A recent question illustrated one of the potential pitfalls of pre-purchasing foreign currency. In short, the poster was unable to pick up currency they had ordered, and a currency purchase is not a refundable transaction as it is a fluctuating commodity.
However, someone went even further and suggested that pre-purchasing currency in advance of a trip is a foolish thing to do, the lack of potential to cancel/refund the transaction notwithstanding.
And the lesson is: don't purchase foreign currency, at least not as currency (vs gambling with it, which is another topic). There's absolutely no need to do so. This is 2019 and your ATM and credit cards work anywhere, and automatically convert currency at rates far below what any scammy currency changer will offer you.
(source, emphasis theirs)
This particular comment was upvoted a few times, so it would seem others would agree with that assessment.
However, while a card may certainly work abroad, I am uncertain if it would be financially advantageous to obtain foreign currency in this manner versus pre-purchasing. I am not an economist, but I would have thought market forces would tend to favour the purchaser when buying 'at home'; whereas abroad there is less element of choice and more lock-in.
I haven't been abroad in a while, but I seem to recall the following things working against using a card abroad as described:
- poor conversion rates, or at least average at best
- a percentage fee on the transaction/withdrawal on top of this
- a flat 'foreign transaction' / 'foreign currency' fee
- others, like withdrawal fees
Though perhaps things have changed or I have misunderstood.
Is it more economic to pre-purchase currency before travel, or use ATM cards / credit cards when abroad? There are a few factors at play, but assume other things to be equal- I budget to spend, say, €500 abroad and spend that amount locally and appropriately regardless of cash or card (ie no reconverting to home currency, credit cards not used to withdraw cash from ATMs etc).