I’m going to South Korea this summer, and my number one concern is money. Where can I exchange it? Who will give me the best rates? How much money will I lose? How about coming back?
High conversion fees could end up costing travelers up to 10% of their actual money! Knowing options now before leaving for an overseas trip can be a money saver.
Know exchange rate basics
An exchange rate is the rate at which one currency will be exchanged for another. To get the most current information, I use a website called Oanda. A user-friendly currency converter that utilizes the most current rates is one of Oanda’s best features. It also allows soon-to-be travelers to follow exchange rates for a few months to be better prepared when it’s time to travel. By being informed, I know that if the U.S. dollar has decreased in value and the trend keeps going down I may want to convert my money sooner so that I get the best value possible.
Oanda’s “traveler’s cheat sheet” makes it easier to understand how to convert increments of money into the currency needed once it is time to get foreign currency. Print the “cheat sheet” and bring it along on the trip to use as a compact guide to compare these rates with banks or money changers.
Tip: When exchanging currency, a good exchange rate is considered to be between 3 and 5%.
The first and easiest option is to use a credit card. Conversion fees range from 2 to 3% (which is on the low end of the spectrum) so out of all of the options, this one is the easiest and most cost effective. But beware: Do not use the ATM. It can cost over $20 in transaction fees and the interest will start on day one.
Tip: To get the best deal, sign up for a Capital One credit card. They don’t charge fees for purchases. Also be sure to ALWAYS ask a shopkeeper to charge you in the local currency or else you could end up paying more because of higher exchange rates.
If using a world wide bank (like Bank of America) there is a possibility to be able to withdraw money from a branch with no fees attached. Otherwise, there will be a conversion fee charge of 3 to 10% plus an ATM charge. The trick here is to withdraw large amounts less often in order to get the most money. This option is good if a set amount of money is wanted. Look at banking options in the airport and in the area where the vacation is planned.
Exchange at bank
If sending a child abroad or money is wanted before traveling, order money from your local bank. This option has slightly better exchange rates than kiosks that sell currency. As a preferred customer, it’s possible to get a better exchange rate.
Tip: Remember to be careful of delivery charges and always compare rates to other banks/ kiosks.
Buying money at the airport
If this is an emergency trip, or you cannot get the currency needed from your bank, the next best bet is to exchange currency at either a mall kiosk or at the airport. They carry most types of currency and are really useful when money is needed right then and there. Call a few weeks ahead if going to the airport and make sure that they have your currency. Also try to call the morning or night of the trip to hear updated rates of currency in order to bring enough cash for an exchange.
Tip: Always try to exchange currency at the airport. After reaching an overseas destination you are at the mercy of the kiosk and may face a high fee.
Above all else, the biggest mistake that can be made is to exchange foreign currency back to the dollar. Unless the currency rose an extreme amount during your stay (which is highly unlikely) you will end up losing more money during the conversion. Try to manage spending so there won’t be much left when the trip is over. Also, if possible, keep the foreign currency for a future trip. If these solutions don’t work, then try to exchange or deposit the money in your bank branch overseas in order to get better rates.
This is a guest post by Juliana from Ashburnham, MA
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