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!