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Originally Posted by Black Page
When you purchase a good with a credit card out of your country (in local currency!! ALWAYS opt for the local currency!!), or you withdraw money abroad in local currency, you will be charged using the current interbank buying rate at the time the transaction is finalized, the one we see on XE.COM (there are two exchange rates at any time: one for buying, one for selling a currency) PLUS a +2% fee (that goes to MasterCard/VISA).
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Good advice to opt for local currency! To significantly reduce forex conversion fee, consider also using a multicurrency card which uses wholesale market rates and a very small fee. Eg Youtrip, Wise, Revolut, etc. These cards need prior funding into eWallet. To avoid having to pre-fund, use Instarem Amaze card which can be linked to a Mastercard. Cash is drawn as needed directly from linked Mastercard, with Instarem doing the currency conversion at a very competitive rate.
A very neat way to pay for Grab transport charges in Batam is to link Grab payment to Instarem Amaze card. The Indo rupiah payment is charged direct to our Mastercard but the currency conversion is done by Instarem at a very competitive rate.
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Said all this, the cheapest way to convert our home currency to a local currency is most of the times one of the following two:
1) Use a debit card on an ATM (at best, we pay %2 + some 2 SGD flat fee). This is also the easiest and less time consuming. I do this.
2) Search an exchange office that applies best conversion rates. This takes time, but it may be profitable, because some offices apply a fee that is less than 2%, for example if you give new 100 USD notes, that have a special market in Indonesia (I think they are good for unofficial business transactions). I do this when I have some USD cash, which I want to spend in Batam 
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An alternative is to use one of the multicurrency cards mentioned earlier to get the best conversion rate. Note though that diff cards have diff withdrawal limits and (low) base fees, and the local ATM charges also not bypassed. Main benefit is very competitive conversion rate.