Article Last updated on March 31st, 2018
When you’re on the move for a long period of time and passing through plenty of places, you quickly learn that one of the ultimate challenges when travelling is making sure you have the right currency for wherever you end up – and more importantly, making sure you get it at a fair rate which doesn’t leave you out of pocket.
After all, you don’t want to lose all your hard-saved travel funds because of dodgy exchange rates, illegitimate currency traders or just a plain lack of common sense! Whether you’re looking to trade dollars, euros, yen, krona, pesos, baht or rupees, there are plenty of simple and useful tips and tricks that the savvy traveller should always bear in mind when buying new currencies. From avoiding getting scammed to just knowing some of the basics of foreign exchange and how to get the most bang for your buck (or euro, or dollar etc.), here’s your essential guide on everything you need to know about buying money abroad, including all the most important tips.
Know Who You’re Trading With
Travellers the world over end up losing billions every year, with UK holidaymakers specifically losing an estimated GBP 1.3 million annually to rip-off exchange fees and totally avoidable transactions which end up costing several times more than if you’d changed your money somewhere else. Knowing where to trade your money and who can be trusted to give you a fair and honest rate is vital knowledge for any globetrotter.
No matter where you are in the world, it may seem like plain common sense to avoid changing money with a street vendor or anybody who is loudly advertising their services and promising better rates than the bureau de change or local travel bank. However, when you’re on the move and need to get your hands on some local currency ASAP, it can be all too tempting to cave to convenience and be taken in by the siren song of the friendly tout on the busy street corner with a fist full of baht.
Street-side currency traders are becoming increasingly common in backpacker hotspots and beyond, including tourist hotspots in Europe, South America, and Asia, and they undoubtedly offer the worst exchange rates on the market. Avoid these guys like the plague.
You should also avoid exchanging money at airports, which tend to take advantage of their captive audience by charging eye-watering fees for currency exchange at rates which can sometimes be half of those on the current market. For the same reason, you’re best off avoiding hotels and even most foreign banks, which make a killing off commissions from hapless travellers. You’re always best off changing your money with reputable and certified bureaus, post offices or shopping around online to find the best vendors to exchange digitally with.
Know the Value of Your Money
A key way to avoid the potential pitfalls of currency exchange is to know the currency you’re after and know the currency you’re trading. There are some more obvious reasons for this; certain, often less-traded currencies have a number of rules and restrictions which limit how and where they can be traded. For example, travellers in Cuba will find that there are two currencies – one for locals and one for tourists, and those planning to hop over into Morocco from a neighboring country may be shocked to learn that the Dirham (MAD) cannot be traded outside of Morocco’s borders.
If you’re travelling with US Dollars (USD), while the fact that dozens of countries tend to use them as a de facto second currency, there are also plenty of local restrictions on how they can be traded and spent, meaning it’s crucial to be aware of any local quirks concerning the money you need. As an example, in Myanmar, it is illegal to use dollars which are even slightly damaged or blemished in any way.
In order to ensure you get the best rate possible and steer clear of any potentially costly mishaps, it’s always useful to keep track of the value of your currencies and to know which external factors can affect that value. Knowing the value of the two currencies you’re working with can be as simple as knowing the circumstances of the country you’re in/heading to; political instability, high government debt, the state of the local economy and inflation rates will all have a significant and constantly-fluctuating impact on exchange rates and the value of your money.
It’s always helpful to prepare by looking at recent patterns of exchange rates before you fly out, which can help you stay on top of any developments that may affect the value of the cash in your wallet and be prepared.
Prepare in Advance
While it’s not always possible to have all your money to be sorted in advance, especially if you’re planning on embarking on a 12-month trip through ten different countries, the most effective money-saving steps you can take are often before you step on the plane. For withdrawing cash and for spending, credit cards are always your best bet, as long as you shop around for the right ones in advance, picking one that doesn’t charge exchange fees or interest on overseas withdrawals.
You can also opt for a pre-paid card in the local currency, which will help limit your spending. Also, if you don’t travel frequently, you’ll want to let your bank know you’ll be using their card abroad – otherwise, they might suspect illegal activity and block transactions. Other top tips to prepare include comparing top exchange rates online, learning how to negotiate discount rates in the country you’re heading to, and learning to avoid dynamic currency conversation at all costs – you’ll want to always opt to be charged in the local currency.
These are the key ways to save money when changing currencies on your travels, meaning you’ll have more to spend on experiences that actually matter. If you have any suggestions on how to make the most of your currency exchange, comment below!