Understanding Exchange Rates and Getting the Best Deal
You’ve got your bags packed, passport sorted, good-bye party booked but when it comes to exchanging money, things are a little fuzzy.
What currency should you change your money into, where is it best to buy your currency, and should you use those pre-load travel cards your bank is promoting?
All good questions!
The first question is the easiest to answer.
To find out the currency at your destination, check out Lonely Planet’s money and cost section for that country.
It’s worth noting that some places, like Vietnam and Mexico, accept multiple currencies which is sometimes the US dollar and their own.
Before buying your currency, research live rates by visiting websites such as XE and Yahoo Finance. You can use the currency calculator to work out how much your money is worth, or simply multiply the Australian dollar by the rate. For example, one Australian dollar is currently worth 76 US cents, so $500 Australian dollars times 0.76 equals $380 US dollars.
Once you have an idea of what your money is worth, it’s now time to buy!
You can either exchange money before you go or at your destination and there are merits to both.
It’s probably best to hedge your bets by taking some local currency with you.
This means you can use cash straight away, for example to pay for a taxi or train, and won’t get caught short if you arrive late at night.
Once you at your destination, it’s advisable to buy your currency at the local banks although make sure you shop around.
Typically you won’t get the best rates at airports or bureau de changes stating they don’t charge a fee, so it is best to bypass these.
It’s handy to use a combination of cash and card when travelling abroad.
Credit cards do offer competitive exchange rates but can have hefty fees and surcharges.
Likewise, you can also use your debit card at the local ATMs but be aware your bank may charge for the withdrawal as well a currency conversion fee.
If you are planning on using your credit or debit card overseas, always make sure your bank knows so they don’t block your cards.
The other option to consider is the pre-loaded travel cards such as the Mastercard Cash Passport. You can buy multiple currencies and can lock in exchange rates so you’re not negatively impacted by currency fluctuations. However it does pay to read the small print as these cards do have many charges and fees too.
If you’ve budgeted smartly and have leftover currency at the end of the trip, hang onto it if it’s a destination you’re likely to visit again. If it’s a one off trip, consider selling it back at your destination but check out the sell rates first, and make sure you have enough to make the trip home!
- This blog is intended as general advice only.
- Exchange rates quoted as at 2 July 2015.
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