What would we do? Carry it around on us like vagrants and risk being pick pocketed?
(That leads me to a point I'd like to make in another post about travel being dangerous...it's not...but that's for later >_>.)
I am loathe to point out how abysmal our exchange rate is from USD to pretty much anywhere you want to go above 3rd world.
1 USD = 0.73 EUR
1 USD = 0.59 GBP (British Pound)
1 USD = 100.79 JPY (Japanese Yen) The average video game in japan costs about 6200 Yen, which is $60 USD. So they're pretty on par with us. Not a loss there.
You can check any currency value by typing "usd to ___" in google and a calculator will pop up at the top.
Best way to avoid fees when exchanging money
Exchange large amounts at one time
Nobody told me this when we exchanged currency in the JFK airport. The currency exchange kiosks charge fees that end up with you getting an even worse exchange rate than what is already listed up there, though some have deals.
For example, the kiosk I went to normally charged a fee for lower denomination exchanges (e.g. under $500 USD to another currency) but they had a package deal where if I exchanged $1200 or more, they charged no fees and gave me two chip & pin cards to use overseas, instead of hauling around all that cash.
I ended up exchanging $1500 USD and split it up between EUR and GBP. Because we were going to be spending more time in European countries (Ireland & France) we put $700 USD into EUR = €436 and $800 USD into GBP = £474.
to type those currency symbols on windows computers hold down Alt and type 0128, then release Alt for the Euro symbol. For the British Pound symbol Alt+0163.
So we got lucky, we didn't end up paying currency fees and it was pre-loaded (like a pre-paid debit) onto the cards to use, without foreign transaction fees. YAY. Plus, the cards were re loadable at anytime online, and no fees were charged to do this.
ATM's will almost always give you the best exchange rates available that day but sometimes you get fees. My best advice to avoid fees is to either get a Charles Schwab account which will refund all ATM fees, anywhere in the world or get a dedicated credit card with no foreign transaction fees like Capital One or Discover
Handy article about No fee Checking Accounts
You can also use an app to find in-network ATM's that won't charge you fees like Allpoint. This app has widespread coverage into international territories but it's not exactly worldwide just yet. Still useful enough to recommend.
Ask if your bank has a partner at your destination country where you can withdraw cash and avoid ATM fees. For example, people with Bank of America debit cards pay no ATM withdrawal fees in France at branches of BNP Paribus, Deutsche Bank in Germany, Scotiabank in Canada, China Construction Bank in China, Banco Santander in Mexico, BNL d’Italia in Italy or Barclays in the United Kingdom but keep in mind they may still charge a conversion fee (different than a % of each purchase like the transaction fee)
Usable but not recommended methods
You can avoid credit card and ATM fees by your money, American dollars for this example, carefully hidden in a money belt, to destinations where they are easily converted or accepted as is. For example, El Salvador uses the US dollar as currency, and tourist areas in Mexico, the Caribbean and near the US borders with Canada and Mexico may readily accept dollars without exchanging them for a local currency
Alert your bank that you are going overseas, even if you don't intend to use your card a lot while there. They WILL freeze it. All it takes is a simple phone call, or just mention it to the agent at the bank and they'll put a note on your account for the travel dates.
Carry SOME cash. Sometimes, it's just easier to carry around that cash money. Some countries do tip (UK and Ireland), and I was that dumb American that didn't have any cash on hand. Don't be me.
Don't be stupid with your money. Don't flash it around. I suggest getting a money belt that can tuck in the inside of your pants or a similar contraption to keep moola safe.