5 Quick Tips for Exchanging Money Abroad
One of the most important components of planning to travel abroad is of course: money. How much will I spend? How do I get my hands on some foreign currency? Where should I convert my Canadian dollars? Should I exchange currency before I travel? Although if there is something that all travelers have in common, it’s that you want to save as much as possible when exchanging currency. Here are 5 tips to keep some money in your wallet on your next trip overseas:
- Avoid ‘No Fee’ Services
Be mindful that there is no such thing as a free international currency withdrawal. When traveling abroad, you may notice ATMs or foreign exchange kiosks that offer “free cash withdrawals” or “no commission fee” currency exchanges. While you may be tempted to use one of these services, it’s best to avoid them. While they may not add extra fees, their exchange rates will more than likely be very poor, causing you to lose more. To avoid this, keep track of the daily exchange rate. You can keep tabs by downloading a currency exchange app for your smartphone or by visiting www.xe.com. At best, you will normally pay between 4% and 9% of the total amount you are exchanging in fees and anything higher is likely an attempt to overcharge you.
- Use ATMs to Withdraw Small Amounts
If you are in need of smaller amounts of day-to-day cash while traveling, and didn’t have time to visit your bank before leaving home, it is best to use local ATMs. While using an international ATM oftentimes carries a fee, it is usually minimal and will not break your wallet. Of course, it is always a good idea to check with your bank first and ensure your bank card is compatible with international ATMs. Some Canadian banks, like RBC and TD, offer special accounts that include no fees for foreign ATM use.
- For Large Purchases, Use a Credit Card
Credit cards are the safest and often cheapest way to make larger purchases while traveling abroad. With a credit card, you are almost always receiving the best exchange rate even if you are paying a fee. This is because credit cards typically come out ahead by adding a fee that is on top of the latest interbank rate (the rate banks pay for foreign currencies).
- Refuse Dynamic Currency Conversion
Dynamic currency conversion is when you are offered the choice to convert the price of something you are purchasing into your home country’s currency. You may see this as a courtesy that is meant to help, or you may choose to do so simply because it’s comforting to see a price (especially for a larger purchase) in a currency that you are familiar with. However, this service only exists to take advantage of you. While it certainly seems convenient to not have to make conversions in your head, however, it usually carries an additional charge of up to 7%.
Prepare as Much as Possible
Do as much research as possible on currency exchange before jetting off; start by looking at banks and foreign exchange services. Banks typically offer better exchange rates than any currency exchange services you will find overseas such as airports, hotels, and exchange kiosks. Some foreign exchange services, in fact, Knightsbridge FX offers lower rates than banks. It’s important that you give yourself enough time to make transactions such as these, as they often require a few days to be processed.
With these tips in mind, hopefully, it will be easier the next time you are looking to travel but are not sure about the best approach concerning foreign currency exchange. Research and prepare at home, avoid dynamic currency conversion and misleading “no fee” services, as well as know that the advantages of credit cards and ATMs will allow you save more on your next trip.
Get started by calling Knightsbridge Foreign Exchange today at 416-479-0834 or visit us online.