A Guide to Currency Exchange for Nomads & Frequent Travelers
Tips and hacks for keeping more of your hard-earned cash while traveling
As a nomad, changing currency is a part of daily life. Whether paying for accommodation, food, or travel expenses, dealing with different currencies can be challenging. Fluctuating exchange rates, the value of one currency compared to another, can have a significant impact on the value of your money, making it difficult to budget and plan for expenses when traveling or working remotely.
Fees are another challenge. Banks and currency exchange services often charge fees for exchanging currency, and these can add up quickly. Additionally, most ATMs charge withdrawal fees or have low withdrawal limits, making it difficult to access your money when needed.
There’s also the potential for fraud and scams, which can exploit unsuspecting travelers and digital nomads. The last thing you want is to lose your hard-earned money to excessive fees and poor conversion rates – or worse, get caught up in a counterfeit or other currency fraud.
Let’s take a look at a few ways you can reduce the risks involved in currency exchange and keep more of your money for yourself, wherever you choose to spend it. First, a bit of housekeeping:
I’m not a financial professional, and all information shared here is based on my experience. It is not financial advice and should not be taken as such. Consult a qualified financial professional before making decisions about your personal and business finances. As an independent author, my newsletter and website are supported by readers. I sometimes earn affiliate or referral income when you click sponsored or affiliate links in my content – a girl’s gotta eat.
With that out of the way, let’s get to geeking out over currency conversion!
Multi-currency accounts with cards
Having a multi-currency account of your own, where you can exchange funds inside your own account at preferable rates, can help. Keeping these accounts in multiple currencies lets you withdraw local currency from ATMs, or spend it at stores, hotels, and restaurants. I use mine for business, for paying international contractors and accepting deposits and payments from clients worldwide, but you can get personal accounts, too.
My Wise account and card were a huge help recently in Honduras, where withdrawing cash from a bank was a time-consuming process that required waiting in line at the bank with my passport and paying the bank’s exchange rates from my USD account to lempiras. When withdrawing from an ATM, you pay exchange fees plus the local ATM fee, and those fees can be steep.
Using my Wise card to pay vendors directly whenever possible meant the currency exchange happened inside the Wise platform, enabling me to pay in HNL (Honduran lempiras) from my USD bank account. I’ve found this to be way simpler and less expensive than withdrawing cash from an ATM and then carrying that cash around.
When I went to the grocery store on April 25, for example, I was able to pay my 489 HNL order using my USD Wise account. Wise applied an exchange rate of 24.5790 and a currency conversion fee of 18 cents.
The moment I paid, Wise alerted me on the app that the transaction had taken $20.08 from my USD account – 22 cents more than the bank exchange rate on that day. Had I withdrawn money from an ATM, I’d have “saved” 22 cents on the conversion rate for that $20 – but I was paying 88 cents in ATM fees per $20 USD withdrawn there.
Net result = paying direct using my multi-currency card saved me 66 cents on every $20 spent in Honduras on that trip. The simplicity of having a debit card I could use for local currency purchases plus the eliminated ATM fees more than made up for small variations in the currency rate I might have gotten at a local bank (and I didn’t have to stand in a sweltering hot lineup).
Wise vs. Revolut: Two multi-currency account options
Wise isn’t the only game in town. Revolut is another popular fintech company offers multi-currency accounts and foreign exchange services. While both platforms have some similarities, there are key differences between the two.
Wise, formerly known as TransferWise, allows users to hold and convert money in over 50 currencies. With Wise, users can exchange currency at the real exchange rate without hidden fees or markups. Wise also offers transparent fee structures, so users always know what they’re paying for. When I switched from PayPal to Wise many years ago, the savings on currency conversion and payment processing fees were substantial (I can’t recall the exact amount, but it was hundreds of dollars per month in savings… I was super happy to say goodbye to PayPal for client payments).
Revolut is another financial technology platform that offers multi-currency accounts and foreign exchange services. With Revolut, users can hold and manage money in about 36 currencies (at time of publication, those are AED, AUD, BGN, CAD, CHF, CLP, COP, CZK, DKK, EGP, EUR, GBP, HKD, HUF, ILS, INR, ISK, JPY, KRW, KZT, MAD, MXN, NOK, NZD, PHP, PLN, QAR, RON, RSD, SAR, SEK, SGD, THB, TRY, USD, and ZAR but you should check here for the latest list). Revolut lets you exchange currency at interbank rates, which are typically lower than the rates offered by banks. It also offers features like freezing and unfreezing your card, setting up recurring payments, and tracking your spending.
Another difference is the way they charge fees. Wise offers transparent fee structures so users always know what they’re paying for. Revolut, on the other hand, offers several different plans with varying fees and features, making it more difficult to compare costs. The standard plan is free, but they offer a Premium plan at $9.99 and Metal plan at $16.99 per month.
With that Metal plan, users receive a debit card with some perks, such as free ATM withdrawals, five free international transfers each month, and the option to create an account to build financial opportunities for teens between 13-17. Revolut also offers investing options with the card, including a 4.25% annual percentage yield and commission-free stock trading. However, this plan does come with higher transfer fees.
Alternatively, Wise offers a debit Mastercard option with fewer limitations. With this card, users can save up to three times when spending money abroad, meaning they could have little to no fees when using the card abroad. You can pay with the local currency, as I often do, or have the conversion happen automatically at a lower rate than traditional credit companies are charging.
Both Wise and Revolut offer support through their websites and mobile apps. However, Wise also offers support through email and phone, while Revolut offers support through a chatbot and in-app support.
TL;DR: Wise and Revolut offer multi-currency accounts and foreign exchange services, but they have some key differences. Wise and Revolut also offer a business account that allows businesses to manage their finances in multiple currencies. Wise supports more currencies and offers transparent fee structures, while Revolut offers additional features such as a metal card and budgeting tools. Ultimately, the best platform for you will depend on your specific needs and preferences. It’s worth comparing the features and fees of both platforms before making a decision.
Personally, I’ve been using Wise for several years now and find that it meets most of my business and personal travel needs. Want to give it a try? Sign up with my referral link to get a fee-free transfer of up to $800 Cdn.
Which credit cards are best for digital nomads?
Another solution for digital nomads is using credit cards with no foreign transaction fees.
A few options available at the time of writing include:
Capital One SavorOne Cash Rewards
Wells Fargo Autograph℠ Card
Chase Sapphire Preferred® Card
Bank of America® Travel Rewards credit card
I won’t tell you one is any better than the other, as they serve different types of people’s needs. I will say it’s important to read the fine print carefully, as credit card companies are notorious for sneaking in as many fees and conditions are possible to wring every last penny out of the engagement they can. Make sure you:
Compare exchange rates: Different credit cards offer different exchange rates for currency conversion. Look for a card that offers competitive rates to ensure you get the most value for your money.
Check for hidden fees: Some multi-currency credit cards may have hidden fees, such as ATM fees or monthly account maintenance fees. Be sure to read the fine print and understand all fees associated with the card.
Consider additional perks: Some multi-currency credit cards offer additional perks, such as travel insurance, airport lounge access, or cashback rewards. Consider which perks are most important to you when comparing cards.
Check how widely the card is accepted: Some multi-currency credit cards may not be widely accepted in all countries or by all merchants. Look for a card that is accepted by a wide range of merchants to ensure you can use it wherever you go.
Consider the security features: Look for a card that offers security features such as fraud alerts or the ability to lock or freeze your card in case it is lost or stolen. This is a big one – a gentleman on my last Hacker Paradise trip had his credit card compromised and spent many hours over several days fighting his credit card company over the phone rather than exploring the city we were visiting. It’s worth proactively ensuring the card you choose has favourable policies around fraud and a history of being on the customer’s side. Read the reviews and look for stories about how the company acted when things went wrong.
Beware the pitfalls of black market currency counters
Be aware of the local customs and laws regarding currency exchange in the countries they are visiting. In some countries, exchanging currency on the black market or using unlicensed currency exchange services may be illegal. Researching the local laws and regulations before exchanging currency is important to avoid legal issues.
Several red flags can help you identify whether a currency conversion counter operates illegally or as part of the black market.
First, an unofficial currency conversion counter may not have any official registration or license. Legitimate currency exchange services are usually required to be licensed by the government or financial regulatory authority, and they will display their license or registration number on their premises. If you cannot see any evidence of registration or licensing, this may indicate that the conversion counter is operating illegally.
Second, the exchange rate offered by the currency conversion counter may be significantly better than the official rate. This is a common tactic black market operators use to lure customers into using their services. However, exchange rates significantly better than the official rate may indicate that the operation is not legitimate.
Third, the currency conversion counter may ask you to conduct the exchange discreetly or outside the official premises. This could involve meeting in a public place, such as a park or coffee shop, rather than a physical storefront. Transactions that are conducted in this way are often indicative of black market activity.
Finally, if the currency conversion counter requires you to pay a fee or commission that is not disclosed or seems excessive, this could indicate illegal activity. Legitimate currency exchange services typically have transparent fee structures and will clearly disclose any commissions or charges upfront.
If you are unsure about the legitimacy of a currency conversion counter, it is always best to err on the side of caution and seek out a licensed and reputable exchange service. This can help you avoid the risks associated with black market activity, such as fraud, money laundering, and the possibility of receiving counterfeit currency.
Reminder: Change currency before you leave the country, unless you plan to hold it
Unless you plan to return to the country and want to hold onto the local currency, changing it before you leave is best.
I found about $ 50 USD worth of South African Rands tucked in a handbag pocket when I returned to Canada and had difficulty changing it back to CDN. I tried banks and even currency counters in other countries to no avail – no one carried or dealt in Rands. It wasn’t until I was back at a major international airport that I could trade them in (and the airport exchange rate was terrible).
So that’s Thing #1 – some currencies are not widely traded outside their country of origin, which means that you may have difficulty finding a currency exchange that will accept them.
Thing #2 is that in some countries, it is actually illegal to take local currency out of the country. If you leave a country with local currency, you may be fined or penalized. No bueno.
Currency conversion FAQs for nomads
Is it better to use a credit card or cash when traveling internationally, and how can I avoid foreign transaction fees?
In some countries, you’ll get better prices if you pay in the local currency, and the rates for other accepted currencies are unfavourable. This is the case in Nicaragua and Aruba, to use two examples I’ve been to recently. You can pay in USD in either country, but you’ll get better rates paying in cash with Cordobas (in Nicaragua) and Florins (in Aruba).
Even so, I prefer to use a credit card for any business expenses I can write off, as the bookkeeping is much simpler. When I pay with my Wise business card, I can check the app later and see the exact amount paid in local and/or USD or Euros. And since it all integrates with my bookkeeping software at Xolo, I just have to email receipts. No more trying to calculate the exchange rate on any given day (I don’t even think the manual, on-paper method we used to track this would be accepted by the government anymore).
How can I budget effectively when traveling in multiple countries with different currencies?
This is another reason I love the Wise app, and it gets a lot of mileage. It helps to have one “home” currency you refer back to in order to give all of these multiple currencies context. My “home” currency is actually USD, because even though I’m a Canadian citizen and tax resident, that’s the primary currency my clients use. It could be Euros, Australian Dollars, or pounds – whatever makes the most sense.
When booking hotels or shopping in local currency, I’ll often quickly check the exchange in the app to give that 300 Rands or 500 Cordobas context. Sometimes I forget, and end up paying $15 for a few slices of cheese (true story) – so it’s worth doing this.
What are the tax implications of earning or spending money in multiple currencies, and how can I ensure I comply with local tax laws?
There are two issues here – the tax regulations of the country where you’re a tax resident, and the regulations around moving money across borders.
It’s very difficult in many countries to be declared a non-resident for tax purposes, and simply staying out of the country for a period of time typically doesn’t do it. Always consult a qualified tax professional with personal and business income tax compliance questions. Otherwise, you might have a nasty back tax bill assessed on what the tax authority believes you should have paid.
Second, investigate the local regulations about how much currency you can bring into the country, and leave with again. Often, you’ll see this information on customs forms, but not always. It’s up to you to check it out and ensure you don’t fall astray of those local laws, wherever you’re headed.
Key Takeaways
By using reputable currency exchange services, credit cards with no foreign transaction fees, and being aware of local customs and laws, digital nomads can confidently navigate the world of international currencies.
Here are some things to consider when deciding how to manage your money internationally:
Consider your business and travel needs to see if a currency exchange service (Wise or Revolut) or international credit card is best.
If you choose to go with a currency exchange service, check out the fees and evaluate the services included to make sure it fits your lifestyle.
If you choose to go with a credit card, consider the exchange rates, hidden fees, additional perks, mobile app options, security features, and countries where the card is accepted.
Beware of and research black market currency counters where you travel to ensure you’re protecting your money. Look for an official registration or license, the exchange rate, and any additional fees when evaluating a currency counter.
Think about exchanging any cash back to your primary currency before leaving a country to ensure you can actually get your money back, as you may not be able to exchange the currency when you leave.
Do you have any more tips for keeping the costs of exchange down? Share yours in the comments.