10 Tips for Saving on Foreign Currency Exchange
Foreign currency exchange is a tricky money-guzzling problem for travelers who aren’t prepared. Where and when should I buy before I leave on my trip? Exchange rates change daily and can be based on the stability of wherever you plan on traveling to and their foreign relations where you are traveling from. My job is in the foreign currency exchange business, so you can trust me with these 10 tips for saving on currency exchange.
1. Ask Around for Prices
Every bank and foreign exchange company will offer different dollar-to-dollar rates and fees. So make sure to check each option before purchasing so you know you are getting the best rate available to you.
2. Track Currency Rates
What you find on Google, XE and in the newspaper is called the “Market Rate”. That is the rate foreign exchange companies and banks buy currency at in large amounts. They then add a markup on the rate to profit off what they sell to you (can be around 10%). In the weeks before your trip, I suggest tracking the Market Rate on a daily basis to see when is the best day to purchase. Use the Market Rate as a guideline for the dollar-to-dollar exchange, but as mentioned above, don’t expect that you’ll be receiving that price that you see online.
3. Purchase at Your Bank in Advance
Some of the bigger banks (like Chase, Bank of America and US Bank) offer currency exchange to their clients. Popular currencies, like Canadian Dollars and Euros, might be on hand but always go visit in advance of your trip to check. I generally guesstimate putting a request in two weeks in advance, especially for less popular currencies and for purchasing in large quantities. Credit Unions do not offer foreign exchange.
4. Don’t Purchase Currency with a Credit Card
When you purchase foreign cash with a credit card, that is considered a “Cash Advance”. Most credit card companies will charge a 3-5% fee to ensure you have the amount of money in your bank account that you are purchasing in foreign currency. It is easier to pay in cash or with a debit card.
5. Don’t Purchase at Airports
Airport currency exchange kiosks often serve as a last-ditch effort at getting foreign money for travelers. The airport kiosks know this and thus bump up their rates because you will still buy it. Generally, their rates are the highest out of any foreign currency exchange options.
6. Buy Value Packs
Travelex offers three value packs in their stores ($350+, $600+ and $1250+). The more you purchase, the more you save. When you spend over $600 USD, fees are taken off both way and the dollar-to-dollar rate changes slightly. Over $1250 USD, the rates change more favorably and you will get the market rate with leftover currency after your trip, which can save you a lot of money!
7. Purchase a Multi-Currency Cash Passport
Multi-Currency Cash Passport (MCP) is a debit card that loads up to five different currencies on it (GBP, EUR, JPY, AUD and CAD). It is safe for travelers because it includes a PIN code and a chip. Cards with chips installed are extremely useful for travel in Europe because some vendors won’t accept American cards without them! You can also reload the card while you are abroad, and replace it fast in case it is lost or stolen. I highly recommend the MCP card for travelers wanting to carry large amounts of money, those who prefer card over cash, and study abroad students.
8. Find Out Your Debit Card Daily Limit
On one of my trips to Japan I found out I could only draw out $150 USd worth of Yen everyday. That means I was pulling out money every few days, while being charged bank fees, ATM fees and foreign transaction fees. By the end of the trip, I racked up a good amount of fees. Prepare by calling your bank on a daily basis. That way you’ll know whether its okay for you to travel with your card or if you should get some cash in advance.
9. Use Credit Cards Without Foreign Transaction Fees
As mentioned above, nobody likes getting fees while traveling. Avoid getting hit with foreign transaction fees specifically by signing up for credit cards that promise not to charge them. Check out Johnny Jet’s resourceful page on choosing which travel-focused credit card is best for you.
10. Exchange Leftover Money
Think you should exchange leftover currency when you return home? Think again. ForEx companies will charge you a different and higher rate for the currency than what you bought it at. So it is better to try and exchange the money before you leave the country you’re traveling in.
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