7 Currency Exchange Tips for Savvy Travellers
You’ve packed light, organised travel insurance and have notified the bank that you’re heading overseas. You’re more than ready for your trip abroad, right? Perhaps not. Thanks to poor planning and a lack of know-how, even the most savvy of Australian travellers are losing out financially by not considering their currency exchange options. According to a recent study by Capital Economics, dodgy exchange rates and high overseas card fees are eating up $3.1 billion each year, with much of these costs being avoidable. Stop falling for currency exchange rip-offs – follow these seven top tips to get more for your money on your next overseas getaway.
1. Research the currency
Pounds and Euros may be fairly straightforward, but other currencies are less easy to figure, especially if they have odd rules around usage for visitors. For example, two currencies do the rounds in Cuba, one being for locals and another for travellers. In South East Asia, multiple countries accept US dollars as their second currency, though if you head to Myanmar, the dollars will need to be without any wear and tear to be accepted. The Moroccan Dirham cannot be exchanged anywhere internationally. Cultural currency quirks can bring your travels to a halt if you’re not careful, so be sure to research your currency and find out exactly what you’ll need before you jet off.
2. Don’t always believe what it says on the tin
Phrases like ‘0% commission’ and ‘guaranteed best rates’ are bandied around a lot by travel money providers. Like many things in life, if it sounds too good to be true, it probably is – these phrases shouldn’t be taken at face value. Providers already have take-home fees built into the exchange rate offered, so disregard the misleading ‘0% commission’ listings; they are adopted to make customers feel like they are getting a better deal than they actually are.
A study by FairFX revealed 38% of British travellers fell for the ‘0% commission’ listings by travel money firms and thought that this meant they were getting their foreign currency for free, which they weren’t. Take a critical approach in selecting a currency exchange vendor and look to money converters for current rates. Be sure to compare currency exchange options first to figure out the best deal away from the marketing spiel.
3. Use a travel-friendly credit card
Avoid ATM and foreign transaction fees and nab yourself a travel-friendly credit card. Beyond saving significant amounts in fees and providing competitive exchange rates, cards like the Bankwest Qantas Platinum MasterCard and the ANZ Rewards Travel Adventures VISA Card give customers plenty of added extras like redeemable airfare, hotel offers and cash bonuses through their rewards systems and point schemes.
4. Always pay in the local currency
When using your card abroad, always remember to pay in the local currency rather than your home currency if given the option. In selecting your home currency, staggeringly high conversion fees will be charged for the privilege and the exchange rate will be dictated by their local bank, rather than yours. In short, opting to pay in your currency rather than theirs will leave your finances worse off, especially if you’ve already done your homework and opted for a card provider with the best compared exchange rates and zero international fees.
5. Don’t exchange currency at the airport
Between packing, tying up loose ends at work, saying goodbye to loved ones and the other last-minute duties that precede a big trip, finding the time to exchange currency before arriving at the airport remains a pipe dream for many. However, being organised and exchanging funds at home or ordering currency online will save you significant dollars. For those that don’t have time to nip to the local Post Office, many major sellers now allow travellers to pre-book currencies at much more pleasing exchange rates, and pick up their currencies at the airport terminal.
6. Consider using a trusted service provider
Steep commission rates and administration fees are steering savvy travellers away from international bank transfers, with more people looking to global transfer providers to gain the best exchange rates. Beyond competitive currency exchange, many international transfer providers also offer tools to help travellers make the most of their money. A trending service for travellers, the ‘forward contract’ locks in a specific exchange rate for a set period of time.
For longer-term travellers who will need to transfer larger sums of money overseas over time, international money transfer providers are well worth looking into. Offering personal account managers, bank-beating exchange rates and free transfers, TorFX UK are proving a popular choice.
7. Keep an eye on exchange rates
Before you exchange anything, monitor the interbank rates (the wholesale exchange rate that banks use between themselves) via money converter apps like XE to discover the best time to exchange your currency. Start taking a look at your travel currency a month before your trip abroad and buy when the rate is climbing and the Australian dollar is strongest. While there’s no foolproof way to predict currency fluctuations, forecasting websites can shed some light on whether the value of your home currency is likely to rise or fall before you jet off.