On a recent trip to Trujillo, Peru, my wife and I needed to change some American dollars into Peruvian soles. It was Sunday so all the banks were closed, and being Sunday, many of the street money changers (cambistas) wanted to give us a lower exchange rate, except for one. His clothes were worn, a little tattered and somewhat dirty. He had a look on his face that made me distrust him. But he was offering the highest exchange rates around, so we decided to give him a try.

We wanted to exchange one hundred dollars, roughly about three hundred and fifty soles. As he handed us the bills, my wife held each one up to the light and checked to see if the surface was rough. She asked the cambista to exchange the bill. She looked at the new bill and again, for curiosity's sake, asked for its exchange. This bill was also counterfeit, the entire stack of bills the cambista had in his hand were false. As we left he said something about how we didn't know how to look for false bills.

We do know how to check bills, and this simple skill has saved us a lot of money in our travels. In this example it saved us one hundred dollars. Tourists and travelers often accept money without a second glance. This practice is dangerous as there are counterfeit bills and unacceptable money circulating, especially in the Third World. If you receive bad money, you lose. You cannot change it again in banks, on the streets, or in stores (your only alternative is to find someone who doesn't check their money, another tourist perhaps).

When you travel you need to look at every bill and coin that you exchange. Whether it be on the street, in banks, change from your meal at a restaurant, or buying souvenirs, you must examine the money. Not only is there counterfeit in circulation, but many countries will not accept bills that are torn or excessively wrinkled. The entire amount of money you receive won't be bad most of the time, but one bill may be. Someone didn't check the bill and now they're trying to pass it on to you. These bills don't have any more value than monopoly money.

To protect yourself from bad exchanges, you need to know what a good bill looks like. These days bills all over the world have a thin strip hidden inside them, often with the bill's denomination. Also a watermark is included of the person's face that is on the bill. The strip and watermark can be seen by holding the bill up to the light. For example, in Peru a good bill of one hundred soles has a strip that says "Peru 100" and a watermark of the face of Jorge Grohmann, which also appears on the face of the bill. The surface of the bill is a little rough. Other bills have a different watermark, such as "Peru 50" or "Peru 20", depending on the bill's value.

Bills that are torn or wrinkled are not acceptable in many countries. In others, they are fine. If you are in doubt as to what acceptable bills and coins should look like in the country you are traveling, ask a bank teller. Although bad money does get into the banks' systems, it is extremely rare, as everyone who works at the bank knows exactly what to look for. As a general rule DO NOT accept bills that are worn, torn or lack the strip and watermark.

Once you know how to spot bad money, you can make exchanges. Look at every bill and coin handed to you, and if you don't like what you see, ask the person to exchange it. This is a common practice. When changing your money on the streets, keep your bills in hand until you have checked over all of the foreign currency. If it looks good, hand over your bills. If not, ask for an exchange of the bad bills or move on.

Checking your money every time you make an exchange can save you hundreds or even thousands of dollars. It takes only a moment. It can keep your vacation from turning into a nightmare.