Getting cash while travelling: are ATMs really a rip-off?

Money exchange

Money exchange

Having ready access to cash is an endless concern for almost every traveller. Those who use the dollar or euro as their home currency can splash their own cash in other select corners of the world, but even they are not immune from making sure they have access to their cash while travelling.

Here are a few observations I’ve noticed that I thought I’d share. Feel free to disagree or share how you manage your cash while on the road.

Using ATMs is not expensive

If you enter a post office or a bank in the UK you’ll quite likely see posters warning you of the huge cost of using ATMs overseas and why you should get your cash from them instead. You would be excused for being led to believe that you might be paying double for your money in a Spanish or American cashpoint.

I frequently travel without local currency and rely on an ATM or exchange booth at the arrival lounge of the airport to get a small amount for a bus/taxi. I always have a small stock of USD and Euros at home, and I’ve yet to get into trouble in a place where  I couldn’t get local money at the airport or where taxi drivers wouldn’t take my $ or €.

As a little experiment on a recent trip to Spain, I checked the pound/euro currency rates at my disposal in St Albans before my departure:

Bank: £1 =€1.14

The Money Shop £1=€1.17

Post Office £1=€1.165

At Gatwick airport I was hardly tempted by a rate of £1=€1.10 and cannot understand for the life of me why there is any demand for these services. They must surely survive on the basis of a fear that there will be no money left at the place of arrival.

I withdrew €200 from the cashpoint when I arrived in Spain and was charged £172 by the bank including a cash handling fee; an overall rate of €1.16. Not quite as good as the best (better than those advertising to the contrary), but for a lot less hassle and no queuing I paid a negligible premium.

Dollars and Euros will never let you down

Travelling to countries outside of the eurozone where only a local currency is accepted the argument for getting cash locally is even stronger. I’ll use the local Money Shop to get a starting sum of euros or dollars if needed , as the rates they offer on these two currencies are usually competitive with local rates. But try getting a decent rate on the Croatian kuna at your local exchange office; certainly with the Thai bhat you’ll do far better to use an ATM or to take your pounds and change them as soon as you arrive at the airport in Bangkok than to collect your bhat in the UK.

I’ve used Croatia and Thailand as two examples where it’s better to change cash on arrival. A quick glance at the exchange boards in most destinations will tell you all you need to know. If you look at the spread on offer (the difference between the ‘buy’ and the ‘sell’ rate) it’s often no more than 1-2%. In other words they work on a low margin for each transaction and rely on volume of business. Contrast this with the UK where spreads are typically 10-12%, and up to 20% in tourist booths in London or at airports. No wonder they can advertise ‘no commission’; a misleading statement if ever there was one.

Look at the whole picture

Two of the biggest myths of exchanging currency are the importance of finding ‘commission free’ exchange and the rip-off fees charged by ATMs. But ultimately any charge can be absorbed or separated, disclosed or hidden. The only question should be this: how much will in cost me in my money, when all charges are included, to get x units of local currency? When I considered this question, I’ve found that getting my foreign currency before I leave the UK is very rarely worthwhile.

Author Information

Freelance travel writer

11 Responses to “Getting cash while travelling: are ATMs really a rip-off?”

  1. Very true on many fronts. I usually arrive into a country after a trip to a money exchange in a neighboring one. I think only twice I found this impossible as the currency was not available. Nepal and the Philippines.

    In this case I exchanged dollars at the airport for enough to get me to town.

    The problem starts here though. ATM fees are becoming a killer overseas. Firstly you have the exchange, which really is not too much of a bother.

    Next, you have you home countries bank charging you for using your ATM card overseas. If you are lucky, then you can find a bank that does not charge this fee.

    Then, you have the overseas ATM charging you. Something that’s appearing all over the world. Philippines, charges $4.50 per transactions (and limits the amount you take out), Thailand charges around the $4 per transaction too.

    And this list will spread.

    Lastly, you also have to add in the costs of calling your bank, to tell them what countries you are traveling in. Otherwise they’ll block your card. Not that difficult in theory. But if you make a big transaction like buying a laptop / camera etc, it can send alarm bells ringing.

    Likewise many cheap South East Asia airlines are on hot lists for many card companies / banks. So again you have to call before hand and say who you are flying with etc.

    It might seems small, but the costs of all the above do add up!

    October 13, 2010 at 9:22 am
  2. Very timely post Andy I’ve always advised people to buy in advance and use online agents.

    Going online and using Crown Currency Exchange or Travelex has always given a better rate than in the US or Europe. However I’ve just read Crown has gone bust leaving people thousands of pounds out of pocket.

    Maybe ATM’s are the way to go.

    October 13, 2010 at 9:39 am
  3. Thanks for the comments guys. Dave, you know the one place I’ve been really stung on ATM fees is in Cambodia. The machines dispense USD but like you say the Cambodian bank charges you, the UK bank charges you and the USD rate isn’t great. But even after all of that, the rate was still around the equivalent of a UK bank.
    Good point about letting the bank know about travel plans. Some banks now allow online travel notification which is great, as you can let them know at short notice while on the road. Getting your cards stopped is no fun, for sure.
    Ronnie, one of the things I like about using ATM is the security of not carrying large sums around but still being able to access cash 24/7. It’s just a question of whether you value that enough to pay the premium in places like SE Asia.

    October 13, 2010 at 8:10 pm
  4. Hi Andy,
    Any story involving $$ while traveling is always a timely post. We were fortunate enough to be told about Schwab checking accounts in states, as their ATM check card (with Visa logo) reimburses ALL ATM FEES charged by other banks (at end of each billing cycle), internationally. Normally the fees here in Thailand is 150B per withdrawal, which is about $5USD, fairly high by any standard. Plus, the exchange rates tend to be higher than purchasing/exchanging for local currency (Thai Bahts). Even using the check card for credit card purchases, there are zero fees as well.
    So, this allows us to skip the currency exchange booths altogether, wherever we go.

    For those of us fortunate enough to get a Schwab account, it’s one less thing to worry about.
    *Disclaimer: I was not paid by Schwab or received any kickbacks from them… Just a happy customer. =)

    October 14, 2010 at 2:45 pm
  5. Hey Jack, thanks for stopping by. The Scwab account sounds perfect for the long -term traveller. Is it well known among the travel community? Can anyone (in the US) open a Schwab account? We need a UK equivalent!

    October 15, 2010 at 8:08 am
  6. rebecca #

    Great post! For me, I’ve never had an issue with ATMs because my bank is global (Citibank). I avoid being charged twice by going to my bank’s branch in the country I’m in. While this is not always possible, my bank just charges a 1% fee for my transactions if I have to visit a foreign bank’s ATM and yes, they charge me too, but it’s never been a debilitating amount. I usually only withdraw once or twice depending on how long I’m there for to minimize the costs.

    October 15, 2010 at 6:29 pm
  7. All, if you’re from the US I highly recommend Schwab. Zero fees, people!! We were referred to Schwab by another traveler (Colin) prior to our move to Thailand, & it has worked out great. I assume anyone in the US can apply for it. Even purchases internationally with their visa check card are fee free, and you don’t have to hunt around for specific ATMs. Not sure how well known this is amongst the travel community, but based on the responses here perhaps it’s worth a blog post. =)

    October 16, 2010 at 2:28 am
  8. TonyW #

    Let me first echo the Schwab endorsement – I have had a Schwab account since 1977 (!), well before ATMs came on the scene.

    Next, I put dealing with Travelex in the same category as flying with Aeroflot – something to be avoided at all costs. Speaking of costs, I find that the difference between their buying and selling rates, even for stable currencies, is about 20%, with the official exchange rate in the middle. So they are taking 10% off the top in addition to any commission they might charge.

    Finally, make sure that you know the official exchange rates when you go to change money. Websites like (Android and iPhone Currency converter app, too.) and are very valuable for that. Sometimes you have to change money in an airport before you can find an ATM, so knowing the rate helps you decide how much to exchange.

    October 17, 2010 at 9:13 pm
  9. Thanks for the many good bits of advice here. Agree with you Tony – it’s common sense but surprising how many people arrive in a country without knowing the correct FX rate. Oanda is an excellent resource for this.

    October 17, 2010 at 10:42 pm
  10. I totally agree! I have used atm’s across Australia, and all over Asia. Different banks are going to charge you different amounts so it’s best to check with your branch before you leave. Also, the most important part – you can carry less money on you at all times. In the unfortunate event that your stuff gets stolen, those few extra dollars in bank fees are worth losing a large amount of cash!

    October 18, 2010 at 1:56 am
  11. Personally I always use my Nationwide debit card – with a ‘no fee’ foreign withdrawal policy. The exchange rates are decent – works out well unless I need large amounts of cash when negotiating a with a local bank/exchange counter and paying by credit card almost always brings the best results. I belive a few other banks also have debit cards with a similar policy.

    Caxton FX have a card which sounds similar to the Schwab card mentioned above (?) – basically visa a card which you can charge up and withdraw on a fixed percentage off the current market rate.

    For anyone paying very large amounts (buying property, doing business etc…) it is is absolutely essential that you use a reputable currency dealer and shop around for the best deal. Using your bank will cost you a lagre amount of money!

    November 11, 2010 at 12:56 pm