You Plan to Pay with: Foreign Currency from an Exchange Teller

Pro:

Short-term convenience. It’s wise to convert a small amount of cash to foreign currency before you travel, since you might need money on hand to tip a porter or pay for a cab before you have access to an ATM.

Cons:

Unnecessary fees. The rates you find at exchange tellers are less competitive than those offered by credit-card companies and banks, and exchange tellers charge transaction fees. All told, this can easily add up to more than 10 percent of the amount you’re exchanging.

You’ll most likely pay twice to exchange twice. Unless you plan your spending perfectly, you’ll need to visit an exchange teller again before the end of your trip.

You have no protection plan if your wallet goes missing.

The Bottom Line: Ideally, avoid exchange tellers like the plague. Still, if you must use one, remember the following:

Window-shop for the teller with the best rate. “Don’t be afraid to negotiate the commission,” says Rick Steves, host of Rick Steves’ Europe, a public-television series about travel.

If you’re traveling in a group, pool your money and make one exchange so that you can split the service charge for the transaction.

Avoid exchange tellers at airports and hotels, because their fees tend to be the highest. And if you happen to be headed to Britain, here’s a little-known fact: Many British post-office locations allow you to exchange U.S. dollars for euros and don’t charge a commission. To find a branch near your accommodations, log on to www.postoffice.co.uk.

Tip: Have leftover foreign banknotes that are no longer in rotation because they were replaced by the euro (Italian lire, for example)? The National Central Bank of the country in question will exchange old banknotes for euros free of charge for at least the next ten years, and some countries’ banks will do so indefinitely, says John DiScala, author of the travel website www.johnnyjet.com. For exchange deadlines, go to www.ec.europa.eu.