Although most of us would like to travel often, the truth is that not many of us can plan multiple trips in a year. This means that it’s even more vital to get the best price possible while exchanging your hard-earned cash for foreign currency. The best way to know the current market rates and the fees that you’re expected to pay for exchanging currency abroad is by visiting a currency exchange compare site like MoneyTransfer.org.uk.
We’ve also outlined a few simple tips that can help you in exchanging your currency while you’re travelling.
#1: ATMs are still the best choice and we’re not kidding, here’s why:
Although some banks charge high fees to withdraw money internationally, ATMs still remain the cheapest option for converting your currency abroad. In addition to high fees, you also need to be aware of the foreign transaction fees per withdrawals, plus a premium if you’re withdrawing from a non-partner ATM or a different bank ATM.
That being said, many banks offer credit cards or forex cards that can be used internationally with minimum currency exchange fees. These cards have been created for people who travel abroad often and need an economical way of converting their local money into foreign currency. You’ll need to ask around and find out which banks have good offers. But always remember to read the fine print so that there are no surprises.
#2: Stay away from ‘No-Fee’ Bureau De Changes
If you see a sign that says “no-fee” currency exchange, the first thing that you need to do is check the rates that they are offering. More often than not, they will be much higher than the ones available at the banks as well. It’s always a good idea to check what the current exchange rates are so that you know how much higher these currency exchanges are charging.
Online compare sites like exchangecurrency.com can give you an idea of the current rates that change on a daily basis. Usually, you’re expected to pay anything between 4% and 9% of the total amount that you plan to exchange in to a foreign currency.
While converting the foreign currency back in to your local currency, you’ll need to pay exchange fees again. So, keep that in mind while exchanging foreign currency. We’d recommend you exchange an amount that’s needed on a daily basis only.
#3: Before travelling ask your bank to increase your withdrawal limit
You never know when you may need a considerable amount of money while travelling. So, it’s always good to let your bank know that you’ll be out of the country. That way if you withdraw more than normal, they will not block your account due to suspicious activity. You can call your bank and also ask them to raise your withdrawal limit for the period you’ll be travelling. Many banks will increase your withdrawal limit temporarily. This way you can safely withdraw as and when needed.
#4: Avoid cash advance on your credit card as much as possible except in a worst-case scenario
Taking cash advances in a foreign currency is a strict no-no. As mentioned above, you’ll be charged a certain fee when you withdraw from the ATM. But the additional charges don’t stop here. You’ll also be charged a percentage over and above your withdrawal as a foreign-transaction charge. Moreover, you’ll start paying a very high rate of interest the moment you get the cash. Sometimes the rate of interest can be up to double the regular interest amount that you’d be charged on your credit card.
Overall, a cash advance on your credit card internationally is a pretty bad deal. Try and avoid it as much as you can, unless absolutely necessary.
#5: Use credit cards for large amount purchases
When you buy something abroad and pay through your credit card, you can be charged a foreign-transaction fee of anything between 1% and 3%. However, this is still probably the safest as well as the cheapest way to buy something that costs a lot.
More often than not, you’ll always be ahead on the conversion since credit cards are known to add their fees over the Interbank rate. So, you’ll end up getting a great exchange rate even though you’ll be paying additional fees.
Certain banks don’t charge anything extra in spite of international purchases except the 1% that MasterCard and Visa charge. On the other hand, there are other banks that can really make you pay through your nose. So, always check the fine print before using your credit card abroad.
#6: You should never opt for Dynamic Currency Conversion
Commonly known as DCC, dynamic currency conversion gives you the option to charge you in your home currency. But never use this option! Always ensure that you’re charged in the local currency. DCC not only gives you a lousy exchange rate, but it also includes hidden fees. Moreover, your bank will charge you its fees for a foreign-transaction abroad anyway. So, in effect, you’ll end up paying much more than you actually bargained for.
#7: Don’t buy anything using your debit cards abroad
While using your debit card to withdraw is perfectly fine, using it to make purchases should be avoided. Here’s the thing, if you’re charged a wrong amount by mistake, there’s no doubt that your account will be debited immediately. But getting that wrongly debited money back into your account could take days. It’s always better to avoid this situation rather than not have money to spend when you’re travelling.
You need to know that whether you carry cash or traveller’s cheques, use your debit or credit card abroad, you’ll need to pay the currency exchange fees either in your home country or abroad. So, the best way to lower your currency exchange fees is by visiting sites that let you compare different rates. This will help you get the best deal available at the time.
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