware black market
Travelers may turn to the black market to pad their wallets, but experts typically caution against it.
"If you're not a savvy traveler, I don't recommend it," said Melisse Gelula, an associate editor with Fodor's Travel Publications. "We hear of stories where things go wrong or people are totally taken advantage of."
Wherever you exchange your money, research the going rates and fees in advance, then take a moment to count your cash carefully.
Gelula creates a small currency converter and tapes it in her wallet, so she has a good idea before she gets to the window how much money she should expect. Having a calculator on hand doesn't hurt, either.
"You do want to verify that you're not being shortchanged in any way," Lump said. "Most services are not going to shortchange you, but it's always good to check."
Don't convert too much
Most travel experts advise against converting much cash, if any, before you arrive in a country. The exchange rate at your destination is likely to be significantly better than the rate you would get at home.
And again, the increasing worldwide availability of ATMs has made it easier to quickly get cash, and you can often check online to see if an airport will have an ATM. If you're an American, U.S. cash may be accepted, even welcomed, in lieu of local currency if you're in a bind.
But if it makes you feel more secure to have some, go ahead and exchange a small amount ahead of time, experts say.
"I think a really important thing for a lot of people who are fearful of going to a location for the first time is to get a little bit of currency before you go," Gelula said.
But wherever you are in your journey, don't convert too much money at once.
"My philosophy is to buy limited amounts of local currency on scattered dates rather than buying everything at once on the front end, because you're risking losing it through a pickpocket," Sangster said.
Having too much converted cash on hand also means you risk paying more money to change it back when you go home or head on to another country. In fact, there are some places where you might have trouble converting it back.
If you do get stuck with cash on the way out of a country, consider contributing it to a good cause. One option is Change for Good, a partnership between UNICEF and several international airlines that allows passengers to donate their leftover currency while on board.
If that doesn't pan out, you can count on getting a poor exchange rate when you try to convert the currency back home.
Or you can include it with photos and other mementos -- as a souvenir of your latest adventure.
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