Take Care When Exchanging Cash : Money: Travelers who exchange currency illegally in foreign countries leave themselves open to fines and even jail sentences.

When trying to stretch your dollars in foreign countries, beware of attractive offers for “easy gains.� They can lead to trouble.

In “Work Your Way Around The World,� by Susan Griffith (Writer’s Digest Books, $12.95), a traveler visiting India reported that when he tried to exchange money at a higher rate than the banks were offering, he had an unnerving experience at a bazaar in Delhi.

“After I had agreed to the favorable rate offered to me, I was grabbed by a plainclothes policeman while his accomplice grabbed the money changer, who was promptly allowed to go.�

The traveler thought he might have been set up. “I wasn’t allowed to go until I paid an official 50-rupee fine, and I was afraid through my detention that the penalty would be more serious.�

Repeatedly Approached

Before arriving in a country, find out if there are restrictions on taking local currency into the country, on taking out that currency, and on exchanging at other than official services such as banks.

For example, in both the Soviet Union and China I was approached repeatedly on the street by people who wanted to buy my dollars. In these countries it was because dollars or “hard currency� could be used to make purchases in special stores that stock luxury items not easily available to local citizens.

However, you run the risk of getting caught, getting set up or simply getting taken. Travelers have sometimes found themselves with a few bills on top of a stack of useless paper, and in other cases with counterfeit funds.

Find out if informal exchanges are illegal. Foreign citizens, also, are subject to the laws and penalties of the country they are in.

Here are some ideas for protecting and stretching your funds:

Before leaving home, transfer money into traveler’s checks. The value of the checks will be replaced if they are lost or stolen--providing you keep good records. You can buy the checks through banks. The fee is about 1%.

When you buy your checks, ask for a list of refund offices. Make copies of your check numbers. Keep one set for your luggage, and leave the other with a friend or relatives at home. Record the numbers on the checks as you use them.

If there are no restrictions on where you can exchange money, avoid hotels or restaurants. Shop around at banks and traveler’s check companies for the best rates and lowest commission fees.

Arriving at Odd Hours

Last year in Portugal I found that some banks were charging about $4 per transaction, no matter if the check was for $20 or $100. If commissions are hefty, cash enough to last for several days.

Consider if you’ll be arriving after business hours or on a weekend or holiday. If your arrival is at an odd hour, play it safe and buy some of the currency before you head for that destination. Airports and major rail stations have some sort of exchange service open at odd hours, though they may not offer as attractive a rate as the bank.

Carry your cash, tickets, passport and traveler’s checks in a money belt or in a neck pouch under your shirt. If you make it difficult to lift your money, chances are that a thief will pick on another tourist.

If you are going to stay in youth hostels or student dormitory hotels, pack a padlock because some have lockers that you’ll be able to use. If not, slip your money belt into your sleeping bag at night. You may trust your roomies, but that doesn’t mean it’s impossible for someone else to intrude.

Each time you exchange money, you lose a little because of different buying and selling rates. So don’t exchange more than you’ll need. When it’s time to leave, get rid of your coins; they won’t be accepted once you cross the border, even at banks.

If you are going to leave a country by plane, you might need some local currency to pay an airport departure tax. Prepare for it. You’ll want to avoid exchanging a big check into local currency just before boarding the plane.