One of the ways to acquire money when you are traveling to foreign countries would be exchanging your money to the country’s local currency. Using the country’s local currency would be the greatest way to go around especially in areas where paying through your card is impossible or not available.
If you are new to the area and getting by is tricky, currency exchange in the airport are readily available. But before you exchange your money, here are a few things you need to know before acquiring the service.
4 Things You Must Know About Currency Exchange at Airport
1. They usually have high commission and transaction fees
If you are unaware of it, currency exchange fees at airports are higher, making your actual money’s worth kind of a terrible deal. On some airports, you pay more or less 27% worth of fees. Do not be easily fooled with signs saying “savings” or “best deals” right away. Know that by adding fees, the currency exchange company gains from this most of the time. So be careful in exchanging your money right away at currency exchange counters at the airport.
2. Currency exchanges with “no commission fee” usually have worse rate
Despite sales consultants or advertisements telling you about “no commission fee” or “no fees”, they are only masking the truth. As a customer, you have to pay for the service charge the certain company has. It varies depending on which company you exchange your rate, but in airports, it can cost you a lot more. There are two kinds of fees that you are most likely to pay for.
● Service fees are fees that are charged for the services offered to you per se, like a labor pay. Service fees can differ depending on the amount you want to exchange; the lower the amount, the more the service fee you pay and vice versa. Approximately, you will be paying about 2% more.
● High exchange rate is what you are mostly paying for. The actual exchange rate you know or announced by your bank might not be what you actually receive or pay for. Approximately, you pay 14% more on this area.
3. Beware of posted exchange rates and ask for rate after commissions
Just like how every other thing in the airport is expensive, so will your currency exchange be. Before buying posted deals that you see, keep the things mentioned in #2 in mind . Don’t become too reluctant on all the ads you see around the airport about currency exchange counters. Your bank does not exactly tell you all the nitty gritty of currency exchange rates. The worst deal you can have is exchanging your current amount of money and you get 20% of fees and taxes deducted from your money. Currency exchange centers outside the airport offers lower service fees than those you see inside.
4. Use them as last resort/emergency
If you find no other way to obtain some cash, make currency exchanges as your last resort or for emergency purposes only. If you don’t have any credit card, debit card, or ATM cards available or you forgot to bring yours, then you are left with no choice but to utilize the currency exchanges. It would be helpful if you convert your cash to the local currency for means of transportation so you could exchange your money outside the airport where the rates and fees are way cheaper.
So Where is Best Place to Exchange Currency?
There are a lot of options for you to go for currency exchange. The best place may vary depending on your preference.
Order foreign cash online and deliver at home
There are a number of websites, like Oanda (US only) and Travelex, that sell foreign currency and do deliveries to your home. While it’s easy and convenient, you might want to consider that exchange rates on this option are less favorable. Plus, the delivery charges will add up to your expenses.
Local currency exchange service in your area
Do a bit of research and see if there are any local currency exchange service in your area. They are also usually located in airports or in popular tourist spots. These may be a better option to exchange currency than the bank, as they offer better exchange rates. Even so, you need to consider the additional fees that they may charge.
Your local bank or credit union
Getting foreign currency at your local bank may be the first option for you, but it might not be the best choice to choose as your bank can charge you up to 10% on the spread. On the brighter side, this is a good option if you’re traveling to neighbouring countries as the bank spread is usually fair.
If you are travelling soon, always remember to use currency exchange rates only in emergency situations. Out of all the options of obtaining money in foreign countries, this one can cost a lot more and won’t be able to help you save some cash. But if you need to do so, it is best to avoid believing in “no commission fee” or “no fees” because they aren’t necessarily true. Always be vigilant and keen with your financial decision when abroad. Have a safe trip!