How To Get The Best Exchange Rate On Your Travel Money
If you haven't already planned your holidays this year then you probably have a huge checklist of things you need to do. But, when it comes to travelling abroad, have you stopped to think about where you're going to buy your foreign currency from and how much it's going to cost?
It's fair to say that the world of money and finance is pretty cutthroat, right? But, in most cases, this almost rabid need to make as much money as possible as fast as possible can be of benefit to you. So, with that thought in mind, here are five places you can get local currency for your vacation (plus a few tips you might want to consider):
ATMs and Credit Cards
For many travellers and tourists, the simplest way to get hold of foreign currency is to use an ATM or credit card. According to research by Evolution Finance, you will get a better exchange on a credit card than you will from a US bank. But, putting convenience aside, there are a couple of things you really should consider before visiting a hole in the wall in a foreign country.
Credit card charges can be extortionate if you use them abroad. What's more, there's no grace period when you use your card to buy abroad - the charges kick in instantaneously. On top of the charges youl may well find yourself being charged a fee for a cash advance.
Top tip: Use your credit card to buy your foreign currency before you head off on vacation. Also, consider applying for a card that doesn't track transactions on foreign purchases.
Prepaid Cards and Traveller's Checks
A traveller's check is a check for a fixed amount of money. The checks are specific to the country you buy them for. I.E: you would buy checks for Euros for a European vacation. When you purchase your currency in traveller's cheques, it comes with guaranteed protection against loss and theft. If you find yourself in either of these situations, the issuing company is obligated to replace your funds. In most cases, the replacement service is very fast and inefficient so losing your checks shouldn't be the end of your holiday.
Be aware that this method of payment might not be accepted everywhere. In some countries only the biggest stores and hotels will process this method of payment so do your homework and ensure you have a fallback source of funds. Otherwise, a lack of planning may turn your vacation into a living nightmare.
Top tip: When you buy your checks ask for a list of locations where, if the need arises, you can have them replaced. Also, keep a record of the check numbers to prevent delays in issuing replacements.
Foreign Exchange Desk At The Airport
Most airports have a foreign exchange desk and are a boon for picking up some money at the last minute. The process is pretty simple: go to the desk, whip out your dollars and exchange them for the local currency of the country you're visiting. For convenience and speed, this is hard to beat. In addition, most large hotels and chains also operate foreign exchange desks so getting hold of more money should be relatively easy.
But with this convenience comes an inevitable penalty - the commission charges. When you hand over your hard earned dollars the clerk will add a fee to the transaction. In some cases, this can be as high as 20%! Even if the advertised commission rate is 0% you'll probably find some dirty, hidden fees lurking in the small print.
Top tip: Avoid at all costs, if possible. Barring an emergency, this should be absolutely the last port of call when you are sourcing your foreign currency.
Changing Currency At The Bank
Most banks buy and sell foreign currency. Depending on who you bank with and the size of the organisation, you can either go in to your local branch and pick up the cash or order it via online services or the telephone. The latter option can take a few days before your money arrives. If you can find a deal that doesn't charge a delivery fee then grab it as, in most cases, you'll be billed up to $10 for the privilege.
Banks tend to offer better exchange rates that most other options as they have direct access to wholesale prices on the money markets. In addition, some of the big banks will waive the delivery charge. If in doubt, ask at your local branch.
Top tip: Ask yourself if you're eligible for a premium account. Banks have a tendency of waiving charges for just about every kind of transaction for premium clients. Don't be put off - in many cases, the criteria for this type of account isn't a hug hurdle. Ask your bank.
If you're planning things efficiently, you could consider buying your currency well in advance. Once you've ordered the cash and paid, it should be shipped to you within a couple of days. All services offer secure delivery so your money is safe. Sadly, this type of service comes at a premium - the cost of delivery can be quite expensive.
Buying online is another convenient way of getting money before and during your holiday. The high cost of delivery means you shouldn't consider this option if you only need currency for small purchases or if you frequently need access to small quantities of money.
Top tip: If possible, try and order a larger sum of cash. Many online outlets will waive delivery costs if you buy $1,000 or more of money. Also, don't be afraid to ask.
Written by James Redden
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Last update: 22 July 2013
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