Best Practices to Manage Currency Exchange
Managing currency exchange when traveling abroad can be a real challenge. Most people know about the regular practices, but it’s tougher to gather practical knowledge. Unless, of course, you’ve traveled multiple times and experienced difficult situations yourself!
In this article, we’ll articulate some of the money-related risks when traveling abroad. Plus, we’ll cover some of the best currency exchange practices you can apply during your next trip. Enjoy!
Money-related risks when traveling abroad
Theft
When traveling abroad, there are several threats related to money, starting with theft and aggression. In most countries, it is safer to avoid getting huge amounts from your purse. Prefer going for smaller amounts at a time to not trigger malevolent behaviors.
High Fees
Another money-related risk are the high fees incurring with any transaction. Whether you’re looking to pay by card or withdraw money, fees can be pretty expansive. Sometimes, to withdraw any amount, you may have to pay $5 per transaction. To avoid these outrageous amounts, set an appointment with your bank prior to traveling. They’ll offer you plans and programs to spend with minimum to no charges.
False Rates
When looking to exchange money abroad, you’ll be faced with various challenges. One of them includes selecting the right currency exchange place. Even if there’s no “best” one, some options are better than others. Sometimes when buying in shops, shopkeepers will overestimate the rate to make more profit. Be aware of false or disproportionate rates, especially in poorer countries.
Useless Money Losses
More generally speaking, the main money-related risk you will face when traveling abroad is losing money uselessly. For example, by exchanging too much money and having to change it back to your original currency. Another example can be by not paying the true value of local products and services. Try to learn as much as you can about the country you’re traveling to before making any money-related move.
Common practices for currency exchange when traveling abroad
Carry little money
The larger the amount you carry, the more troublesome it’ll become if you lose it or get it stolen. The best practice is to place smaller amounts in different locations. For instance, you can keep pocket money in your purse, future expense reserves in your suitcase or bag and leave emergency funds at the hotel.
Exchange small amounts at a time
Similarly to the previous tip, exchanging small amounts will help you avoid dramatic losses. It’s also useful in case you don’t use all of the money. Having too much of a local currency can result in you not spending it all, and having to change it back, incurring further fees. Prefer going for smaller amounts, even if you have to exchange money multiple times during your trip.
Use smaller cash denominations
When exchanging money, the bank or the exchange office will generally give you larger denominations. Ask them specifically to split them into smaller ones. Local people don’t generally have the cash to pay you back for your first purchase. Think of it this way: what would you tell someone paying a $2 coffee with a $100 bill?
Know what you’re planning to buy
Although it’s nearly impossible to forecast every spending, there might be some large and specific purchases you’re planning a budget ahead for. For these, make sure you withdraw the right amount at the right time. You can also be ready to pay by card for these purchases.
Know your bank rates
Prior to traveling, it’s important to book an appointment with your bank. First, for insurance purposes. Second, for bank fees. Bank fees vary from one bank to another and from one country to another. Sometimes, depending on your situation, your banker can offer you special discounts, plans or products to avoid fees. Gather as much information as you can.
Have a currency reference
This is especially important when you’re exchanging weaker currencies. Try to have a strong currency as a reference, such as euros or US dollars. When purchasing any product or service locally, make sure to shift back to a reference amount to be sure you’re willing to spend the money. Failing to do so can result in larger budget holes towards the end of your trip.
Have an exchange rate reference
Similarly to currency reference, exchange rate reference is important to avoid local shops over or under evaluating their currency. Generally, the reference rate will be the one you find at the airport. Change a small amount of money there if needed to acknowledge what x amount of your currency represents locally.
Prefer local currency exchanges
While the airport is a good place to gather reference information about currency rates, prefer local exchanges. Indeed, the airport charges larger amounts. You’ll be better off trading in town or even a little out of town for preferred rates. Try to not go by yourself. If you can, ask a local inhabitant or tour guide to go with you. They’ll know the best places to benefit you.
Now you should be set for your next trip! To help you manage your money better, you can subscribe to Finnt App. Safe travel!
