Credit: Ibrahim Boran
Navigating the world of currency exchange – also known as Forex trading – is full of potential pitfalls for travelers. Let’s say you’re looking to trade $200 into Euros. It’s possible to walk into two different traders with $200 and walk out with vastly different amounts of Euros. The industry is full of hidden fees, and traders who sell currency for more than what it’s worth to improve their profit margins. Taking some time to learn how the foreign exchange market works can save you plenty of money in the long run.
Find a trader that offers a favorable rate
As previously mentioned, not all traders offer the same rate. This can be for a few different reasons. Firstly, the currency market is always in flux, and opinions can differ on exactly what the rate of exchange is at any given moment. Additionally, there can be a number of factors that affect the rates charged by a trader. If the trader is part of a global company, the exchange rates will be set by a centralized team, whereas smaller companies have more freedom to set their rates. Therefore, do some research and find out which traders offer a good rate in your town. Be aware that certain traders may offer better prices for certain currencies, so be sure to do your research and shop around every time you exchange money. A few minutes’ research each time you go abroad can save you plenty of money.
Never get your currency changed at the airport
The airport is by far the worst place to get your currency changed. Companies that offer currency exchanges at airports know that their customers are in a tight spot. They have either just arrived in a foreign country, or are just about to get on a plane to one. Their options of places to go to get their currency changed are extremely limited. Because of this, Forex traders in airports hike their prices, meaning that you get less of the currency you’re purchasing than you would elsewhere. We all get caught short occasionally and are forced to buy some foreign currency at an airport, but planning to avoid this will save you plenty of money in the long run.
Get a prepaid FX card
If you’ll be able to pay by card easily when you arrive at your destination, you should consider getting a prepaid FX card. This is a type of debit card that you can top up, and use to spend money or withdraw from an ATM when you’re abroad. The difference between FX cards and an ordinary debit or credit card is that you’ll incur no additional fees when you spend money abroad. You’ll pay the standard exchange rate, without any hidden fees. On the other hand, if you use your everyday debit card, your bank may hit you with additional fees without your knowledge. If you’re planning on paying by card abroad, an FX card is the best way to go.
