Every time you exchange one currency for another, there is always a little charge. This is irrespective of whether you are using credit cards, ATM, Forex Bureaus, among other currency exchange outlets. The question is therefore not whether you can avoid the service fees charged for this convenience but how you can pay the lowest possible fees.
How can you minimize currency exchange fees, especially while travelling abroad? The following are must-know tips that are guaranteed to get you the best exchange rate, wherever you may be in the world.
1. Research the Best Rates
To be certain you’ve got yourself a great deal, you have to first know what the current rate is. The currency converter can greatly aid you when seeking to understand what the prevailing exchange rates are. Don’t leave your country without knowing what the indicative currency rates for the country you are visiting are. If you will be out of the country for an extended time, constantly checking the currency rates will help a great deal since they are highly volatile.
2. Use ATM and Credit Cards
Buying foreign currency using your credit or ATM cards always gets you the best rates. The fees charged range between two to seven percent lower compared to using traveller’s checks to exchange cash. Use your credit card as much as possible, especially when settling hotel bills, car rentals and tickets. However, bear in mind that some credit card companies surcharge credit card transactions in foreign currencies. Local businesses such as shops and restaurants may also charge an extra fee if you are transacting in credit cards.
For your daily cash needs, it’s highly recommended that you use ATMs, which are available in almost every country. However, remember that your bank and whoever owns the ATM could charge you an extra fee for every transaction. You can, however, minimize these charges by taking out as much money as you need with each transaction instead of making multiple withdrawals.
3. Exchanging Traveller’s Checks and Cash
If you are planning to transact in traveller’s checks or cash, do so in the country you are visiting. The only exception is if you are certain that the value of your hard currency will sharply decline for the duration you are away and you want to hedge against potential losses by taking advantage of the current rate. In most cases, however, hard currencies such as the dollar are very hard on foreign currencies. You will get the best exchange for your traveller’s checks or cash at post offices, banks, etc. By all means avoid the forex bureaus at the airports, train stations, border crossings, and any other forex bureaus located in areas frequented by tourists. You might get a good rate now and then in these areas, but this is the exception rather than the rule. As a general rule, do your research well. Don’t exchange blindly without checking out the rates first. Avoid the black market exchanges as these are notorious for transacting in fake currencies.
4. When to Pay in Your Currency
Most hard currencies are readily accepted in some countries. If these are pegged on fixed exchange rates, it is better to pay in your currency to avoid the fees. In some places, you may be given a choice to pay for goods and services in your own or local currency. In such cases, there is a likelihood that you will pay a little more than you would if you paid in your own currency; but this could be the same or less than you would have paid had you exchanged your currency in the first place. To be sure you are getting the best deal for your money, carry a calculator or use the one on your smartphone.