Between ATM fees, credit card surcharges, commissions and other expenses associated with foreign currency, you’ll have to pay extra to exchange your currency, there’s no doubt there. But there are ways in which you can minimise these expenses as well as get best exchange rates when you’re travelling abroad. If you do it right, then you can be successful in avoiding pesky fees and stretching your money further while travelling.
In addition to comparing foreign currency exchange rates online, here are a few ways that will ensure you get the best foreign exchange rates.
#1: Learn the Jargon
Foreign exchange has its own jargon. It can get a bit difficult to understand if you don’t know the terms related to foreign exchange. It’ll certainly be helpful to learn the terms so that you’re not taken for a ride. So, here are the three terms that you must know.
Sell Rate: This is what you get when you exchange your pounds into a foreign currency
Buy Rate: This is what you get when you exchange the unused foreign currency back into pounds
Interbank/Bank to Bank Rate: This is the wholesale rate that banks usually exchange between themselves.
#2: Investigate the Foreign Currency
This doesn’t usually apply to the more prominent currencies like Euro or the US Dollar. But you need to be careful if you’re heading to an exotic location like Morocco or Cuba. These countries have their own quirks that you need to be aware of.
For instance, the Moroccan Dirham cannot be exchanged internationally. So, ensure that you don’t carry anything extra back into your home country or else you’ll be stuck with the money. On the other hand, Cuba has two currencies! No, we’re not kidding. It has one currency for locals and another one for tourists.
So, always investigate the foreign currency and try and get as many details as you can. You definitely don’t want to be stuck with no money in hand in a foreign land.
#3: Watch the Exchange Rates like a Hawk
Watching the daily interbank rates of your chosen currency will give you an insight on what makes a good exchange rate. As you may already be aware, currency fluctuates constantly. In a span of a few hours in a day, you can either save money or end up spending more for exchanging currency. Naturally, the daily rates change as well.
A whole lot of things contribute to this fluctuation. From economic forecasts, interest rates, employment figures to a major event, anything can affect the currency rate. So, it will always help to watch the currency movements and purchase when the rate is climbing.
#4: Shop Around
Not only do the currency rates change daily, but the rates differ from provider to provider also. Prices are never same across the board. This makes it even more imperative to shop around to get the best foreign exchange rates before you buy. Rather than just enquiring around the high street, call, talk to someone and ask for the rates. You can even use this excellent Exchange Currency comparison site.
#5: Negotiate Exchange Rates
The exchange rates are never set in stone. There’s always a chance that the forex brokers may reduce them. This is especially true if you plan to exchange a big amount. As a rule of thumb, you can often get an additional 0.5% discount on the advertised rates. If you’re exchanging a lot of cash, it will certainly make a lot of difference. If another provider seems to be offering a better rate, you can negotiate further to get a good deal.
#6: Online vs. High Street
Many foreign exchange providers offer better rates online than their high street counterparts. If you want to order cash online that can be picked up at the shop or delivered through post, then you’ll end up getting the best foreign exchange rates. Use a comparison site to see who will give you a better deal on your FX transfer.
#7: Hidden Fees
Although walking into Bureau de Change and using your debit or credit card to purchase foreign currency is tempting and the easier thing to do, you’ll be bombarded with insane exchange fees. These are hidden fees, which the provider is never up front about. On top of that, each card provider has different policies and fees. These fees usually start at £1.50. So, it makes more sense to consider a broker or an online provider, especially when you need to exchange a big amount.
#8: Consider Traveller’s Cheques
Not many are comfortable travelling with a huge wad of cash; and rightly so. There’s no way to know predict what can happen while travelling. There are chances of misplacing or losing the money. Worst, it can get stolen. So, to be on a safer side, consider taking traveller’s cheques instead. They can easily be replaced and are more secure than cash. The most widely accepted traveller’s cheques are American Express.
However, they do have their limitations. Traveller’s cheques are available only in six currencies. Usually, they need to be cashed in for currency abroad.
#9: Pre-paid Cards
This is another alternative to carrying cash around while travelling. You can load the card with money before you leave. These kinds of pre-paid cards can be used as a substitute to debit cards. However, just like traveller’s cheques, they also have some limitations. Some of them may have some purchase cost or other hidden charges. So make sure to read the fine print before you buy them.
A lot of foreign currency providers advertise their services as ‘Guaranteed Best Rates’, ‘Best Rates on the High Street’ or ‘0% Commission’. But don’t get fooled by these claims. They are often misleading and may not be worth your time and money at all.
Always shop around, get a couple of quotes and then decide the foreign currency exchange provider you’d like to go with.
The post 9 Ways to Ensure You Get the Best Foreign Exchange Rate appeared first on The Libertarian Republic.