Are you planning to go abroad? If so, it's very likely you'll be dealing in a currency other than the one you're used to, and will have to exchange currencies. This brings up a whole heap of questions, especially if you are new to traveling abroad. How do you read the foreign exchange rates? How do you make sure to get the best exchange? These are just a few questions that need to be answered when dealing with foreign money, but this advice will make it one less thing to worry about.
1. How to Read Foreign Exchange Rates
When visiting a currency exchange, money exchange, or bureau de change (as they are known in Europe), you'll see a board that looks something like this:
The board may look a little confusing at first but these businesses are specifically for exchanging one currency for another and will answer questions.
Each of the 3-letter codes refers to a currency. “USD” stands for US dollar, while “EUR” is euro, "JPY" is Japanese yen, and so on. Each line features two currencies, because these are the currencies that will be exchanged. The number at the end of each line is the current exchange rate that you will receive. So, for the first line, were you to exchange $1 US dollar, you'd get €0.74 euros in exchange.
2. How To Get the Best Rate
It goes without saying that everyone wants the most foreign currency possible. So how do you get it? The thing is, foreign exchange rates aren't fixed. They change all the time, depending on what's happening in the global economy. One day you might check the "USD/EUR" exchange rate, and see it's 0.70. Then a week later it's 0.75. So what's happened here? During the week, the US dollar has gained value against the euro so now you're getting €0.75 euros for every dollar and earning yourself $2.50 for every $50 exchanged. Might not seem like much but that pays for a snack or ATM fee plus, it adds up.
Bottom line: keep an eye on exchange rates especially if you will be living in a foreign country for an extended amount of time. Even a small change can save a few bucks here and there.
3. How To Keep Up-To-Date with Rates
Since the foreign exchange rate is constantly changing, how can you keep up with it and exchange currencies at the best time? One simple way is to use Google. Just enter the currencies into Google (for example, "USD/EUR") and Google will return the latest exchange rate.
Make checking the exchange rate once a day, or once a week, part of your routine. Then, when you see that the exchange rate has improved – go for it! You can also check the exchange rate on your smartphone, with apps from XE.com.
4. How To Avoid Unnecessary Fees and Commission
Once you decide to exchange currencies, you'll want to do so as cheaply as possible, which of course, means avoiding any unnecessary fees and commission. A bureau de change shouldn't charge any fees or commission … at all. If the bureau de change tells you there's a fee, look elsewhere. It shouldn't be too difficult to find a bureau de change that provides the service without extra charges.
5. Other Foreign Exchange Tips To Keep in Mind
A. Different bureau de change offices will offer different exchange rates, so compare!
B. The earlier you look at exchanging currencies, the better. This provides a bigger window for the exchange rate to improve.
C. Don't exchange currencies at the airport! They're well aware you're doing so at the last minute or that it’s your first stop after a long flight. They typically offer poor exchange rates.
D. Prefer not to carry cash? Consider a foreign currency card, which you load with funds before traveling. Fair FX and Caxton FX offer both.
E. Don't use a normal domestic debit card or credit card abroad. Usually, they charge a host of fees such as the dreaded foreign exchange fee but there are the few that don’t, so call your bank or company to be sure.
F. Notify your credit card company and bank of your travels or the unusual activity and location could result in the cards being locked. This can be difficult to remedy from abroad and leave you with no money at all!