The traveling industry has experienced a boom in the last few decades. As the quality of education improves, families have seen a major income boost with adequate disposable income to splurge. Holidays abroad, which were a costly affair earlier, have now, become a possibility for families with disposable income. Education or work can take people abroad for the first time in their lives. A shift to a foreign country makes currency exchange a necessity in life. With international transactions involved, it now becomes necessary for most of us to have a basic understanding of how money exchange works.
Many people tend to break a sweat over currency exchange, as they are unaware of anything related to it. Currency exchange is as simple as exchanging one country’s currency for another through buy and sell transactions based on the foreign exchange rate. These currency conversion rates are subject to fluctuations as they are driven by market forces. It is not something to panic about- people just need time to familiarize themselves with it.
The whole process of currency exchange can be simplified to make it more convenient and less susceptible to fraud. Here are a few things that should be noted and kept in mind during the whole process of currency exchange.
Things to keep in mind during currency exchange:
- Research currency rates:
While getting the currency exchanged, one needs to pay a charge to the vendor to get it exchanged. The exchange rates are changing from every three seconds, and one needs to keep themselves updated about it regularly.
This will assist in getting the best deal. Nowadays, there are websites and apps as well that are pre-programmed and updated in real-time to save one from the time-consuming manual calculations. Foreign exchange comparison websites, like CompareRemit.com, can help you make an informed decision while wiring money internationally.
Also, one needs to be prepared to exchange the currency at least a week or two in advance so that in case the rates go up, and one still has time to wait for it to come down.
- Avoid the no exchange fee offices:
Currency conversion always has an extra-fee. If there are any offices at the tourist spot or any other location, one must avoid using it at all costs. The currency exchange rate is the lowest over here, and one will end up getting a very less amount as compared to the places which do charge a fee.
The better option is opting for a place that does charge an exchange fee and gives one an excellent return, which is useful for the journey.
- Avoid the airport exchange offices:
The airport foreign exchange offices charge one of the highest conversion rates and fees. An 8% to 12% margin of charge is levied by them for the amount of cash one pays them.
Hence, it is better to get the currency exchanged before you land at the airport or after you reach the destination and avoid any last-time transactions at the airport.
- Credit and debit card use should be avoided:
The credit and debit cards from one’s home country charge a high transaction fee when it is used in another country. There is even a chance of the bank blocking the cards on the grounds of suspicion if one has not informed them in advance of the trip. The transaction fee will lead one to pay way more than they would pay in their entire trip.
Thus, one should inform their banks about the trip if there is an emergency and you need to use the cards in a foreign country.
- Follow the 30-70 rule:
This is a simple rule to follow which advises you not to exchange all the currency at once. It means that instead of converting all the money that one intends to spend, convert only approximately 30% of the currency and keep the rest of it in a forex debit card. The forex debit card is usable in most hotels, shopping malls and eateries nowadays. This way, you can save on the expenses required to exchange your currency.
- Compare between vendors before exchange:
Exchange rates vary from vendor to vendor, and thus one needs to check the currency rates among a few vendors at least before selecting one. Even if one has an office of currency exchange near you, check the rates beforehand. You may browse online to compare vendors or physically visit agents to know the best rates in town.
It is recommended to get a quotation from three vendors at least before settling for one.
The currency exchange should also be done from an authorized dealer. One may face the problem of getting fake notes, or one’s Forex card might stop working when abroad, which will turn out to be very problematic, and one cannot even lodge a complaint.
- Use Forex cards:
There is always a chance of losing the cash you’re carrying, or one might get robbed in a foreign land if one has a lot of cash. To avoid such a situation, a Forex card comes in handy. One gets a hundred percent return for all the money in case of a cash card, and the amount of money present in the card gets automatically converted to local currency.
Other advantages of using a Forex card are one it prevents one from overspending and also a card recharge can be done at any point in time.
- Avoid keeping huge amounts of foreign currency:
While it is not illegal to keep small amounts of foreign currency, hoarding high amounts of it can be considered illegal in India. One may face legal consequences if found guilty, or be penalized or jailed.
Hence, one must ensure they use as much foreign currency as possible during the trip itself. Also, keeping a token of foreign cash as remembrance is not illegal but if you have a high amount of it, ensure it is converted back to your local currency in time. One could even sell their leftover foreign currency.
These handy hacks will help one to increase their knowledge about foreign money exchange and take the load off. Currency exchange is not rocket science, but due to the lack of knowledge about the subject, one might feel it is difficult or arduous.