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Exchange rates matter a lot when traveling abroad, may it be for business or pleasure. Sure, a lot of money changes or entities can help you. But how do you know if they are giving you the best deals?

First and foremost, you need to understand how exchange rates work. Remember that a US dollar is not equal to another currency. Rates vary based on a country’s government, inflation rate, economic condition, and the amount of money being circulated, among others.

Currency is expressed in pairs when assimilating the value of one nation’s currency versus another. For instance, if you are visiting Japan, you will need to change your US dollars into Japanese yen to pay in cash. Let us presume the value of the JPY/USD is 0.0083. Meaning, it takes $0.0083 to purchase one yen.

Of course, any entity that exchanges currency will impose a charge for the service. Fees differ from one money changer to another. Now, to determine the markup, get the difference between the rate offered by the entity and the current market exchange rate, and divide it by the market rate. Referring to the example above, a yen/dollar exchange is quoted at 0.0090.

So,

    0.0090 – 0.0083 = 0.0007

    0.0007 / 0.0083 = 0.0843

Multiply the answer by 100. You will notice the markup is 8.43%. Some businesses levy other fees, including conversion fees. You also need to factor those into the computation, too.

If you hate crunching the numbers or looking for the best rates, worry not. Some credit cards charge no foreign transaction fee, meaning purchases done using this card won’t incur additional charges. Capital One does places no fee for any foreign purchase. You can use an ATM card to obtain quick money, but be mindful of the charges connected to it. Use your card with a partner ATM to minimize the fees, provided the bank is included in a global ATM network alliance. Forget not to ask your bank about it before you travel.

One more thing: start looking for the best deals early. Do your own research to compare offers.