What You Need to Know About Foreign Exchange Rates When Traveling
It’s important to know about foreign exchange rates when traveling internationally. The first thing you may likely do is to exchange your cash for local currency. You can’t buy everything with a credit card. There are times when you will need local bills. Here are some of the things you need to know about foreign exchange and more.
Exchange Foreign Money at Your Local Bank
It’s practical and safer to exchange a small amount of foreign exchange at your local bank. This way, you have ready cash on hand in case you need to buy something straight away when you get to your international destination.
As you plan your holiday, also plan when you’ll be making the exchange. Exchange rates fluctuate. One day it’s high. On another day, currencies may devalue. So, it is best to watch the market. You want to make sure you get the best possible exchange rate.
Withdraw Foreign Money at ATMs
You can withdraw foreign money directly from a local ATM abroad. Just make sure to do this at a safe place. Withdraw money inside a shopping center or within (or around) the vicinity of the actual bank. You should also find out if your bank has affiliates abroad. You can make withdrawals from affiliate ATMs and those bearing the matching logos on your own card (Cirrus or Maestro).
Make sure to notify your local bank of your international trip and your plan to use your account abroad. If you don’t, you may trigger a fraud alert and have your account frozen for security purposes. More information on this issue is available here from the traveling godfather Rick Steves.
Get a Traveler’s Check
You can also buy foreign currency via traveler’s checks. You can get this from American Express or even your bank. Some credit unions sell them as well. Check fees as some charge higher rates than others. A traveler’s check is appealing because it’s secure. It’s in your name and only you can withdraw it abroad. It’s a little inconvenient, though. Some establishments won’t accept them. So, give yourself some time to find a local bank to cash it after you arrive.
Get a Prepaid Travel Card
A prepaid travel card is advantageous and safer in so many ways. You don’t need to keep lots of cash with you at all times. You just need your prepaid travel card. It works like a prepaid credit. You load credit on your card and spend it as you wish. The exchange rate is time-dependent. So you can choose which day is good to spend the money abroad. It is secure since you can lock the card in case you lose it. Make sure to understand the fees as some charge per transaction.
Exchange Foreign Money at Currency Exchange Booths
Currency exchange booths are accessible. They’re all over the place. You can get your foreign money from there instead of your bank. However, we discourage using currency exchange booths at airports. It seems that their rates are not competitive and can even take a commission fee.
Exchange Currency at Your Foreign Bank
When you frequently travel to the same country abroad, it’s wiser to open a second account there. Keep it open and fund it. This is convenient since you can just wire into this account and it will be waiting for you to use when you land.
Use Your Credit Card
Credit cards are the simplest means of buying things abroad. You don’t need to carry cash. And there’s no need to make foreign exchanges. The credit card company does the calculations for you. In short, you buy in foreign money but you pay it back with your local money when you get home.
Some credit cards offer different perks and promotions for international travel purchases. Sometimes, they double your credit card rewards points. Other times, they give larger cash rebates. There are also freebies like additional days of hotel accommodation. So, know what’s available to you and use the card that offers the best value.
Also, know the charges that come with international purchases. Some cards can cost you higher fees and conversion rates. Remember, when it comes to credit card purchases, the lower conversion rate is the more preferable rate.
Image by Annie Spratt