9 years ago

Travel Essentials: Foreign Currency

The second blog in our 'Travel Essentials' series is about exchanging foreign currency. Study abroad students have many things to organise before their trip. Buying currency can often times be left to the last minute. However, every penny counts, and with a little preparation and research you can save a lot of money.

There are a huge number of options available. Three things to look for before you exchange money are:

Low Exchange Rates. Some places will hook you in with the promise of 0% commission, however, this can equate to lower exchange rate.
High Commission Charge. Look out for how much commission you are paying. If you are paying a commission charge you more than likely will receive a more attractive exchange rate. This may be worth it if you are exchanging larger amounts of money.
Unexpected Fees. Some options like prepaid cards may have unexpected fees. ATM transactions and recharging the card are examples of where you may encounter unexpected charges.

Below are a few options available for money exchange, including the pros and cons:

Post Office or Travel Agent

Pros

Order online or buy in branch
0% commission offered online
Improved exchange rate when you buy more
Free delivery over a certain amount

Cons

Lower exchange rates
Have to carry the cash

Advice: It is always a good idea to shop around for the best exchange rate available for the amount of money you are exchanging.

Debit Cards

Pros

You don't need to carry the cash
It can be used to withdraw cash at the ATM or make direct payments
It is easy to cancel if the card is lost or stolen

Cons

Fees for every time use
Fee for ATM transactions
Not always the best exchange rate offered
Potential double fee for use, plus, a % fee for the amount used

Advice: Check with your bank on all fees that are applied. Take a note of the overseas contact number in case your card is lost or stolen.

Credit Cards

Pros

Safer option as you don't need to carry the cash
Recognised in most outlets
Can be used to withdraw cash at the ATM or make direct payments
Easy to cancel if lost or stolen

Cons

Fees for every time use
Fee for ATM transactions
Not always the best exchange rate offered
Potential double fee for use, plus, a % fee for the amount used

Advice: Check your provider's policy on use abroad. Be aware of all fees that can be incurred. Take note of the overseas contact number in case your card is lost or stolen.

Pre Paid Cards

Pros

Easy to load and easy to use
Safer option as you don't need to carry the cash
Can be used at ATM's and for most purchases
Widely accepted at outlets
Easy to cancel if lost or stolen

Cons

Set up fees normally apply
Ongoing top up fee
ATM withdrawal fees

Advice: Check your provider's policy on use abroad. Be aware of all fees involved. Take note of the overseas contact number in case your card is lost or stolen.

Travelex (or similar service)

Pros

Online ordering
Free delivery depending on amount
Airport or train station pick-up
0% commission
Best guaranteed online rate
Pre-paid card available

Cons

Carrying cash is not as secure
Only travel insurance policy will cover you if your money is lost or stolen

Advice: Always order in advance. Do not make buying at the airport an option!

Bank Transfer

Pros

Safe and secure transaction
Transferring large amounts is more efficient
Better exchange rates in general

Cons

You need to be in the country to set up an account overseas
Transaction fee will apply

Advice: Contact your bank at home about the process involved in making more efficient transactions.

Overall Advice:

Research the different options available in advance.
Take a mixture of local currency in cash and use your card.
Take note of your bank or credit card provider's overseas number in case you have to cancel the card.
Be aware of any fees incurred by providers before you commit to using them.
For longer periods of stay, set up a local bank account where you can transfer larger sums directly.
Don't leave it to the last minute and buy at the airport!