Going to the Bank Before Overseas Travel Makes You an 'Old-Fashioned Person'... Preparation Is Complete with Just 'This' [Hutdari Economy]

An Era of Currency Exchange Without Fees

Editor's NoteMany people thought they were engaging in smart economic activities to get better deals, but it often turned out to be a misstep. When consumers are deceived by corporate marketing or blinded by momentary gains and make wrong decisions, they end up suffering the consequences. We aim to examine economic activities where people have made mistakes by misjudging everyday situations.

If you plan to exchange money for overseas travel expenses ahead of the summer vacation, there is no longer a need to visit a bank counter. You don’t have to rush to exchange currency at the airport anymore. This is because we live in an era overflowing with travel-specific cards that can be used conveniently overseas without currency exchange fees. Saving the waiting time at banks and avoiding exchange fees has become a trend among young travelers these days.

Ms. Kim Minji (39) exchanged currency at a bank counter on the 20th before her overseas trip. She paid about 1,127,000 KRW including a 20,000 KRW exchange fee to convert 800 USD. The staff mentioned that using the bank’s app could offer up to 90% preferential exchange rates, but since it was not her main bank, she could not receive the maximum discount. Including the exchange fee, the effective exchange rate applied was 1,409 KRW per USD.

Banks offer preferential exchange rates depending on the customer’s situation. Preferential exchange rates mean reducing the currency exchange fee rate by 10% to 90%. For example, if you receive a 50% preferential rate, you only pay 50% of the exchange fee. However, the preferential rates vary continuously depending on each bank’s conditions and exchange events. Also, the rate differs based on the amount exchanged and individual banking performance.

Unlike Ms. Kim, Ms. Lee Suyeon (28) did not exchange currency separately but traveled to Rome with only a travel-specific card issued by her bank. Ms. Lee exchanged 800 USD for 1,106,560 KRW through the card app. The exchange took 1 to 2 seconds, and she paid no separate fees. Although the amount exchanged was the same, there was a difference of over 20,000 KRW compared to Ms. Kim, who paid fees at the bank.

Ms. Lee said it was convenient to load foreign currency onto the card and use it, as carrying cash posed a high risk of pickpocketing locally. She withdrew urgent local currency cash from an overseas ATM immediately upon arrival at the airport, also without paying any fees.

Thanks to the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori), as well as internet banks and fintech companies, travel-specific cards that allow currency exchange into local currencies without fees have become widely available. The number of supported currencies ranges from 17 to 45 depending on the bank, but most commonly used currencies by Koreans such as USD, JPY, EUR, and CNY are included.

Woori Financial Group’s Wibee Travel Card exempts overseas payment fees, international brand fees, and overseas ATM withdrawal fees. Hana Financial Group’s Travel Log service allows immediate issuance at all branches, offering 100% preferential exchange rates on 41 currencies, a 3 million KRW exchange limit per currency, and free foreign currency remittance services. KB Kookmin Bank operates the KB Kookmin Wish Travel credit card, which also offers overseas usage fee waivers and 100% preferential exchange rates (dealer basis). Shinhan Card, in collaboration with Shinhan Bank, launched the 'Shinhan Card SOL Travel Check,' which allows fee-free exchange of 30 currencies.

Even if there is a remaining balance after using local currency, travel-specific cards allow re-exchange. However, most places charge exchange fees for this. Typically, a 1% re-exchange fee is deducted, or a 50% preferential exchange rate is applied during re-exchange.