4 Best Practices for Exchanging Foreign Currency

June 13, 2018

You are leaving for vacation and cannot be more excited. Your hotel and flight is booked and your itinerary is full of fun-filled activities. These things have no doubt cost you a lot of money already. Therefore, you want to save as much as you possible can so you have money to spend on meals, souvenirs, and other necessities if the need arises. One way to do this is being mindful when you exchange your currency for the one accepted in the area you will be going to.

Below are some currency exchange tips that will save you money and frustration, ensuring that you have a great vacation.

1. Know the rate

Most people do not know what the rate of exchange is even if they are traveling abroad and it would benefit him/her to be aware of such information. Additionally, this rate changes from day to day as well, adding even more confusion and unawareness at times.

Before exchanging your currency, educate yourself regarding what the exchange rate is that day. You can easy determine what the rate is by checking online before visiting any exchange bureau. Be mindful that the one posted online will be lower because it does not include any commissions or fees that most if not all agencies charge.

2. Avoid tourist & convenient areas

It is always the most convenient to exchange your currency in areas you will already be in when traveling. These include airports, hotels, train stations, and places with lots of tourist attractions. However, these are the places that will charge you excessive fees, leaving you with less money to spend on your vacation.

Instead of choosing convenience, seek out local banks. These are the institutions that will give you favourable rates and charge the least amount of fees and commissions. If you absolutely need to exchange your money at an airport or train station, try to find an ATM. These bank machines will have a better exchange rate of up to 5 percent better than any exchange bureau in that area.

3. Consider US dollars

United States currency is king in most areas of the world and as a result, it is rarely refused no matter where you are. In some countries, US dollars are even taken over the local currency.

If you are American or at least have bank accounts that hold US funds, consider using US dollars instead of exchanging for local currency. That way, you can avoid commissions and fees that occur when currency is exchanged. Even if the place that you are traveling to prioritizes the use of the local currency, businesses often fix their prices to the rate of the US dollar. As a result, you can rest assured that you can use your US dollars and not be overcharged for anything.

4. Avoid “no-fee” bureaus

Like anyone, you are attracted to a currency exchange bureau that advertises the fact that they charge no fees. However, this is not always accurate and you could end up being charged more than usual if you use places like these.

Bureaus that state they charge no fees may in fact not charge them. However, they will often charge fees that are excessive in comparison to banks and ATMs. These places will often only charge no fees for larger amounts of money. If the amount of money you are exchanging falls below this, you may not find out you were charged a fee until well after the transaction is complete. To avoid any issues, be up-to-date on daily exchange rates and avoid these no-fee places at all costs.