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Figure out where to exchange currency before leaving home. 

With the economy showing continued improvement, more and more Americans are taking to the skies again. Finally, you're ready for that vacation to Europe or Latin America that you've been putting off for years. Before you go, it's important to figure out how you'll get the local currency.

Having spent roughly half of my time outside of the United States -- primarily in Central America -- over the past five years, my wife and I have become experts at making sure we get a fair deal when it comes to exchanging currency. And while this has always been important, we're looking forward to seeing how a stronger dollar can help cut our costs even more this winter.

Currency exchanges to avoid
In general, we've found three major places you'd be better off avoiding when it comes to currency exchange. The first is probably the most obvious: currency exchange kiosks located in or near airports.

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If you're wondering where to exchange currency, here's a place to avoid: the airport kiosk. Source: Paul Swansen, via Flickr.

These kiosks are able to capitalize on the convenience of their location and the fear that some travelers have of moving around a foreign country without any local currency. They turn those factors in their favor by taking a comparatively large cut of whatever transaction you'll be making.

The second way to get stiffed when it comes to currency exchange is by using a credit card that carries an added charge for foreign currency purchases. You can find out if this is the case by contacting your credit card company well in advance of your international travel.

The final places you want to avoid exchanging currency are local banks. This varies largely by what country you're in, and it may not be an issue. For my family, however, we've found that going to the bank in countries like Costa Rica is a task that could easily take up half a day. Not all cultures value speed and efficiency the way we do in America, and travelers would probably be better served spending their precious vacation time sightseeing with family and friends.

Where to exchange currency cheaply
When traveling abroad, my family uses two primary modes of getting local currency. The first is by using a credit card with no foreign currency charges. Personally, we use a Capital One Rewards card, and have never had a problem getting the current exchange rate on all of our purchases.

If you need to get a new credit card before traveling abroad that has no extra charges, I suggest you check out this post from NerdWallet.com, which offers up options from JPMorgan Chase, Capital One, Bank of America, Discover, American Express, Citibank, Visa, and MasterCard.

The second method we use is pretty simple: our debit card. Check with your bank to see how much the ATM fees will be for using your card in a foreign country. We are charged $5. While we aren't thrilled with that, we almost always take out the maximum allowed withdrawal (usually between $300 and $500 in one 24-hour period). That helps keep the debit card fee to a tiny 1% charge.

If you are going to a country where safety is a major concern, or where there won't be any ATMs readily available, you should also look into using Traveler's Cheques, or their plastic card counterparts. These can help in a bind, and you stand to lose nothing if they are lost or stolen. You can read more about Traveler's Cheques by visiting an earlier story on the topic here

Brian Stoffel has no position in any stocks mentioned. The Motley Fool owns and recommends MasterCard and Visa. The Motley Fool recommends American Express and Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.