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Make "Cents" of Foreign Currency

Traveling abroad means dealing with foreign currency, and all the potential challenges that come with it. But understanding how to exchange your American dollars for something else, and then spending it wisely, does not have to be complicated.

For starters, when traveling, use credit cards as much as possible. Before leaving, ensure your preferred card does not charge foreign transaction fees and also let the credit card company know of your upcoming trip.

Using a credit card consolidates your spending, allows you to pay for items in local currency, and protects you if you happen to encounter a problem with purchases while abroad.

When you arrive at your destination, get a little local cash before leaving the airport—enough for cab fare or small purchases, like a bite to eat. Airport currency exchanges are always open, but be aware that some charge hefty fees.

An alternative to currency exchanges are ATMs. Most American banks belong to the Plus and Star networks, which allow you to withdraw cash anywhere in the world, just like you do at home. If ATMs are not readily available, check with your hotel front desk or a local bank. Both are good options to exchange for local cash, but may charge a less favorable rate and include fees.

Take a few minutes to familiarize yourself with the different bills and coins. American bills are all the same size and color, but many foreign countries have denominations that are of a variety of sizes and colors, which can help in identification.

Keep your local money apart from your American money. A wallet with separate compartments will ensure you don’t have to struggle to get what you need when purchasing and will help keep you organized.

Download a currency app. XE Currency app is a great one. It can convert to and from any currency quickly, so you won’t need to guess what you will be paying.

Make sure you understand the tax rules for the countries you visit. Much of the world, especially Europe, pay 16-25% VAT (Value Added-Tax) on purchases, instead of a sales tax, and the amount is already included in the price of the item. However, many countries will allow visitors to get refunds on the VAT they pay on large-ticket items, once they leave the country. Shop owners or hotels can help with details and forms, just look for stickers in the shop windows and remember to keep close track of your purchases and receipts.

And lastly, when leaving the country, consider donating extra coins and bills to charity—there are often donation bins in the airport, and some airlines collect for UNICEF during the flight. It is a much better use for your last little bit of foreign money than having small bits of foreign coins lying around your house.