When you are travelling outside your home country you are going to have to exchange your currency for the one that is used in your destination country. It is always a sensible idea to check the exchange rate before you start your trip. This will then give you a general idea of the rate that you should expect to be offered whilst you are away from home.
Be aware that some places that offer currency exchange will quote considerably higher rates than their competitors. This is done to attract the unsuspecting tourist to exchange their money at this particular place. The company will advertise the “buy rate” for your home currency rather than the “sell rate”. The “buy rate” is always higher than the “sell rate”.
Another tactic that is often used is an advertised rate is higher than those of the local competitors. This rate will only be available for the exchange of large amounts of money. The amount of money to which this rate is applicable will be in the thousands rather than the average amount required by a tourist.
The Best Place to Exchange Currency | Carrying Cash
The simplest form of exchanging currency is to take cash with you on your trip. The main drawback to this is that you will be offered a lower exchange rate then if using “plastic” for your transactions. Many banks will charge the institution that has purchased your foreign currency a variable rate of exchange. The institution is not going to lose money on this type of transaction and will therefore offer you a lower exchange rate. Carrying large amounts of cash has its own dangers, namely that of theft.
Using Travellers Cheques
Traveller’s cheques are a convenient way to carry currency. You will be charged a commission for the use of traveller’s cheques so it makes sense to compare this commission to any other forms of charges levied on alternative methods of currency exchange when seeking the best place to exchange currency.
Banks do offer the service of being able to buy traveller’s cheques in the currency of your destination. There is a drawback to this because you are pre-purchasing the currency at the rate that is offered at the time you buy them. Should the currency rate rise during your trip, you have already purchased and cannot take advantage of the increased rate. It is wise to seek financial advice, when searching for the best place to exchange currency.
Credit Cards and Debit Cards
Without a doubt the best place to exchange currency is by using a credit or debit card whilst on a trip. It is the safest way to withdraw local currency by using a cash machine. The rate that is offered through a cash machine (ATM) will usually be between two percent and seven percent higher than when you exchange cash or traveller’s cheques. The ATM will advise you of the exchange rate that is being offered and any other charges that are applicable before you complete the transaction. This gives you the choice of whether or not to accept the rate that is being offered.
It is more advantageous to use a credit or debit card to pay for large purchases such as hotel bills or car hire. You must remember that almost all credit card companies will make a conversion charge for payments made in a foreign currency.