At the very core of traveling is money. You will not be able to go to anywhere without it. When you are in a new and foreign country, your options can be quite limited. You normally would not have access to everything like you would back in your home country. Thus, plan ahead of time. Find out what are the best options for changing currency with the list below.
5 Best Options for Exchanging Currency
1. Withdraw Cash Using a Foreign Automated Teller Machine
ATMs are your best friends when traveling as it is one of the most convenient ways to obtain money in a foreign country. There are a million of machines scattered all over the world and ATM inside airports are a common thing so finding one will not be a difficult challenge. Withdrawing money from ATMs also gets you the best conversion rates in the lowest of prices. However, you need to know that your home bank may charge you an additional $2 to $5 for using an out-of-network ATM. It is also advisable to do one big withdrawal rather than doing small withdrawals along the way so you can save yourself from bigger fees.
2. Pay with a Credit Card
Though it can be quite intimidating at first to use a credit card (as your bills can easily pile on if you are not too careful), the best travel credit cards actually allow you to pay for items in the local currency of the country you are currently in. Another pro of using travel credit cards is that you do not have to pay for transaction or exchange fees. It is also safer to carry a credit card rather than carry wads of cash on. This way, you are less likely to be a victim of theft. Plus, there is the added benefit of being protected from fraud. So choose the best travel credit card for you.
3. Go to Your Local Bank
Before you travel to a new country, it is best to visit your local bank and see what the travel deals they offer. One downside to this, however, is that banks usually do not offer the best rates. Of course, in comparison to having money exchanged in the country of your destination, your local banks may still have better rates.
4. Ordering Foreign Cash Online
While it is one of the ways to acquire foreign money, this method is actually one of the most discouraged. This is because the rates will not be as good compared to your local bank or even at a foreign ATM. The only sites where it is recommended to order foreign cash from are Oanda (for the US) and Travelex. Even so, Travelex charges an additional nine percent for the transaction fee.
5. Foreign Currency Exchange Service
Currency exchange can be found in most airports and near tourist areas, making them one of the most convenient options to exchange your money into the local currency. However, they also have a lot of disadvantages. One of their cons is that they don’t offer competitive rates as they do not have incentives to do so. Another is the hidden charges that they include. Remember that these offices have operating expenses and facility fees. As such, they like to pass these fees on unsuspecting tourists. Having your money exchanged at airports may not get you the most out of it.
Useful Tips for Exchanging Currency and Spending Money Abroad
Now that you have learned various ways to have your money exchanged into the local currency, what other useful tips for exchanging and spending money abroad are there?
Inform Your Bank of Your Travel Plans
Before you hop on a plane to travel to a foreign destination, make sure that you paid your bank a visit. Inform them when and where you are traveling. Otherwise, they might freeze your account on suspicion of fraud when they see international transactions. This can be a huge problem, especially when you need money. So go ahead and pay them a visit. It will save you from troubles once you are out of your home country.
Know the “Interbank” or Mid-Market Rate
First of all, what is a mid-market rate? Basically, it is the real rate or the rate that is not like any other. It is the midpoint between the demand and supply of a currency, and because of this, it changes all the time. Simply put, the mid-market rate is the fairest exchange rate possible. However, you need to watch out because although banks and money transfer use it among themselves, they do not pass on this rate to you. There are many ways to hide this such as through misleading pricing, set “day” rate, and unfair deals on your local currency.
Avoid Dynamic Currency Conversion
Dynamic Currency Conversion is the conversion of credit card transactions from the local currency into your credit card home currency. At first thought, it may seem like a good deal, but it’s actually very expensive and should, thus, be avoided.
Overseas merchants who make this offer generally use a higher conversion rate than the actual rate. In approximate, this conversion rate is 7% higher. By avoiding Dynamic Currency Conversion and using your credit card without foreign transaction fees, you can save 10% on your purchases.
Traveler’s Checks and Why It’s Not a Great Option
Traveler’s checks used to be one great option for obtaining travel cash, but now, not so much. They offer lousy rates with higher transaction fees. Not only that, they are also not as secure as credit cards, so do not bother using them.
Having Some US Dollars Is a Good Emergency Fund
In the case that banks go on strike, you can’t take out money for whatever reason or your ATM card or credit card stops working, it is advisable to carry some US dollars cash as backup for emergency. US dollars are widely acceptable worldwide so it’s the best currency to carry in case of emergency.
Where To Exchange Currency After Your Trip?
First of all, plan ahead and make sure you don’t get stuck with too much foreign currency at the end of your trip. If you still have some leftover cash, it is advisable that you spend most of them before you return back home (be it for food, taxi or duty free items etc.). You can also exchange them at the airport or any currency exchange services but of course the rate won’t be so great.
When traveling, it is best to read on tips especially if it concerns your financial matters. This helps you become stress-free and fully enjoy your travel. Research ahead of time, especially about the conversion rates, so you get the best out of your hard earned money.