Currency conversion is one of those thorny issues that many Americans are loathe to contemplate. If we don’t know anything about it, it must be complicated, and so we stay away from international travel. In fact, it is quite different than most of us realize. But if you plan ahead and know a few tips about currency conversion, your flight to another country can be far less stressful, and you can save money with a few guidelines that can help you in your international travel.
Perhaps the best advice about currency conversion is not really advice, but learning what it is and why it affects the international traveler. Simply put, the exchange rate for a given currency is the rate at which one currency can be exchanged for another. If, for example, a dollar can be exchanged for .65 euro, that means that the dollar is weak against the euro and you’ll need more dollars on that European vacation. Alternatively, if the exchange rate were one dollar for 1.2 euro, the opposite would be true: It takes fewer dollars to make the equivalent buying power in euro. If the dollar is strong in relation to a given currency, it buys more when exchanged, and less if it is weak in exchange. That’s why your dollar “doesn’t go far” in England, but it buys a lot in Cambodia. This exchange rate can affect how much you spend and, more importantly, how much you need to plan for when traveling abroad.
Getting the best exchange rate can be as easy as an ATM card or credit card in most cases, mainly due to the higher fees charged by most exchange bureaus. As long as exchange fees are within reasonable bounds, ATM and credit cards are the most convenient, and frequently less expensive, way to go for many travelers. And because they are so commonly used here in the states, their convenience lends them to be used more often by the experienced international traveler.
But there is one useful tool that is not as commonly used by travelers abroad. Research the exchange rate with your bank and find out their exchange fees before traveling abroad and you can save yourself a lot of headache. The reason is simple: Knowing your bank’s fee and using that as a benchmark will give you the edge in a foreign country—and you’ll be able to recognize when an exchange bureau tries to price gouge tourists. You might be able to find a better deal elsewhere if you do your homework first. And sometimes those better fees are just around the corner or next door from your hotel if you just ask the person at the front desk. And when using credit cards, be aware that different credit card providers can charge dramatically different fees for use in a foreign country. Understand these fees, and if your credit card company charges an exorbitant amount, then it’s time to switch credit card companies.
If you are buying tickets or travel packages from overseas providers, they may be charging you in local currencies. If this is the case, buy those tickets early to lock in the current exchange rates and avoid unpleasant surprises later on down the road.
Currency conversions and fees are not all that complicated once you learn a few tips to make things easier. And international travel is a must for those who want to experience another culture firsthand. The time spent beforehand to research the exchange rates and fees will save you plenty when you get to your destination.